Types of student loans for higher education

What types of student loans are available for higher education?

Education loans are a critical financial aid that students apply for to fund their studies abroad. Different banks and financial institutions offer these loans at competitive interest rates, making quality education more affordable for students. Studying at renowned universities, especially abroad, opens doors to numerous opportunities. However, the cost of such education can be substantial. To bridge the financial gap, education loans for studying abroad become invaluable, enabling students from all backgrounds to pursue their dreams at top-tier institutions across the globe.

Types of Education Loans for Abroad Studies

Education loans are broadly classified into two types: secured loans and unsecured loans. Understanding the difference between these two is essential before choosing the right one for you.

Secured Education Loan

  • Collateral Requirement: Requires the borrower to offer collateral such as immovable property, fixed deposits, or insurance policies.
  • Interest Rate: Lower rate of interest.
  • Approval Chances: Higher chances of approval.
  • Repayment Period: Longer repayment period.
  • Loan Amount: Higher loan amount can be availed.
  • Repayment During Study: No repayment during the study period.
  • Parental Income: Not required for approval.

Unsecured Education Loan

  • Collateral Requirement: No collateral required.
  • Interest Rate: Higher interest rate, usually 1.5% - 4% higher than secured loans.
  • Approval Chances: More challenging to obtain due to higher risk for the lender.
  • Repayment Period: Comparatively shorter repayment period.
  • Repayment During Study: Some repayment during the study period.
  • Parental Income: Required for approval.

Types of Lenders Offering Education Loans for Abroad Studies

When considering student loans for studying abroad, you have three main categories of lenders to choose from: banks, Non-Banking Financial Companies (NBFCs), and international lenders.

  • Banks: These are traditional financial institutions that offer education loans for studying abroad and are divided into public and private banks.
  • NBFCs: Non-Banking Financial Companies provide various financial services similar to traditional banks but operate without a banking license.
  • International Lenders: Financial entities based outside your home country that specialize in offering education loans without collateral and cosigner.

Choosing the right type of education loan and lender is crucial for managing the financial burden of studying abroad. With numerous options available, it is important to evaluate all factors such as interest rates, repayment terms, and loan amounts. GyanDhan can assist you in navigating these choices, ensuring you find the best loan option to support your educational aspirations.