When you dream of studying abroad, the first question that comes to your mind is: How will I pay for it?
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For Indian students, the rising cost of education abroad often leads to two main paths—scholarships or student loans.
Both seem useful. But one gives you free aid, while the other gives you money that you must repay. So, how do you choose between them? Which one is better for your future?
This blog breaks down the differences. It helps you weigh your options. We will explain how scholarships and loans work. We’ll show real-life examples. We’ll talk about pros, cons, and even a mixed approach.
Whether you’re aiming for the UK, USA, Canada, Australia, or Europe, this blog will guide you through the best way to fund your global education in 2025.
Understanding Scholarships
A scholarship is financial support given to a student to help cover tuition fees, living costs, or both. It does not need to be paid back.
Scholarships may come from:
- Governments (India or abroad)
- Universities
- NGOs
- Private companies
Some are based on merit. Others are based on need. A few are open to special categories—like women in STEM, Indian minorities, or sports talent.
Let’s explore the key types of scholarships:
1. Merit-Based Scholarships
These are given to students with high scores in academics, tests like IELTS or GRE, or achievements in other areas.
| Scholarship Name | Country | Eligibility | Coverage |
| Chevening | UK | Academic merit, leadership | Full/Partial tuition, stipend |
| Erasmus Mundus | EU | Strong academics | Full tuition, travel, monthly stipend |
| Fulbright-Nehru | USA | UG/Postgraduate merit | Tuition, airfare, stipend |
2. Need-Based Scholarships
These are given to students who cannot afford high tuition fees.
| Scholarship Name | Country | Income Limit (INR) | Coverage |
| Inlaks Shivdasani Foundation | USA/UK | Below ₹6 Lakh/year | Tuition + living |
| Tata Trust Scholarships | Various | Family income based | Tuition + one-time grants |
3. University-Specific Scholarships
Each university usually offers its own scholarship based on test scores, statements of purpose, or diversity.
| University | Scholarship Name | Eligibility |
| University of Melbourne | Graduate Research Scholarship | High academic record |
| University of Toronto | Lester B. Pearson Scholarship | Leadership + academic excellence |
4. Government Scholarships
Many Indian and foreign governments fund bright students.
- National Overseas Scholarship (India): For students from SC, ST, and OBC groups.
- DAAD Scholarship (Germany): For students going to German universities.
- Australian Awards Scholarship: For students from developing countries.
Benefits of Scholarships:
- No repayment
- Prestigious recognition
- Better CV/resume value
- Reduced financial burden on family
- May include travel, visa, or research funds
These clearly show the advantages of scholarships for students. But not everyone gets one, and the process can be competitive.
Understanding Education Loans
An education loan is borrowed money. You take it from a bank or NBFC. You repay it in installments after your course ends.
Unlike scholarships, loans are guaranteed—if you qualify, you will get funding. They are available even if your academics are average but your offer letter is from a top university.
Types of Education Loans
| Type | Description |
| Secured Loan | Needs collateral (house, land, FD, etc.) |
| Unsecured Loan | No collateral, but higher interest |
| Domestic Loan | For Indian courses |
| Overseas Loan | For international studies |
Top Banks & NBFCs Offering Loans in 2025
| Bank/NBFC | Max Loan (INR) | Interest (Avg) | Collateral Required? |
| State Bank of India (SBI) | 1.5 Cr | 10.50% | Yes |
| Axis Bank | 75 Lakh | 11.25% | Optional |
| HDFC Credila | 1 Cr | 12.00% | Yes/No (depends) |
| Avanse | 50 Lakh | 12.50% | No |
Loan Eligibility:
- Indian citizenship
- Confirmed admission in a recognized foreign university
- Co-applicant (parent/guardian)
- Creditworthiness
- These show how to get an education loan for abroad studies clearly.
Loan Features:
- Moratorium period: You don’t repay until 6–12 months after your course ends
- EMI structure: Flexible, 5–15 years
- Tax benefit: Under Section 80E of the Income Tax Act
Pros of Education Loan:
- Covers full cost of study
- Available for wide range of universities
- Quick disbursal (within 30 days)
- Improves credit history if repaid on time
But yes, it adds financial pressure. Repayment begins after graduation.
Key Factors to Consider While Choosing Between Scholarships and Loans
When Indian students look at study abroad funding, it’s not just about choosing what’s free vs. what’s borrowed. You must look deeper.
Here are the main points that will help you decide:
| Factor | Scholarships | Student Loans |
| Repayment | No repayment required | Must repay with interest |
| Availability | Limited and competitive | Easier if you meet basic eligibility |
| Application Timeline | Long process, may require essays, interviews | Faster process, especially with NBFCs |
| Amount Covered | May not cover total cost | Can cover tuition + living + travel |
| Eligibility | Merit-based, need-based, or special categories | Must have co-applicant, collateral (for some) |
| Certainty | Not guaranteed, selection-based | Guaranteed upon approval |
| CV/Resume Impact | High-value achievement | Neutral |
| Government Schemes | Yes (Inlaks, National Overseas, etc.) | Yes (CSIS, Dr. Ambedkar Loan Scheme, etc.) |
Think about these when deciding how to get loan for study abroad or go for a scholarship.
When to Prefer Scholarships
- You have excellent academics
- You belong to a financially challenged background
- You apply early (6–12 months in advance)
- You are applying for research/PhD programs
When to Prefer Loans
- You have secured a university admission but missed scholarship deadlines
- You need full funding without relying on selection
- You have a strong co-applicant
- You want to study in a professional program (MBA, MS, etc.)
