₹20 lakh is the mid-point education loan for Indians heading abroad — enough to fund a 1-year Masters in the UK, Canada, or Australia with family contribution toward living expenses, but not enough for a full-ticket US program. It also sits right at the threshold between "non-collateral" and "collateral-needed" at most lenders. Here's what ₹20 lakh actually looks like across the top eight Indian education-loan providers.
Can I get ₹20 lakh without collateral?
Yes, in most cases — but it depends on your target school:
| Lender | Unsecured cap | ₹20L unsecured? |
|---|---|---|
| SBI | ₹40 lakh (at premier schools) | Yes, for listed schools |
| HDFC Credila | ₹75 lakh | Yes |
| ICICI Bank | ₹50 lakh | Yes |
| Axis Bank | ₹75 lakh | Yes |
| Bank of Baroda | ₹40 lakh | Yes |
| Avanse | ₹75 lakh | Yes |
| PNB Udaan | ₹40 lakh | Yes |
| IDFC FIRST Bank | ₹50 lakh | Yes |
The practical constraint isn't the lender's cap — it's the co-applicant income. Unsecured ₹20L loans typically require co-applicant (usually parent) with ₹75,000-₹1 lakh net monthly salary or equivalent ITR for self-employed.
Collateral option — when it helps
Pledging collateral (usually parental property or fixed deposit) against a ₹20L loan unlocks:
- Lower rates: 0.50-1.00% cheaper than unsecured equivalent.
- Longer tenure: up to 15 years post-moratorium vs 10 years unsecured.
- Relaxed co-applicant norms: income requirement drops significantly since the lender has physical backstop.
- Better loan-to-cost ratio: up to 100% of Cost of Attendance vs 85% unsecured.
For a ₹20L loan, the collateral-vs-unsecured rate gap is ~₹1.5-2 lakh saved over a 10-year tenure. If your parents own unencumbered property, the paperwork (2-3 weeks of legal due diligence) is usually worth it.
EMI on ₹20 lakh after moratorium
Education loans run in two phases: moratorium (study + 6-12 months) and repayment. If you pay only simple interest during moratorium, principal stays at ₹20L. If you pay nothing, interest capitalises and you'll start repayment on ₹24-28L.
| Rate | Tenure | Principal ₹20L (paid SI) | Principal ₹26L (capitalised) |
|---|---|---|---|
| 10% | 10 years | ₹26,430 | ₹34,360 |
| 11% | 10 years | ₹27,545 | ₹35,810 |
| 12% | 10 years | ₹28,695 | ₹37,300 |
| 11% | 15 years | ₹22,730 | ₹29,550 |
Reducing capitalised principal by paying ₹15,000-₹18,000/month simple interest during a 2-year Masters is the single most valuable decision on this loan. Lifetime savings: ₹8-10 lakh of interest.
Country-specific notes for ₹20 lakh
UK (1-year Masters)
₹20L typically covers tuition (₹15-18L) + first semester living. Visa evidence needs to show full tuition + £1,334/month living costs for 9 months (~₹12L in blocked/sanctioned funds). A ₹20L sanction letter from SBI or Axis usually suffices.
Canada (2-year Masters or diploma)
₹20L partially funds tuition (₹12-18L total) — SDS visa requires GIC of CAD 20,635 (~₹12.6L) upfront. Many students combine a ₹20L education loan with family contribution to the GIC.
Australia
₹20L covers ~70% of a typical 2-year Masters. GTE (Genuine Temporary Entrant) visa evidence similar to UK. Axis Bank has the strongest Australia-specific education loan product.
US (2-year Masters)
₹20L funds only the first year of most US Masters programs. Students typically pair a ₹20-30L loan from India with a US-side Sallie Mae or MPOWER Financing loan for year 2. Or parents supplement with home-loan top-up.
Europe (non-UK)
₹20L comfortably funds 2-year Masters in Germany (low tuition), France, Italy, Sweden. Some programs are nearly free of tuition — ₹20L is almost all living expenses.
Tax benefit — Section 80E
Every rupee of interest paid on the ₹20L loan is 100% tax-deductible under Section 80E for up to 8 years from repayment start. For a student earning ₹15 LPA paying ~₹2L interest annually, the deduction saves ₹62,400/year (31.2% slab). Over 8 years: ~₹5 lakh lifetime tax savings.
Documents you'll need
- Admission letter / I-20 / CAS / Unconditional offer letter.
- Detailed fee structure / Cost of Attendance breakdown.
- Student's academic records (Class 10, 12, UG mark sheets).
- GRE / IELTS / TOEFL scorecards.
- Co-applicant's PAN, Aadhaar, 3 months' salary slips, 6 months' bank statement, ITR 2 years.
- Collateral documents (if secured): property title, NOC, valuation report.
Compare and apply
Our education loans hub lists all eight lenders side-by-side with rate, unsecured cap, and moratorium rules. Use the AI loan finder with your target country and school — it filters to the lenders with active partnerships for your institution. For the strategic view on country choices and college tiers, read our best abroad education loan guide.
Frequently Asked Questions
Can I get ₹20 lakh education loan without collateral?
Yes, at all eight major lenders — provided your target school is on the lender's approved list and your co-applicant (usually parent) has ₹75K+ net monthly income. Premier-school students often get approval without stringent co-applicant income.
What is the EMI for ₹20 lakh education loan?
At 11% rate over 10 years post-moratorium, EMI is ₹27,545 if principal remains ₹20L (simple interest paid during study). If interest capitalises to ₹26L, EMI rises to ₹35,810. Always pay simple interest during study if family can afford it.
Which bank gives the cheapest ₹20 lakh education loan?
SBI (9.15-11.15%) and Bank of Baroda (9.65-11.40%) lead on rates for public-sector unsecured loans. HDFC Credila and Avanse are pricier but faster and more flexible on school approval.
Can I claim tax deduction on ₹20 lakh education loan?
Yes — Section 80E allows 100% deduction on interest paid for up to 8 years from repayment start. There's no upper cap on the deduction. Available to the person actually making the payment (student or parent co-applicant).
Loans Editor, OnePaisa Editorial
Prasanth writes on borrowing for OnePaisa — personal, home, car and business loans, and the credit-score questions that decide what a borrower is actually offered. Interest rates, processing fees and eligibility rules in his guides come from lender schedules of charges and official product pages, are cross-checked against OnePaisa's verified lender data, and are dated so readers can see how current they are. A rate that a lender publishes as a range is published here as a range, never as a single teaser number.
Work published under this byline follows OnePaisa’s editorial standards — how our guides are researched, fact-checked against primary sources, and corrected.