An education loan can make MBBS abroad possible, but it is a long commitment: repayment often continues while the graduate is still clearing the licensing exam and doing an internship in India. Here is how these loans work and how to borrow sensibly.
Who lends for MBBS abroad
- Public sector banks are the most common source of loans for MBBS abroad. Each has its own scheme and rules on which universities and countries they accept.
- Private banks lend too, often with stricter conditions.
- Non-banking finance companies (NBFCs) specialising in education may lend faster but often at higher interest. Some focus on postgraduate courses in a few countries and do not fund MBBS abroad.
- Loan marketplaces compare offers from several lenders. Only use regulated lenders, and never pay a “loan processing” fee to an individual.
The government’s Vidya Lakshmi portal lets you apply to several banks’ education loan schemes in one place.
Key terms explained
| Term | What it means for you |
|---|---|
| Loan amount | Covers tuition, hostel, travel, books and often insurance. Banks may cap it or ask for a margin you pay yourself. |
| Collateral | Usually required above about ₹7.5 lakh: property, fixed deposits or other security. |
| Co-borrower | Usually a parent; their income and credit history matter. |
| Moratorium | The period before repayment starts, often the course plus about a year. Interest usually keeps building up during it. |
| Interest | Often floating, linked to the bank’s benchmark rate. Some banks offer concessions for girl students or for paying interest during study. |
| Disbursement | Usually paid directly to the university, year by year, against fee invoices. |
Important for MBBS: the moratorium may end before the graduate has passed the licensing exam and completed the Indian internship. Plan how EMIs will be paid in that gap, or pay interest during the course to keep the balance down.
Tax benefits and TCS
- Section 80E: the interest (not principal) on an education loan from a financial institution or approved charitable institution, for higher education of yourself, your spouse or children, is deductible from taxable income for up to eight years from when repayment starts, with no upper limit on the interest amount. This applies under the old tax regime; check with your tax adviser which regime suits you.
- TCS: after Budget 2025, education remittances funded by a loan from a specified financial institution do not attract TCS. Self-funded education remittances above ₹10 lakh in a financial year can. This makes loan-funded remittances easier on cash flow.
Documents usually required
- Admission letter and fee schedule for all years from the university
- NEET scorecard, Class 10 and 12 mark sheets
- Passport and visa (or proof of application)
- Co-borrower’s identity, address and income documents (salary slips or income tax returns, bank statements)
- Collateral documents, if required
- Photographs and the bank’s application forms
Borrowing sensibly
- Borrow for the full course, not just the first year. Make sure the bank will disburse every year, and know what it needs from you each time.
- Calculate the total repayment, including interest built up during the moratorium, before you sign.
- Pay interest during study if you can. It reduces the balance significantly.
- Keep every fee receipt and bank confirmation for the bank and for tax records.
- Compare exchange rates for any amounts you send yourself, for example living money. A forex card or transfer service such as BookMyForex or Wise can be cheaper than a standard bank transfer; check current rates.
- Choose an eligible university. A loan for a program that does not meet NMC rules is a debt with no licence at the end. Check with our verification checklist.
For the full cost picture, see the total cost calculator, and for lower-cost options scholarships for MBBS abroad.
Frequently asked questions
Can I get an education loan for MBBS abroad without collateral?
Usually only for smaller amounts, about ₹7.5 lakh or less, depending on the bank and any credit guarantee scheme. Larger loans generally need collateral.
Which bank is best for an MBBS abroad loan?
It depends on the university, the amount and your collateral. Public sector banks are the most common lenders for MBBS abroad. Compare interest, margin, moratorium and disbursement rules from several banks.
Is education loan interest tax deductible?
Yes, under Section 80E for up to eight years, under the old tax regime, for loans from financial institutions or approved charitable institutions.
Is TCS charged on education loan remittances?
Education remittances funded by a loan from a specified financial institution are exempt from TCS following Budget 2025.
Sources
- TCS changes (Budget 2025): Business Standard
- Vidya Lakshmi education loan portal: vidyalakshmi.co.in
- Section 80E: incometax.gov.in
Not financial advice: loan terms and tax rules change. Confirm with your bank and a tax adviser. Last checked: October 2026.
