Parents work hard to provide their kids with a quality education because they believe it is crucial for living a successful life. But as a student applies for a reputable institution, the expense of education continues to rise. Not all parents can afford these costs, so they may need to take out an education loan to ensure that their children can finish their studies. These loans, which are also known as student loans, are readily available to Indian nationals with flexible payment terms and cheap interest rates. After a specific amount of time, they can begin making payments. For instance, following course completion. The education loans can be used to pay for costs associated with education, such as tuition, lodging, travel, books, etc. They can be secured or unsecured loans.

Types of educational loans in India

Numerous different educational programs may be funded through education loans or student loans. They are primarily classified as

Location-based loans

Domestic loans

Students who prefer to pursue their studies at Indian educational institutions are eligible for these loans. The loan will only be approved if the applicant has been admitted to an institution that complies with the lender's requirements, which will have a variety of requirements for education loan eligibility.

Study abroad education loans

The purpose of these loans is to aid students who wish to pursue their education overseas. Similar to domestic education loans, the applicant must have a seat at a school on the lender's list of acceptable colleges in order for the loan to be approved.

Course based loans

The type, of course, the borrower chooses will determine the sort of loan that is issued by financial institutions. It can be to finish their undergraduate degree or to enroll in prominent colleges like IITs and IIMs.

Undergraduate education loans

These loans are available to help students seek and finish undergraduate degree programmes. A three- or four-year undergraduate education will provide the student with many job opportunities. To be eligible for this loan, the applicant must have completed or been enrolled in secondary education.

Graduate student loans

Applicants who wish to continue their studies and get advanced degrees at domestic colleges are eligible to apply for these loans. It is for students who want to finish any professional program or pursue a postgraduate degree. The candidate must have completed an undergraduate program to be eligible for this loan.

Career education loans

Many banks and other financial organizations offer career education loans to cover the cost of training programs and courses that advance careers or make people employable. An applicant who intends to enroll in career-oriented courses at Indian colleges and technical and trade schools is eligible to apply for this loan.

Loan-based collateral type

An assurance that the loan will be repaid is required when applying for a secured loan. Various loans kinds include

Loan against property: It is necessary to pledge an immovable asset to the bank, such as land, agricultural property, residential land, a flat, a house, etc.

Loan against deposits: Loans against fixed deposits, recurring deposits, or gold deposits are available.

Loan against securities: Equities, bonds, and debentures can all be used as collateral.

Third-party guarantee: Loans can be obtained with the use of a certificate of guarantee from an employee or a home bank.

Loan for parents 

Even while parents work extremely hard to give their kids the best education possible, doing so has become increasingly difficult due to rising school prices. To help these people, a number of banks offer parent education loans that can pay for a child's education 100% of the time. It is an unsecured loan that can be used for tuition, books, transportation costs, and other costs associated with a child's education. This facility is accessible to relatives in addition to parents.

College parents loans

These are loans that can be applied to the cost of books and tuition, among other things. Parents are required to co-sign for these unsecured loans because there is no requirement for collateral if the borrower is employed while enrolled in school.

Repayment of educational loans in India

Loans for education help pay for both the associated expenditures and the cost of attending school. Like all other loans, these have repayment terms where interest must be paid on the principal sum. When these obligations are due for repayment depends on the duration of the agreed-upon repayment period and the type of loan obtained.

Contrary to popular belief, education loans can be utilized to pursue professional courses after completing the 10th and 12th grades in addition to studying abroad for higher education.