By GlobalEd Team | April 2026 | 15 min read | Education Finance
Rahul’s father runs a small tailoring shop in Jaipur. When Rahul got admission into a Master’s programme in Data Science at the University of Manchester, the joy lasted exactly three days — until the family realised that the INR 35 lakh in fees and living costs would require them to mortgage their home to get a bank loan. They did not own any property outright. The house was still under a joint family arrangement. The bank said no.
What Rahul’s family did not know — and what thousands of Indian families discover too late — is that an education loan for study abroad without collateral is no longer a rare exception. In 2026, it is a mainstream product offered by public banks, private banks, NBFCs, and even international lenders. The question is not whether such loans exist. The question is which one is right for your profile, your country of study, and your loan amount.
This guide covers everything: the best banks and NBFCs offering collateral-free education loans for studying abroad in 2026, exact loan limits, interest rates, eligibility criteria, the new PM Vidyalaxmi scheme, and a step-by-step application plan — all in one place. Finding the right education loan for study abroad without collateral is now the most critical financial decision an Indian student makes before departure.
EDUCATION LOAN FOR STUDY ABROAD IN 2026 — KEY NUMBERS
The education loan for study abroad without collateral has evolved dramatically — here is what every applicant needs to know for 2026.
India has 1.3 million students studying abroad. A significant and growing proportion fund this through loans rather than family savings. Here is the landscape at a glance before we go deeper.
Key Metric | 2026 Figure | Source |
|---|---|---|
Total Indian students studying abroad | 1.3 million+ | Ministry of External Affairs |
Max unsecured loan — public sector banks | Up to ₹50 lakhs (premier universities) | SBI / Bank of Baroda |
Max unsecured loan — private banks | Up to ₹75 lakhs–₹1 crore | ICICI / Axis Bank |
Max unsecured loan — NBFCs | Up to ₹1.25 crore | HDFC Credila / Avanse |
Interest rate range — public banks | 9.5%–12.5% per annum | BankBazaar / Shiksha |
Interest rate range — private banks / NBFCs | 10.5%–14% per annum | Industry data 2026 |
TCS on education remittances (2026) | Reduced to 2% (from 5%); 0% via loan route | Finance Act 2025 |
Moratorium period | Course duration + 6–12 months post-graduation | Standard across lenders |
Maximum repayment tenure | Up to 15 years | Standard across lenders |
PM Vidyalaxmi — interest subvention | 3% subsidy on loans up to ₹10L (income < ₹8L/yr) | Govt. of India 2024 |
Education Loan for Study Abroad Without Collateral: What Has Changed in 2026?
The biggest shift in the education loan market over the past two years is that the old rule — ‘no property, no loan beyond ₹7.5 lakhs’ — is effectively dead for most study-abroad profiles. Several forces drove this change:
1. The IBA model was extended. The Indian Banks’ Association model scheme originally set ₹7.5 lakhs as the collateral-free ceiling. But public sector banks have quietly extended this limit for students admitted to QS-ranked and other globally recognised universities — sometimes up to ₹40–50 lakhs without any security.
2. NBFCs entered the market aggressively. Non-Banking Financial Companies like HDFC Credila, Avanse, Auxilo, and InCred now dominate the unsecured high-value loan segment. They evaluate employability and earning potential rather than parental assets — making them ideal for students with strong academic profiles and admissions to reputable foreign universities.
3. TCS on remittances was cut. In a significant relief for education borrowers, Tax Collected at Source (TCS) on foreign education remittances was reduced from 5% to 2% in 2025. Better still, if you route your payment through the same bank that gave you the loan, many lenders waive TCS entirely — bringing the effective cost down to 0%.
4. PM Vidyalaxmi was launched. In November 2024, the Government of India launched the PM Vidyalaxmi Scheme — a central initiative providing collateral-free, guarantor-free education loans for students admitted to Quality Higher Education Institutions (QHEIs), with a 3% interest subvention for eligible families. Over 22 lakh students annually are targeted under this scheme.
