top of page

Understanding Education Loan

Education is central to the Human Resources Development and empowerment in any country. The extent of education has widened both in India and abroad covering new courses in diversified areas. Development of human capital is a national priority and it should be the aim of all that no deserving student is denied the opportunity to pursue higher education for want of financial support. An education loan is a type of loan designed to help students pay for post-secondary education and the related fees, such as tuition, books, and living expenses. It came into existence in 1995 started by SBI Bank and after that many banks started offering student loans.

The eligibility criteria for the education loan is that the student should be a citizen of India, the loan applicant must have attained the age of 18 else his/her parents will have to avail the loan, the student should have secured admission to foreign universities/ institutions and the student should have scored a minimum of 60% (50% for SC/STs) in the qualifying examination for admission to graduation courses.

Some of the factors to be considered while choosing an education loan are:

Select your bank

Select a bank that will provide you with the best postponement period interest rate and terms to pay back the loan.

Interest Rate

This is the most critical factor to be considered before taking an education loan. A difference of even 0.5% creates a big impact. Also, make sure to check whether the interest rate is floating or fixed although it depends on the loan amount.

Repayment Period

Check out this with the bank. Normally a student starts loan repayment after he/she starts earning and there are possibilities that earning does not start immediately after the course ends. So get this point checked as you would end up paying more.

Down payment

Whenever you take a loan, down payment should be deposited in the bank which is normally 5%-10% of the loan amount.


While taking a loan, the borrower needs to deposit security with the bank and this differs for each bank. So it is important to evaluate this aspect before making a loan application.

Other fees

Apart from interest rate and late payment fees, banks also charge a processing fee, documentation fee, and others. So always be informed about these charges and keep yourself up to date for any changes in any type of fees

In conclusion, the banks offer good services to the community by providing educational loans for the students who are unable to continue their higher education due to a lack of funds. Extra care should be taken before taking an education loan from any bank. Also, search for better offers in different banks and analyze the terms and conditions of the loan.


bottom of page