Can You Combine Both? Hybrid Approach
Yes, you can. In fact, many Indian students now choose a hybrid approach—get whatever scholarship they can and fill the rest with a student loan.
This method lowers the burden of repayment while ensuring you can still cover all expenses.
Example Scenario:
- Tuition fee: ₹40 lakhs
- Scholarship won: ₹10 lakhs
- Student takes loan: ₹30 lakhs
This mix reduces EMI and pressure. It also ensures that you don’t lose out on an admission just because you didn’t win a full scholarship.
Pros of Combining Scholarships and Loans
- Balance between free aid and flexible funding
- Boosts your credibility with banks (if partial cost is already funded)
- Smaller loan = lower interest over time
Many students ask how can I get education loan for studying abroad after winning partial scholarships. This is where the hybrid model wins.
Final Verdict: Which Is Better?
When it comes to scholarships vs. student loans, there is no universal winner. What works best depends on your academic profile, financial background, career goals, and timelines. Here’s a quick summary:
| Criteria | Best Option |
| Strong academics + research interest | Scholarships |
| Needing full funding without delay | Student Loans |
| Partial scholarship received | Combine with Loan |
| Career-focused professional programs | Education Loan (with short ROI) |
| Financially weak family background | Scholarships (try govt. + NGO funds first) |
When thinking about how to get funding for study abroad, the trick is to prepare early. This gives you more time to apply for both.
Tips for Indian Students
To make the right choice between scholarships and education loans, keep the following points in mind:
1. Start Early
Begin your funding journey at least 12 months before your course starts. This lets you explore how to get loan for study abroad or how to secure a scholarship well before deadlines hit.
2. Maintain a Strong Academic Profile
Even if you’re going for a loan, a good GPA improves your chances. It may also fetch you better interest rates or unlock institutional grants.
3. Apply to Multiple Scholarships
Don’t rely on just one source. There are country-specific, university-based, and NGO-driven scholarships. Explore all.
Here are some well-known ones:
| Scholarship Name | Eligibility | Benefit |
| Inlaks Scholarship | Indian students, age under 30 | Up to USD 100,000 |
| Fulbright-Nehru | Master’s and PhD candidates | Full tuition + living |
| Commonwealth Scholarship | For UK-based programs | Full or partial tuition |
| DAAD Scholarship | German universities, technical courses | Tuition + monthly stipend |
| Erasmus Mundus | For European joint degrees | Tuition + travel + living |
Using these can reduce the loan you may need later.
4. Understand Your EMI Commitments
If you go the loan route, ask for an amortization schedule from the bank. This helps you calculate how long you’ll pay, what the EMIs look like, and how soon you can become debt-free.
5. Stay Updated on Government Schemes
Some Indian schemes support students who want to study abroad:
| Scheme Name | Eligibility | Benefit |
| Central Sector Interest Subsidy | Families with income < ₹4.5 lakh | 100% interest subsidy for moratorium period |
| Dr. Ambedkar Central Sector Scheme | SC/OBC students | Tuition + living + travel |
| Vidya Lakshmi Portal | Central platform to apply | Access to multiple loan options |
Understanding these improves your decision on how can I get education loan for studying abroad.
Conclusion
For Indian students aiming to study abroad in 2025 and beyond, both scholarships and student loans offer viable funding paths.
While scholarships are prestigious and debt-free, they are limited and highly competitive. Loans, though repayable, are accessible, quick, and often customizable based on your needs.
Rather than asking, “Which is better?” — ask yourself:
- What’s my academic and financial standing?
- What timelines do I have for application?
- Am I comfortable with post-study debt?
- Can I reduce the loan amount by winning a scholarship?
If you’re still unsure how to get an education loan to study abroad or navigate how to finance your study abroad with a mix of scholarships, a trusted study abroad consultant can help streamline this process for you.
Whether it’s finding benefits of scholarship to students or helping you understand how to get student loan to study abroad with better repayment options, expert support makes a difference.
Frequently Asked Questions
1. What is the difference between a scholarship and an education loan for studying abroad?
Scholarship is free money and you do not have to pay. It is provided either on merit or need. A loan is money received to utilize in paying school fees that you are obliged to repay with the accumulation of interest. Scholarships reduce your expense. Loans are useful when you do not get enough capital.
2. Are scholarships available for all countries and courses?
No, not all scholarships cover every country or course. Some are only for certain universities or fields. Always check the rules before you apply. Many countries do offer scholarships, but they have limits.
3. Can both scholarships and loans be used together to fund overseas education?
Yes, you can use both. If a scholarship covers part of your fees, a loan can cover the rest. Many students use both to manage costs. Just make sure you meet the rules for both.
4. How can Indian students find scholarships for studying abroad?
Indian students can check government sites like the National Scholarship Portal. They can also check university websites, private trusts, or study abroad consultants. Always apply early and read the rules well.
5. What are the eligibility criteria for getting a scholarship to study abroad?
Each scholarship has different rules. Most look at your grades, test scores, or need for money. Some also check your course or country choice. Read each scholarship’s terms before applying.
6. What is the interest rate on education loans for studying abroad?
Interest rates for education loans usually range from 8% to 13% per year. Rates depend on the bank and loan type. Some banks offer lower rates for top universities or girls.
7. Is it easier to get a loan or a scholarship for studying abroad?
It’s usually easier to get a loan. Banks mostly need proof of admission and income. Scholarships are harder as many students apply and only a few get them. But both need effort.
8. What documents are required to apply for an education loan to study abroad?
You need your admission letter, mark sheets, ID proof, passport, income proof of parents, and sometimes property papers. Some banks may ask for more. Always check the bank’s list.
