Categories: Scholarships

How to Apply for an Education Loan: All you need to know

Whether you are pursuing an education in India or abroad, the high education and living costs make it difficult managing the expenses even with parental support or scholarship aid. For those without access to either, education loans prove to be the saviour.

Easily available and accessible to all classes of the society, education loans bring about a much-needed parity among those with privilege and those without by giving students an opportunity to pursue their education without regard to their financial situation.

Before applying for an education loan, however, there are many considerations that one must take into account. With so many options to choose from, loan products could be confusing for the layman to simply dive into and decide.

In view of the above dilemma, here’s a handy guide on the steps you need to take while applying for an education loan:

Calculate the Loan Amount

Time to take out your calculator and open a spreadsheet! Before applying for the loan, you need to know the amount you need. Account for all the expenses you need to cover – college fees, books, accommodation, living expenses, etc. while considering any contingencies. Once you finalize the amount you need, it will help you find the most suitable lender.

Research about Interest rates

The next important consideration is the interest rate. The rate varies from bank to bank but is generally lower for public sector banks. Women pay a lower rate as they get a 0.5 percent concession across banks. You may also have to decide between choosing a fixed or floating interest rate, which could be a tricky choice. Generally, floating rates are lower than fixed rates. You would do well to research across the spectrum to find the best interest rate for your loan.

Choosing the financial institution

The previous two considerations will give you a good idea of the financial institution to go for. You may also choose to look for banks or loan providers that have tie-ups with your University or College, in case you need the process to be speeded up. You may also want to check for collateral requirements, requirements for co-borrower, moratorium period and if the bank mandates margin money (requiring you to cover a percentage of the expenses out of your own pocket). Depending on your loan requirements or situation, any of these considerations could be vital for you.

Repayment Options

Once you’ve decided on all the other details, you would need to figure out your repayment options. Before committing to the time period for repayment, you may do well to figure out your expected future income. Search for the average pay offered during campus placements at your college to get a rough estimate, allowing you to plan the loan tenure and EMIs. Unless you do this wisely, you risk falling into a debt-trap.

Look for alternatives

Alright, scratch the previous steps – this is the first thing you ought to do! A loan is a debt and unless you repay it, it will not go away. You should always resort to it once you’ve exhausted all your other options. Try and find out if there is any other source of funding available, including financial aid, bursary, scholarship, grant, etc. that could potentially bring down the loan amount.

Remember, before you sign the loan document, read the fine print carefully and familiarise yourself with all the loan details so there are no unpleasant surprises later.

If you still have any queries, you may write to us at and we would be happy to help you out.

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Abhishek Saluja

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