Education Loan for MBBS Abroad: Banks, Interest Rates, Collateral and Tax Rules (2027)

Can you get an education loan for MBBS abroad?

Yes, but the loan you get depends on three things more than on your marks: where you study (lenders keep country and university lists), how much you borrow (above ₹7.5 lakh, public banks want collateral), and who co-borrows (parents' income and credit record). Families who start the conversation with a bank only after the admission letter often discover that their chosen country is not on the lender's list.

This guide summarises what lenders publish on their own websites as of November 2026. Rates are linked to RBI's repo rate and change often, so get a written sanction letter before you pay any fee. For what the money must cover, use the cost calculator and our cheapest countries guide.

Education loan options at a glance

Sources: lenders' official pages, checked November 2026. Rates are starting or headline rates; your rate depends on credit profile, collateral and institution.

Public-sector banks

SBI Global Ed-Vantage

SBI's study-abroad scheme lends above ₹7.5 lakh and up to ₹3 crore for regular degree courses "in any discipline" at foreign universities. Key terms from SBI's page (updated 7 September 2026) and rate card (updated 22 October 2026):

• Interest: 9.65% with collateral; 9.15% for select institutions. The rate equals SBI's External Benchmark Rate of 8.15% (repo 5.50% + 2.65% spread) plus a margin, so it changes when the RBI changes the repo rate.
• Girl students: 0.50% concession on the general rate.
• Collateral: tangible security is required; third-party collateral other than parents is accepted. Collateral-free loans up to ₹50 lakh are offered only for a list of select premier institutions.
• Repayment: EMIs over up to 15 years, starting 6 months after the course ends. Interest during the course and moratorium is simple interest and is added to the principal.
• Processing fee: 0.50% of the loan, minimum ₹10,000 and maximum ₹50,000, plus GST.
• Countries: the USA, UK, Canada, Australia, Singapore, Japan, Hong Kong, New Zealand, the UAE and a list of European countries that includes Russia, Poland, Italy, Germany and the Czech Republic.

Medicine is not mentioned either way. If you are heading to Russia or an EU country, this is the scheme to ask about first; for Kazakhstan, Kyrgyzstan, Georgia or China, ask SBI whether another scheme applies.

SBI Student Loan Scheme, PNB Udaan and the IBA model scheme

For smaller amounts, public banks follow the Indian Banks' Association (IBA) model scheme:

• No collateral up to ₹7.5 lakh, with parents as co-borrowers. The government's Credit Guarantee Fund Scheme for Education Loans (CGFSEL) guarantees 75% of such loans, with no income limit.
• Margin (the share the family pays itself): nil up to ₹4 lakh and 15% above that for study abroad, at SBI, PNB and Canara Bank.
• Moratorium: course period plus one year at PNB and Canara Bank; up to 15 years to repay.

The catch for MBBS: SBI's Student Loan Scheme caps study-abroad loans at ₹7.5 lakh and its list of eligible foreign courses names programmes such as MS, MBA and MCA, not medicine; PNB Udaan's page also does not mention medicine. Ask the branch to confirm eligibility for a foreign MBBS in writing.

NBFCs and private lenders

Non-banking finance companies are often more flexible about countries, co-borrowers and collateral, at higher rates and fees.

• HDFC Credila: secured loans from 9.95% and unsecured from 11.25% (floating), origination fee up to 1.25% plus GST. Its MBBS page covers medical colleges in India and abroad, though its sample cost table lists only a handful of countries, including the Philippines.
• InCred: rates from 10.50%, advertising no collateral up to ₹1.5 crore (conditions apply).
• Auxilo: no upper loan limit and a processing fee of up to 5%; the countries listed on its site do not include Russia or Central Asia.
• Avanse: advertises loans of up to ₹2 crore; we could not verify its rates.

Before signing with an NBFC, compare the total cost: interest rate, processing fee, insurance add-ons, and whether the rate is floating.

How much will the loan really cost?

Two features of education loans surprise families: interest runs from the first disbursement, and unpaid interest during the course is added to the principal.

Example (illustration only, using SBI's published terms): you borrow ₹30 lakh at 9.65%, disbursed as ₹5 lakh at the start of each of six years. Simple interest accrues on each instalment until repayment begins six months after the course ends, adding about ₹11.6 lakh of interest. You then repay roughly ₹41.6 lakh over 15 years, an EMI of about ₹43,800 a month. Paying the interest during the course, if your family can, keeps the EMI close to ₹31,600 on the original ₹30 lakh.

Use these figures to judge affordability against a doctor's likely early income in India, and remember that registration comes at least 7 years after joining for a foreign graduate (see MBBS abroad vs private MBBS in India).

Government schemes: what applies abroad?

Most central subsidies are for study in India, not abroad:

Sources: Business Today, 30 July 2026, citing the Finance Minister's reply in the Rajya Sabha; Indian Bank's PM-Vidyalaxmi page.

The PM-Vidyalaxmi portal brings many banks onto one application platform, but its subsidy does not follow you abroad. Most families applying for a foreign MBBS loan go to the bank directly.

Tax: Section 80E and the new Income-tax Act

• Section 80E allows a deduction for interest paid on a loan for higher education of yourself or a relative, taken from a bank or financial institution. The income-tax department's guidance shows the deduction as the total interest paid, without a cap, and lists it only under the old tax regime.
• The new tax regime (section 115BAC) does not allow Chapter VI-A deductions such as 80E, apart from a few exceptions listed by the department.
• The Income-tax Act, 2025 came into force on 1 April 2026 and renumbers many provisions. Ask a tax adviser how the education-loan deduction applies from tax year 2026-27 before you plan around it.

Since the loan's co-borrower (usually a parent) often repays in the early years, check who can claim the deduction in your case.

Sending the money: LRS and TCS

Fees go abroad under the RBI's Liberalised Remittance Scheme (LRS), which allows a resident individual to remit up to US$250,000 per financial year; studies abroad is a permitted purpose. Your bank will ask for the admission letter and the university's fee invoice, and should pay the university directly.

Large remittances can attract tax collected at source (TCS). The rate depends on the amount sent in the year and on whether the remittance is funded by an education loan from a financial institution. Ask your bank for the current treatment before each transfer. TCS is not an extra fee: it is tax collected in the remitter's name, shows up in Form 26AS and the Annual Information Statement, and is claimed as a credit when the remitter files an income-tax return.

How to apply, step by step

1. Shortlist universities first, then check each lender's country and university list.
2. Get the full fee schedule for every year of the course in writing from the university.
3. Collect documents: admission letter, fee schedule, NEET scorecard, Class 10 and 12 marksheets, passport, KYC and income proof for co-borrowers, and property papers if offering collateral.
4. Apply to two or three lenders and compare sanction letters on rate, processing fee, margin and disbursement terms.
5. Ask for direct disbursement to the university for each year's fee.
6. Track the moratorium and interest every year, and pay interest during the course if you can.

Never borrow through an agent who takes a commission from the lender, and never accept a loan arrangement where the money passes through the agent's account. See our agent red flags guide. Scholarships are rare for MBBS abroad, but check the realistic ones in our scholarships guide.