What are the different types of an education loan for students?

Every year, lakhs of students graduate from colleges all over India. Many of these students will either opt for a job, or already have a job offer in-hand. The remaining students go for their higher studies. However, as many students are now opting for further education, which would help them in terms of their future, there has also been a rise in the cost of education for post-graduation courses. This increase could cause many students to drop their plans of opting for higher studies, especially if they are planning on going abroad. However, with the help of an education loan for students, they can easily achieve their dream without any worries. We have listed below the types of education loans you, as a student, can opt for:

What are the types of education loans?

If you are looking to apply for an education loan, then there are two types of loan that you could select: secured loans and unsecured loans. All the financial institutions such as banks, both PSBs and private banks, and NBFCs provide these loans. What is the difference between these two loans? We have given the details below.

1. Secured loans

The loan where you will be asked to provide collateral is called secured loan. The collateral, or security, that you will be asked to provide could be a property, a fixed deposit, or a life insurance policy. The amount of the collateral that you provide needs to match the amount of loan that you require. For example, if you want to apply for an education loan for study in India of Rs.40 lakhs, you will be required to provide collateral of the same amount.

2. Unsecured loans

When you apply for an unsecured loan, you will not be required to provide collateral for the loan. If you do not have the necessary collateral required to secure a higher loan amount, then you should apply for unsecured education loans for students. If you apply for an unsecured loan through a PSB, then you will only get a limited loan amount which could be insufficient. However, if you apply for the loan at a private bank or an NBFC, then you will be able to get the amount you require at a higher ROI. For example, if you want an education loan of Rs.60 lakhs, then you can apply for it at an NBFC to get the amount you require instantly.

Which loan should you opt for?

While each loan has its advantages, what kind of loan you want to apply for depends on your requirement. If you want a loan with a lower ROI, then you should apply for a secure education loan for students. However, if you want a higher loan amount without giving any collateral, then you should go for unsecured loans.

You can get a suitable and leading list of lenders when you run a search for ‘education loan abroad’. Apply for either type of loan as per your requirements. Also, have your doubts cleared by your loan provider before you apply for the loan.

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