How Currency Risk and Flexibility Are Redefining Study Abroad Loans in 2026

Studying abroad is a life-altering experience, but it is also costly. The gap in education abroad may be filled through the study abroad education loan. Nonetheless, these loans continue to evolve in their structure, particularly in 2026, where the currency risk, flexibility in repayment and the moratorium policies are on the frontline.

One of the most important decisions for students is whether to borrow from banks or NBFCs (Non-Banking Financial Companies). Both institutions provide education loans for abroad studies, but their repayment structures, deferment options, and grace periods differ greatly.

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Banks vs NBFCs: Repayment and Eligibility

Public and private banks generally offer lower interest rates compared to NBFCs. Reserved Bank of India (RBI) controls them, and they usually give tax incentives under Section 80E of the Income Tax Act. Banks also issue education loans undera longer tenure that is easy to repay to students who are yet to enter the career aspect. However, they typically have stricter education loan for abroad eligibility and require more documentation, especially for loans above ₹7.5 lakhs, which often need collateral.

On the other hand, NBFCs like HDFC Credila, Avanse, InCred, and Auxilo are known for faster processing and customized repayment options. Many NBFCs are willing to offer high-value loans without collateral, which is particularly useful for students applying to top universities. However, the trade-off is higher interest rates and the absence of government interest subsidies or tax benefits.

Moratorium Periods and Deferment Flexibility

Most lenders provide a moratorium period, which is the time when repayment is postponed during the course and for a few months after graduation.

Banks providing educational loans for abroad usually offer a moratorium covering the study period plus 6–12 months grace after course completion. For example, State Bank of India’s Global Ed-Vantage Loan provides a moratorium with competitive interest terms and repayment flexibility.

NBFCs, meanwhile, also provide moratoriums but with a key difference—simple interest is charged during the deferment period. This means that while students are not required to make full repayments during their studies, the loan amount continues to accrue interest, which may lead to a higher total repayment burden in the long run.

Which Bank Gives an Education Loan Without Collateral?

For students worried about collateral, both banks and NBFCs provide solutions.

• Banks like SBI, Bank of Baroda, and Union Bank of India offer unsecured loans up to ₹40–50 lakhs for students admitted to top-ranked universities.
• Private banks such as ICICI Bank and Axis Bank also offer unsecured loans up to ₹75 lakhs–₹1 crore, but they usually charge interest during the moratorium.
• NBFCs like Avanse, InCred, Auxilo, and HDFC Credila provide unsecured loans of up to ₹1.25 crore, with highly flexible repayment structures but higher rates.

The Role of Currency Risk

Another factor shaping student education loans for study abroad in 2026 is currency risk.

The students who borrow in Indian Rupees (INR) and make payment in U.S. Dollars, Euros or Pounds are prone to exchange rate fluctuations. This implies that the real value of repayment may increase tremendously in case the Indian Rupee depreciates against the foreign currencies.

Some banks and NBFCs are now offering forex-linked repayment solutions or allowing students to repay loans in foreign currency accounts, which helps reduce exchange loss risk. However, these features are still evolving and vary between lenders.

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Conclusion

A number of banks and NBFCs are currently providing forex-based repayment options or enabling students to repay loans in foreign accounts, which minimises the exposure to the exchange losses. But these are still developing, and differ across lenders. For students, the decision comes down to balancing interest costs, moratorium flexibility, and currency risk exposure.

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