THE MOST IMPORTANT THING TO UNDERSTAND ABOUT COLLATERAL-FREE LOANS
Lenders who skip the collateral requirement do not skip the risk assessment — they just shift what they assess. Instead of your parents’ property, they evaluate your academic performance, your university’s rank and employability record, your chosen programme’s earning potential, and your co-applicant’s income and CIBIL score. A strong profile in these areas can unlock significant unsecured funding.
Government Schemes: Start Here Before Approaching Any Bank
Before comparing individual bank products, every Indian student should check these two government-backed schemes — they offer the lowest effective cost of borrowing and should be your starting point.
1. PM Vidyalaxmi Scheme (Launched November 2024)
The PM Vidyalaxmi Scheme is the Government of India’s most comprehensive education loan initiative to date. It operates through a unified digital portal at pmvidyalaxmi.co.in, allowing students to apply to multiple banks with a single form.
Feature | Details |
|---|---|
Collateral requirement | Zero — completely collateral-free and guarantor-free |
Eligible institutions | 955 Quality Higher Education Institutions (QHEIs) identified via NIRF rankings |
Loan amount | No upper ceiling — covers full tuition + hostel + books + laptop + related expenses |
Interest subvention | 3% subsidy during moratorium for families earning up to ₹8 lakh/year |
Full interest subsidy | Available under PM-USP CSIS for families earning up to ₹4.5 lakh/year |
Credit guarantee | 75% government guarantee on loans up to ₹7.5 lakhs (so banks approve freely) |
Government allocation | ₹3,600 crore committed for 2024–2031; targets 7 lakh new students by 2031 |
How to apply | Register at pmvidyalaxmi.co.in → Apply to up to 3 banks with one form → Track online |
Processing fee | Only ₹200 + GST portal fee — zero bank processing charges |
IMPORTANT NOTE ON PM VIDYALAXMI FOR ABROAD STUDIES
PM Vidyalaxmi primarily covers institutions within India (QHEIs identified via NIRF). For abroad studies, the scheme’s full benefits may not directly apply — however, the participating banks (SBI, Bank of Baroda, PNB, Canara Bank, ICICI, Axis, HDFC) all have their own abroad-specific loan products. Use PM Vidyalaxmi as your starting point for checking government-backed options, then compare with bank-specific abroad schemes.
2. Central Sector Interest Subsidy (CSIS)
CSIS provides a full interest subsidy during the moratorium (study) period for students from families with annual income up to ₹4.5 lakhs. This means the government pays your interest while you study — you start repaying only the principal after graduation. CSIS applies to loans up to ₹10 lakhs from scheduled banks and is available through the Vidya Lakshmi portal.
Best Public Sector Banks for Education Loan Without Collateral Abroad (2026)
Public sector banks offer the lowest interest rates but have stricter university approval lists and longer processing times (typically 15–30 working days). They are the best starting point for students whose target university falls on their approved list.
01. State Bank of India — SBI Global Ed-Vantage [Public Sector Bank]SBI Global Ed-Vantage is the most popular education loan for study abroad without collateral among public sector lenders. | |
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SBI PRO TIP
SBI’s 0.50% interest concession for purchasing SBI Rinn Raksha life insurance, plus 1% concession for paying interest during study period, can bring your effective rate down significantly over a 10-15 year repayment tenure. Always ask the branch about all available concessions when applying.
02. Bank of Baroda — Baroda Scholar Scheme [Public Sector Bank]Baroda Scholar is a strong alternative education loan for study abroad without collateral for students at premier foreign universities. | |
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03. Union Bank of India — Union Education Loan [Public Sector Bank] | |
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Best Private Sector Banks for Education Loan Without Collateral Abroad (2026)
Private banks offer larger unsecured loan amounts than public banks, significantly faster processing (7–15 working days), and more flexible documentation requirements. The trade-off is a slightly higher interest rate — typically 0.5–1.5% above public sector rates. Private banks now offer the most competitive education loan for study abroad without collateral in terms of loan limits and processing speed.
04. ICICI Bank — Education Loan for Abroad Studies [Private Bank] | |
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05. Axis Bank — Education Loan for Overseas Studies [Private Bank] | |
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06. IDFC FIRST Bank — Education Loan Abroad [Private Bank] | |
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Best NBFCs for Education Loan Without Collateral Abroad (2026)
NBFCs (Non-Banking Financial Companies) are the go-to option for students who need large unsecured loans, face rejection from banks due to co-applicant income issues, or need faster processing. They evaluate your earning potential and university reputation more heavily than parental assets. The trade-off is a higher interest rate — typically 11–14%.
