With so many types of Education Loans available, you might get confused about which loan option best suits your needs and financial situation. Therefore, it becomes important to know all the types of Student Loans offered by banks in India, whether you're looking to study in the country or abroad.
Types of Education Loans
Here are the different types of Education Loans available for students:
1. Based on location
- Domestic Education Loan: As the name suggests, a domestic Education Loan provides financial aid if you're looking to study at a college or university in India. These loans usually cover tuition fees, accommodation expenses and other educational costs you may incur during your years of study. Domestic Education Loans typically have lower interest rates as they are linked to the RBI’s repo rates. They also come with more flexible repayment terms.
You can take domestic Education Loans to cover the cost of your undergraduate programmes or postgraduate degrees. These loans help you focus on your studies and pursue your academic goals without undue financial stress.
- Overseas Education Loan: Education in foreign countries is expensive, so you should consider taking overseas Education Loans to cover the cost of your education at a college or university outside India. Such loans also cover other related expenses, such as hostel tariff, cost of study materials, travel, etc.
Usually, banks and non-banking financial companies (NBFCs) offer overseas Education Loans to students aspiring to study abroad at competitive interest rates. By taking overseas Education Loans, you can fulfil your dreams of studying at the institute of your choice. It can also open the doors to global opportunities for you.
2. Based on collateral
- Loan against property, deposits and securities: Students and their families are often required to pledge collateral for taking an Education Loan, for studies in India or abroad. Lenders usually accept various types of assets as collateral, including property, deposits, and securities. Loans with collateral are provided at attractive interest rates as they are considered secured loans. In such cases, lenders have more confidence in you and offer you credit at lower interest rates.
These financing options allow you to pursue higher education using your family-owned assets. You can take such loans for your undergraduate programme as well as for postgraduate degrees.
- Third-party guarantee: A third-party guarantee is when someone else promises to repay your loan if you cannot. Let's say you want to borrow money for school, but the bank is worried you might not pay it back. In that case, you could ask someone you trust, like a family member or friend, to guarantee the loan. They would promise to pay the bank if you couldn't. This gives the bank more confidence to lend you the money because they know there's another person who will step in if needed.
It's like having a safety net for your loan, making it easier for you to get the financial help you need for your education.
3. Based on course
- Career Development Loans: Professional and career development loans are low-interest loans that provide you with the flexibility to fund your courses and training to improve your career prospects without burning a hole in your bank account. Such loans fund educational programmes that contribute to the professional development of the nation’s professional workforce.
Career Development Loans are particularly beneficial if you're pursuing postgraduate courses or training to advance your career and skill sets. However, you are required to meet the eligibility criteria for taking a career development loan. Eligibility is based on the nature of the course or training and its alignment with career development goals.
- Postgraduate Loans: As the name suggests, a postgraduate loan funds your education and other expenses related to your postgraduate degrees. You can take a postgraduate loan to complete your master’s degree in any field or to fund the popular postgraduate programmes offered by top business schools in India or globally.
Simply put, Postgraduate Loans help you complete your postgraduate degrees without worrying about funds or needing to juggle between a college education and a part-time job. This allows you to completely focus on your studies, as you don’t need to worry about funding your education or other expenses related to your postgraduate degree.
- Undergraduate Loans: Last but not least, undergraduate loans are another type of Education Loan that you can take to fund your undergraduate programmes in colleges or universities in India or abroad. You can take undergraduate loans to fund your bachelor’s degree or baccalaureate, without putting an additional financial burden on your parents or doing a part-time job.
Undergraduate Loans provide you with an opportunity to study at leading colleges in India and across the world. These loans cover tuition fees and living costs. Repayment for these loans starts after graduation and once you earn a minimum salary.
List of courses covered under an Educational Loan
Courses covered under Education Loans typically include undergraduate, postgraduate and professional courses offered by recognised institutions. These loans can fund a wide range of programmes such as engineering, medicine, management, law, arts and sciences. Additionally, Education Loans can cover education courses both within the country and abroad.
In India, Axis Bank offers Education Loans that cover tuition fees, hostel charges (if any), the cost of books, etc. You can get a loan sanction even before getting admission to the college of your choice. The Education Loan funds 100% of the education costs, with no upper limit, so that you can fulfil your dream of studying at the top universities across the world.
Also Read: How to get an Education Loan in 6 easy steps?
Conclusion
By now, you must have understood that Education Loans are differentiated based on location, collateral and course. You can now choose to get the Education Loan best suited for your degree and financial needs.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
