Education loans are basically a form of monetary assistance availed by students to meet the expenses associated with their studies. Education loans can be taken by means of funding, scholarships, financing and rewards, and are granted in cash, which has to be repaid to the lender along with a rate of interest. Students who wish to avail education loans are advised to borrow based on their needs as the repayment periods for these loans can vary to a great extent depending upon the lender and the amount borrowed by the student.
Most of the student loans available to individuals in India are granted at a relatively low rate of interest, and interest payments need not be made immediately. Students are usually granted a period of time before from the time they take the loan to the time they start making repayments.
Education loans are unsecured loans that can be used to cover expenses related to education, such as tuition fees, books, living expenses and other such expenses as transportation costs, etc. If you wish to avail an education loan but are unemployed or still studying, a co-signer may be required to avail an education loan, like an eligible adult such as a friend, parent or relative. The repayment of the loan can be done once the student has completed his/her education. Given the flexible terms and conditions associated with the repayment of an education loan, availing one is fairly simple and straightforward.
Different Types of Education Loan
There are a number of different education loans which are offered for different types of education programmes. Based on the type of the education that one wants to pursue, there are student loans for diploma and certificate courses, student loans for skill-based courses, student loans for studying abroad, and so on.
Whatever the course may be, there are two wide categories of the education loans on the basis of location.
- Domestic Education Loan – For educational courses within the geographical limits of the country.The borrowers have to meet various eligibility criteria and the lenders will approve the loan if the student has got a secured seat in an institute that meet the requirements of the lenders.
- Study Abroad Education Loan - For educational courses outside the geographical boundaries of the country.Like domestic education loan, the borrower should get a secured seat in a college or university among the list of the eligible educational institutions to approve the loan.
In addition to these, the education loans can be further divided on the basis of a few other categories. These include the following:
On the basis of course of education:
The financial institutions also provide loans on the basis of course type the borrower selects. The following are the types of course based education loans:
- Graduate Student Loans: These education loans will be provided to the students who like to continue their education in the institutions within India. These loans are specifically for those students who plan to pursue postgraduate degrees. To avail this loan, the students should have completed their undergraduate program.
- Undergraduate Education Loans: These loans provide financial support to the students to pursue their undergraduate degree programs. The course duration of an undergraduate program can be three to five years after completing which the students get ample job opportunities.
- Professional Education Loans: Many banking institutions and NBFCs provided loans to the students who are willing to opt for career education.
On the basis of security of collaterals and/or guarantee:
The following are education loans provided based of security of collaterals or guarantee:
- Loan against deposits: Education loan can be availed against recurring deposits or fixed deposits or gold deposits.
- Loan against property: Banks and NBFCs also provide education loan against immovable assets such as residential land/agricultural land/ house/flat, etc.
- Loan against securities: The borrower can avail education loans against debentures/bonds/equity shares.
What is a Study Abroad Education Loan?
As the name suggests, a study abroad education loan is a loan which can be availed for pursuing a course of education abroad. On the basis of the type of course, there are multiple options which are available under the study abroad education loans.
Following are the Education Loans in India
- Undergraduate Education Loan
- Professional / Graduate Education Loan
- Career Education Loan
- Loans for Parents
Undergraduate Student Loans
Undergraduate student loans can be availed by individuals who have completed secondary education and wish to undertake a three or four years course to enhance their job opportunities.
Professional / Graduate Student Loans
Professional / graduate student loans can be availed by students who wish to pursue advanced degrees or higher education at colleges across the country. An undergraduate course must be completed in order for the student to apply for a graduate student loan.
Career Education Loan
Career education loans can be availed by students who wish to attend undergraduate career oriented programs at trading and technical schools and colleges across the country.
Loans for Parents
Parents of students can avail these loans, which are unsecured, to meet expenses related to their child’s education, such as tuition fees, living expenses, books, uniforms, and other expenses such as transportation costs. The loan can be availed by not only parents, but also other adult relatives who wish to enrol their children in secondary schools, military elementary schools, religious, private or non-public schools across the country.