07. HDFC Credila — Education Loan for Abroad [NBFC]HDFC Credila offers the highest education loan for study abroad without collateral limit among all Indian lenders — up to ₹1.25 crore. | |
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HDFC CREDILA PRO TIP
HDFC Credila offers a unique ‘pre-approved loan’ for students who have received a conditional offer of admission but not yet the final Letter of Acceptance. This is valuable because it lets you demonstrate financial capacity to the university — which can strengthen your visa application.
08. Avanse Financial Services — Study Abroad Loan [NBFC]Avanse is particularly popular for students seeking an education loan for study abroad without collateral with non-traditional co-applicant income. | |
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09. Auxilo Finserve — Study Abroad Education Loan [NBFC] | |
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10. InCred Financial Services — Education Loan Abroad [NBFC] | ||
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International Lenders: For When Indian Banks Say No
For students whose target university is not on Indian lenders’ approved lists — or who need 100% funding with no Indian co-applicant — international lenders are worth considering. They operate in USD/GBP/EUR and do not require an Indian co-signer or collateral. When Indian lenders decline your education loan for study abroad without collateral, international lenders like Prodigy Finance are the next option.
Lender | Best For | Loan Amount | Interest Rate | Key Condition |
|---|---|---|---|---|
Prodigy Finance (UK-based) | STEM / MBA at top 1,800+ partner schools | Up to USD 220,000 | 11–14% APR (USD) | University must be a Prodigy partner |
MPOWER Financing (USA-based) | STEM students at US/Canada universities | Up to USD 100,000 | 13–14% APR (USD) | Must be within 2 years of graduation |
Leap Finance (India-origin, USD) | USA Master’s programmes | Up to USD 100,000 | 11–14% APR (USD) | Top US university required |
WARNING ON INTERNATIONAL LENDERS
Interest rates on international lenders are in USD/GBP — not INR. A 12% USD rate is far more expensive than a 12% INR rate once you account for currency risk. If the Indian Rupee depreciates by 5% against the USD during your repayment period — which has happened historically — your effective repayment cost in rupee terms increases significantly. Only use international lenders if Indian options are unavailable for your profile.
Side-by-Side Comparison: All 10 Lenders at a Glance
Lender | Type | Max Unsecured | Interest Rate | Processing Time | Best For |
|---|---|---|---|---|---|
SBI Global Ed-Vantage | Govt Bank | ₹50 lakhs | 8.65–11.15% | 15–25 days | Lowest rate; top QS universities |
Bank of Baroda | Govt Bank | ₹40 lakhs | 9.70–11.45% | 15–25 days | Premier foreign universities |
Union Bank | Govt Bank | ₹40 lakhs | 9.90–11.60% | 15–25 days | PM Vidyalaxmi applicants |
ICICI Bank | Pvt Bank | ₹1 crore | 10.50–13.50% | 7–12 days | Large amounts; fast processing |
Axis Bank | Pvt Bank | ₹75 lakhs | 10.70–13.70% | 7–15 days | Strong co-applicant profiles |
IDFC FIRST Bank | Pvt Bank | ₹1 crore | 10.00–13.00% | 7–12 days | Competitive private bank rate |
HDFC Credila | NBFC | ₹1.25 crore | 11.00–14.00% | 5–10 days | Highest unsecured limit |
Avanse | NBFC | ₹1.25 crore | 11.00–13.50% | 7–12 days | Non-traditional co-applicant income |
Auxilo | NBFC | ₹75 lakhs | 11.00–14.00% | 5–10 days | Weaker co-applicant profiles |
InCred | NBFC | ₹75 lakhs | 12.00–14.50% | 5–7 days | Most flexible eligibility |
Need Help Choosing the Right Education Loan? GlobalEd’s counsellors compare 10+ lenders for your profile — country, course, loan amount, and co-applicant income — and help you get the best rate before you apply. Book FREE Consultation at globaled.co.in | +91 9217112502 |
Who Qualifies for a Collateral-Free Study Abroad Loan? Full Eligibility Checklist
Lenders evaluate six key factors for unsecured education loans. Understanding these helps you predict which lenders will approve you — and at what interest rate. Six key factors determine whether you qualify for an education loan for study abroad without collateral — and at what interest rate.
