When a student decides to pursue higher education abroad, parents play a crucial role as guides and supporters. One of the primary responsibilities of parents is to provide financial assistance. Education is an investment in the student's future, and parents need to understand its long-term benefits. While students may seek scholarships, grants, and part-time jobs to ease the financial burden, parents may need to take on the responsibility of securing an education loan to fulfill their child's dreams.

As a parent, here are some roles you should consider when taking an education loan in India to study abroad for your child,

Responsibilities of Parents in Taking an Overseas Education Loan

Following are the responsibilities of a parent to get an easy overseas education loan sanction,

  1. Maintain a High Credit Score

One of the initial steps parents should take when considering an education loan is to ensure they maintain a high credit score. All the lenders they visit will very first inquire about the creditworthiness of the borrower. A good credit or CIBIL score should be above 700 in India, is crucial for securing loans with favorable terms. Moreover, lenders will also check for any ongoing loans, so managing current debts responsibly is important. So, by prioritizing repayment of credit and maintaining a strong credit score, parents can increase their chances of obtaining a desirable loan deal for their child's education abroad.

  1. Research Loan Options

Parents should thoroughly research and compare education loan options offered by different banks or financial institutions such as Nationalized, Private, and Cooperative banks, international lenders, and Non-Banking Financial Companies (NBFCs). After comparing you get an idea about the loan terms such as interest rate, moratorium period, etc., and are prepared to choose an ideal lender among all the financers.

  1. Evaluate Collateral Requirements

As a co-borrower, you need to understand the two primary types of overseas education loans for financing your child's studies abroad journey i.e., secured, and unsecured. While secured loans demand collateral, unsecured loans do not require any security. Understanding this difference is very crucial as it informs parents about their financing options. They can then explore which banks give education loans without collateral for abroad, and which banks do not, ensuring they make informed decisions aligned with their financial capabilities and preferences.

  1. Understand the Tax Benefits

As per section 80E of the income tax 1961, one of the main advantages of an educational loan is the tax deduction on the interest payment. The tax benefits are available to both the loan applicant and co-applicant whoever pays the EMIs of the loan. Complete interest payments can be exempted from the total income, making the repayment cost lower.

  1. Encourage Financial Responsibility

Help your child understand the value of financial responsibility by teaching them about managing money wisely while studying abroad. Encourage discussions about the importance of budgeting and making thoughtful spending decisions in their host country. Additionally, instill a sense of independence by suggesting part-time work opportunities to alleviate financial pressure.

  1. Plan for Loan Repayments

Develop a solid repayment strategy considering the loan amount, interest rates, and monthly installments. It is vital to ensure the plan is practical and fits within your budget, allowing you to meet other financial commitments without difficulty. Missing EMIs can harm your credit score, affecting your ability to secure future loans. By proactively planning for repayments, you can stay on top of your education loan and maintain financial stability while fulfilling your obligations.

In conclusion, while the loan is primarily for the student's education expenses, parents should also provide emotional support and guidance throughout their child's academic journey abroad. It is important to stay informed about the student's academic progress and ensure they are making the most of their educational opportunity abroad.



For overseas education, student loan for USA, UK, Australia, and all major abroad study destinations, seeking professional advice can be valuable to help you navigate the process more efficiently and make well-informed decisions about loan options and repayment plans. Don't hesitate to reach out to loan advisors for help, as it can make the process much easier and less stressful.