Established in 1919 as a limited company, Union Bank of India (UBI) became a nationalized bank in 1969. Over the years, the bank has grown to offer a wide range of financial services, including personal banking, corporate banking, international banking, and education loans for studies in India and abroad. In 2020, Union Bank of India merged with Andhra Bank and Corporation Bank, making it the fifth-largest public sector bank in India. UBI provides both secured and unsecured education loans. The bank categorizes courses and institutions into specific lists and offers loan amounts based on these classifications.

Overview of Union Bank of India Educational Loan Scheme

Union Bank of India (UBI) offers education loans to support students pursuing studies in India and abroad. The schemes are designed to cover a wide range of courses, from school education to postgraduate programs, professional courses, and skill development programs

• Covers Studies in India & Abroad: Loans available for graduate, postgraduate, professional, vocational, and technical courses.
• Secured & Unsecured Options: Loan amount and type depend on course category, institution list, and repayment capacity.
• Categorized Institutions: Courses and institutions are grouped into specific lists (Prime A, Prime B, Non-Prime, etc.) to decide maximum loan eligibility.
• Broad Expense Coverage: Tuition fees, travel expenses, exam fees, library/lab fees, laptops, project work, and other education-related costs.
• Flexible Loan Amounts: Higher loan limits for premier institutions; moderate limits for general courses.
• Competitive Interest Rates: Rates vary based on institution category, loan amount, gender, and repayment type.
• Moratorium Period: Course duration + 1 year grace period before repayment begins.
• Repayment Tenure: Usually up to 15 years, making EMI manageable.
• No Margin for Smaller Loans: Generally no margin for loans up to a certain limit; margin applies for higher amounts.
• Subsidy Schemes Available: Eligible students can apply for government interest subsidy schemes like CSIS for economically weaker sections.

UBI Education Loans Without Collateral (Unsecured / Collateral-Free)

• Under certain schemes (such as “premier-institute / Category A / Tier-I” or government-backed subsidy/guarantee schemes), UBI offers unsecured education loans — i.e., loans with no collateral required.
• Typical limits: Loans up to ₹40 lakh for studies abroad under premium / selected-institute schemes can be offered without collateral.
• For domestic courses / standard education loans, smaller amounts (often up to ₹4 lakh or ₹7.5 lakh) may not require collateral.
• Even for unsecured loans covering abroad studies and premium institutions, UBI may cover full expenses — tuition fees, living costs, travel, etc.
• Repayment terms: Moratorium during course + sometimes a grace period (varies by scheme), followed by long-term repayment (often up to ~15 years after moratorium).
• Additional requirement: Even for unsecured loans, a co-applicant/guarantor (usually parent/guardian) is mandatory.

When unsecured loan is possible

• Student admitted to a “premier” / “Category A / Tier-I” college (domestic or abroad) under UBI’s approved list.
• Loan amount is within the unsecured-loan threshold (e.g., up to ₹40 lakh for premium-institute abroad courses).
• Student/co-applicant meet co-applicant/guarantor requirements; other bank formalities satisfied.

UBI Education Loans With Collateral (Secured)

When the loan amount is larger, or when the course/institution doesn’t qualify under the “collateral-free” category, UBI requires collateral (or a third-party guarantee / property / securities) — making the loan a secured one. Here’s how that works:

• For large loans (e.g., abroad courses or expensive premier-institution studies) beyond unsecured limits, collateral is required.
• Under certain schemes, up to ₹150 lakh (₹1.5 crore) may be sanctioned — but collateral covering 50% to 100% (or more) of loan + interest accumulation must be provided.
• Acceptable forms of collateral include immovable property (house, flat, non-agricultural land), fixed deposits, government securities, LIC policies, or other “tangible security acceptable to bank” as per bank’s valuation rules.
• If 100% (or more) collateral is provided, margin money requirements may be waived.
• Even with collateral, a co-applicant / guarantor is mandatory.

When secured loan is required / used

• Loan amount exceeds the unsecured threshold (for abroad/premier courses or others).
• The course or institution is outside the “Category A / premier” list, or falls under regular domestic education loan scheme where loan amount is high.
• Applicant or family is willing and able to pledge assets (property, FD, securities, etc.) as collateral.

How UBI Decides: Collateral vs. No Collateral — Key Determinants

What It Means for Students — Pros & Cons

This is a special loan scheme for students admitted to top institutions in India.

Pros of Unsecured (No-Collateral) Loan

• No need to pledge family assets — reduces risk for borrower/family.
• Faster and easier processing (no property valuation, legal checks for collateral).
• Good for students whose families don’t own property or don’t want to mortgage anything.
• Enables access for meritorious students admitted to top institutes even if they lack collateral.

Pros of Secured (Collateral) Loan

• Allows much larger loan amounts — can fund expensive courses, international education at top universities.
• Sometimes gives better interest concessions if collateral is adequate.
• More flexibility in funding — tuition, living expenses, travel, equipment, etc., even for expensive courses.

Things to Consider / Trade-offs

• For secured loan: need to have acceptable collateral — property, FD, etc.; involves valuation and legal paperwork.
• Collateral ties up family assets — risk if borrower fails to repay.
• Even for unsecured loan, a co-applicant/guarantor is mandatory.
• Interest rates and margins may vary depending on collateral, loan amount, institution category.

What You Should Check Before Deciding (If You’re Planning to Apply)

• Whether your course/institution is listed under UBI’s “Category A / premier / Tier-I” list (this affects collateral requirement).
• The total loan amount you need — for modest courses/expenses, unsecured option may suffice; for expensive courses or abroad, you may need collateral.
• Co-applicant details: ensure co-applicant meets the bank’s requirements (as co-borrower / guarantor).
• If opting for secured loan: make sure you have acceptable collateral (property, FD, securities), and are comfortable pledging them.
• Understand repayment terms, moratorium period, interest rates, processing fees, and margin money requirements for your specific scheme.

What PayStudy Adds (If You Use It Along with UBI Loan)

• End-to-end assistance and hand-holding: PayStudy claims to help with everything — from application and document collection to loan processing and disbursement.
• Access to multiple lenders and customized loan options: PayStudy works with several banks/NBFCs and helps match you with the best loan offer depending on your profile (secured vs unsecured, loan amount, repayment capacity, etc.).
• Speed & transparency: Their platform promises a fully digital application with live tracking, avoiding long paperwork delays common when applying directly.
• Simplified pre-visa funding and disbursement: For overseas students, timely disbursement (tuition + living/travel costs) is critical — PayStudy facilitates this process, which is particularly useful when you have visa or admission deadlines.
• Support for large loans and different loan structures (secured or unsecured) depending on your requirements and background.

What This Means for You (As a Student)

If you plan to study abroad and need financial support — using UBI’s education loan (possibly via PayStudy) can make foreign education much more accessible:

• You don’t need to exhaust family savings — loan covers most expenses.
• Even big-ticket foreign degrees can become manageable thanks to high loan caps and long repayment periods.
• If you’re going to a top (premier) foreign institute — you might get significant funding without pledging collateral.
• Loan processing and disbursement becomes smoother and faster through a facilitator like PayStudy (less hassle, fewer delays).
• Flexibility in repayment and interest rates make planning easier once you start earning.

Why Students Prefer UBI Loan via PayStudy

• Faster processing due to PayStudy’s direct coordination with UBI.
• End-to-end support (file preparation, branch coordination, follow-ups).
• Better approval chances due to expert documentation and case structuring.
• Support for high-amount secured & unsecured loans.
• Zero charges — PayStudy services are free for students.