Factor 1: University Ranking and Reputation
The single most important factor for any lender. Students admitted to QS Top 500 or NIRF-ranked global institutions automatically qualify for higher unsecured limits. Ivy League, Russell Group, G8 Australian universities, IIT-equivalent German technical universities — these open the door to the maximum unsecured limits. Less-known private colleges or non-ranked institutions will face lower limits or may require collateral.
Factor 2: Co-Applicant Income and CIBIL Score
Most Indian banks and NBFCs require a co-applicant (usually a parent or guardian) with a minimum monthly income of ₹30,000–₹40,000 (net of obligations). The co-applicant’s CIBIL score should ideally be 700 or above. NBFCs like InCred and Auxilo are more flexible with lower co-applicant incomes but will charge a higher interest rate. A CIBIL score below 650 for the co-applicant is a significant barrier — work on improving it 6 months before applying.
Factor 3: Programme’s Earning Potential
Lenders assess the employment rate and average starting salary for graduates of your specific programme. STEM, MBA, Data Science, Finance, Engineering, and Healthcare programmes get the most favourable treatment. Arts, Humanities, and Social Science programmes may face lower unsecured limits or higher rates at some lenders — though Avanse and InCred are more accommodating here.
Factor 4: Student’s Academic Record
A strong academic track record (70%+ aggregate) signals that you are likely to complete the programme and gain employment. Some lenders specifically reward students with distinction-level marks with a 0.25–0.5% interest concession. Gap years without clear explanation can trigger scrutiny — be prepared to address them.
Factor 5: Proof of Admission (LOA/Offer Letter)
You typically need at least a conditional offer of admission. HDFC Credila’s pre-approved loan can be processed with a conditional offer. Most other lenders require a firm Letter of Acceptance (LOA) from the university before final sanction and disbursement.
Factor 6: Loan Amount vs Annual Salary Potential
Lenders informally apply a ‘loan-to-earning’ ratio. If your target starting salary in your field post-graduation is USD 60,000 per year (approximately INR 50 lakhs), a loan of ₹40 lakhs is well within what they are comfortable approving. A ₹1.2 crore loan for a programme with weak employment data would be scrutinised heavily.
Documents Required for Education Loan Without Collateral Abroad
Prepare this document set in advance — having everything ready in advance cuts processing time significantly. These documents are required across all lenders; individual banks may ask for additional items.
Student Documents
- 10th, 12th, and Undergraduate mark sheets and certificates
- Entrance test scores — GRE / GMAT / IELTS / TOEFL as applicable
- Proof of admission — Conditional Offer Letter or firm Letter of Acceptance from the university
- Statement of course expenses from the university (fee structure for all years)
- Passport (valid) and Student Visa (once received, for final disbursement)
- PAN Card and Aadhaar Card
Co-Applicant (Parent/Guardian) Documents
- PAN Card and Aadhaar Card
- Proof of income: Last 3 months’ salary slips (salaried) OR last 2 years’ ITR with computation (self-employed / business)
- Form 16 (last 2 years) — for salaried co-applicants
- Bank statements (last 6 months) of co-applicant’s savings account
- Proof of address — utility bill, Aadhaar, or rental agreement
- CIBIL score report (most lenders pull this automatically; have it ready for reference)
LARGE UNEXPLAINED DEPOSITS ARE RED FLAGS
If your co-applicant’s bank statements show a large, sudden deposit just before the loan application — from property sales, gifts, or transfers — attach a signed affidavit explaining the source of funds. Unexplained fund movements make lenders nervous and can delay or derail your application, even for unsecured loans.
Step-by-Step Application Guide: How to Get Your Education Loan Approved
Step 1: Calculate Your Total Loan Requirement
Add up: tuition fees (all years) + accommodation + living expenses + travel + health insurance + books and equipment + visa and immigration fees. Add a 10–15% buffer for currency fluctuation. This is your target loan amount. The first step in securing an education loan for study abroad without collateral is calculating your exact total funding requirement.
- Tuition: check the university’s international student fee page for each year
- Living costs: use your destination country’s official student cost of living guide
- Travel: two return flights per year is a safe assumption
- Currency buffer: if borrowing ₹50 lakhs but costs are in GBP, add 10-15% for INR depreciation risk
Step 2: Check Your Profile Against Lender Criteria
Before approaching any bank, honestly assess: Is your target university on their approved list? Does your co-applicant meet the minimum income requirement? Is your loan amount within the unsecured limit for your institution type? This self-assessment determines whether you go public bank → private bank → NBFC, or straight to an NBFC.
Step 3: Apply to 3 Lenders Simultaneously
Never apply to just one lender. Apply to at least 3 — ideally one public bank, one private bank, and one NBFC. Comparing sanction letters gives you negotiating power on interest rates. Some students successfully negotiate their NBFC rate down by showing a competing public bank sanction letter. Always apply to at least 3 lenders simultaneously when seeking an education loan for study abroad without collateral — competition gives you negotiating power.
Step 4: Request Pre-Visa Disbursal for GIC / Blocked Account
For Canada (GIC) and Germany (Blocked Account / Sperrkonto), you need to deposit funds before your visa is processed. Most top lenders — SBI, ICICI, HDFC Credila, Avanse — can disburse a partial amount pre-visa for this purpose. Specifically ask for this when applying — do not assume it is automatic.
Step 5: Negotiate Your Interest Rate
Interest rates on education loans are not always fixed — particularly at NBFCs. Factors that give you negotiating leverage include a competing sanction letter from another lender, a co-applicant with CIBIL 750+, admission to an Ivy League or Russell Group institution, and STEM field with strong employment data. Use these to push for a better rate before accepting.
Step 6: Understand the Moratorium — And Plan for It
The moratorium is the period during which you do not repay the principal. But interest continues to accrue — and if unpaid, it gets capitalised (added to your principal). A ₹40 lakh loan at 12% over a 2-year course + 12-month moratorium = approximately ₹14.4 lakhs of accrued interest before you even begin repaying. Some students pay interest during the moratorium to keep their total repayment burden manageable.
Hidden Costs to Watch For — Read Before You Sign
Before signing your education loan for study abroad without collateral, always read the fine print on these often-overlooked charges.The interest rate headline is just one part of the true cost of your loan. Before signing any sanction letter, ask specifically about these:
- Processing fee:
Most banks charge 0.5–2% of the sanctioned loan amount as a processing fee. On a ₹50 lakh loan, that is ₹25,000–₹1 lakh upfront. Some NBFCs waive this for strong profiles — ask.
- Prepayment / foreclosure charges:
If you plan to repay your loan early (say, after landing a high-paying job), some lenders charge 2–4% of the outstanding amount. Public banks typically do not charge prepayment penalties — NBFCs often do. Always check.
- Forex mark-up on disbursements:
When the bank converts your loan from INR to foreign currency for tuition payment, they apply a forex conversion mark-up — typically 0.5–2% above the mid-market rate. Ask for the exact spread before signing.
- Interest capitalisation during moratorium:
If you do not pay interest during your study period, it gets added to your principal. Always ask the lender to show you the post-capitalisation loan amount — this is what you will actually be repaying.
- Insurance bundling:
Some banks require or strongly recommend purchasing their life or health insurance as a condition of the loan. This adds to your cost. SBI’s Rinn Raksha is a genuine option if the interest concession it provides (0.5%) outweighs the premium — calculate this before agreeing.
Frequently Asked Questions — Education Loan Without Collateral for Study Abroad 2026
What is the maximum education loan I can get without collateral for studying abroad?
In 2026, the maximum unsecured education loan for studying abroad varies by lender. Public sector banks (SBI, Bank of Baroda) offer up to ₹40–50 lakhs without collateral for students at top QS-ranked universities. Private banks (ICICI, IDFC FIRST) go up to ₹75 lakhs–₹1 crore. NBFCs (HDFC Credila, Avanse) offer the highest unsecured limits at up to ₹1.25 crore for strong profiles.
Which bank is best for education loan without collateral for abroad studies?
There is no single ‘best’ bank — the right lender depends on your loan amount, university, and co-applicant profile. For the lowest interest rate, SBI Global Ed-Vantage (8.65% onwards) is unmatched. For the largest unsecured amount, HDFC Credila or Avanse (up to ₹1.25 crore) lead the market. For the fastest processing, InCred or Auxilo (5–7 working days) are strongest. Always compare at least 3 lenders before deciding.
Does the education loan cover living expenses, not just tuition?
Yes. Most education loans for study abroad cover tuition fees, hostel/accommodation charges, books and study materials, equipment (laptop), exam fees, travel expenses (usually one return journey per year), health insurance, and visa fees. Ask your lender for a complete list of ‘allowable expenses’ — each bank’s definition varies slightly.
Can I get an education loan without collateral if my parents have a low income?
It is harder but possible. NBFCs like Auxilo and InCred are the most flexible with lower co-applicant incomes — they may approve unsecured loans with co-applicants earning ₹20,000–₹25,000 per month for smaller loan amounts. Your university’s reputation and your programme’s earning potential become even more important when the co-applicant income is lower. The PM Vidyalaxmi scheme (for domestic/India-based studies) provides credit guarantees that allow banks to approve without collateral even for lower-income families.
How does the TCS waiver on education loans work in 2026?
Under Finance Act 2025, TCS on foreign education remittances was reduced from 5% to 2% for amounts above ₹7 lakhs. However, if you route your foreign remittance through the same bank that gave you the loan, many lenders (SBI, HDFC Credila) waive TCS entirely, bringing the effective rate to 0%. Always confirm this with your lender before finalising — the TCS saving on a ₹30 lakh remittance can be ₹60,000 or more.
What happens to my loan if I drop out or fail to complete the course?
Dropping out does not cancel your loan obligation. Repayment continues on the original schedule — though most lenders will work with you on restructuring if you communicate proactively. The moratorium period ends, and repayment begins as planned. In extreme cases of medical or other genuine hardship, some lenders offer restructuring or deferment — but this must be negotiated, not assumed. Always have a contingency plan before taking a large education loan.
Can I use a education loan to meet the GIC requirement for a Canada student visa?
Yes. The Guaranteed Investment Certificate (GIC) requirement for a Canadian study permit requires depositing approximately CAD $10,000–$20,635 into a Canadian bank account before your visa is processed. Most major Indian lenders — SBI, ICICI, HDFC Credila, Avanse — can pre-disburse a portion of your sanctioned loan amount specifically for the GIC deposit before your visa stamp. Ask your lender explicitly for ‘pre-visa partial disbursal for GIC’ when applying.
Final Word: The Loan That Works Is the One You Compare Before Signing
Education loans without collateral for study abroad have transformed from a niche exception to a mainstream product in 2026. Whether you need ₹20 lakhs for a UK Master’s or ₹1 crore for a US MBA, there is a lender in the market whose criteria you can meet.
But the single most common mistake Indian students and families make is approaching only one lender — usually the bank where they hold a savings account — and accepting whatever terms they are offered. Comparing three lenders takes one week. It can save you 1–2 percentage points on interest, which on a ₹50 lakh loan over 12 years is the difference between repaying ₹75 lakhs and repaying ₹85 lakhs.
Start early. Prepare your documents. Know your profile. And get expert help to compare the right lenders for your specific situation. In 2026, securing an education loan for study abroad without collateral is entirely achievable — if you compare the right lenders for your profile.
ABOUT GLOBALED
GlobalEd is one of India’s most trusted study abroad consultancies, based in Pitampura, New Delhi. Our counsellors help students not just get admitted — but get funded. We compare 10+ lenders for your profile and help you structure your loan application for the best possible outcome.
Need Help Choosing the Right Education Loan? |
Disclaimer: Interest rates and loan limits are indicative and change frequently. Always verify current terms directly with the lender before applying. All figures cited are based on publicly available data as of April 2026.
Related Reads: Full Scholarships for Indian Students 2026 | Canada Student Visa Rejection Rate 2026 | Cost of Living Abroad for Indian Students
