Choosing the Right Education Loan: Factors to Consider

When it comes to higher education, one of the first thoughts that comes to mind is how are you going to fund the course. These days, education loans have become a popular option among students to help them pursue courses at their desired colleges or universities.

However, finding a reliable and suitable education loan can be a challenging process, given the different schemes and loan terms offered by various education loan lenders. So, if you are finding it difficult to choose the right education loan, we are here to help you.

In this blog, we will look at the factors that you must consider while picking an education loan for yourself. But first, let us understand what an education loan is.

What is an Education Loan?

Simply put, an education loan is a financial aid that you can avail as a student to pursue your education. The education loan amount covers tuition expenses, living expenses, course materials, and other related expenses. The repayment of such loans is usually deferred for the duration of the course and starts once you have completed the entire degree.

What are the Types of Education Loans?

Education loans in India can broadly be categorised based on two factors- based on course location and based on collateral.

Based on the course location

Domestic Education Loan:

You can avail this education loan if you choose to pursue your higher education at any university in India.

Study Overseas Education Loan:

If you wish to study abroad, you can avail secured overseas education loans to realise this dream.

Based on collateral

Secured loans:

Generally, lenders require you to pledge collateral for an education loan with a large principal amount. This collateral could be assets like a house, gold, debentures, bonds, agricultural land, etc. The education loan interest rates are usually lower in such cases as the lender is at lower risk.

Unsecured loans:

Here, you need not pledge security and can avail an education loan without providing any collateral. However, such loans may levy a higher rate of interest because of the increased risk exposure for the lender.

What Should You Consider Before Taking an Educational Loan?


Here are some factors you must consider before applying for a personal loan for your education expenses:

Interest rates:

When you avail an education loan, you will have to bear the interest rates and processing charges. The education loan interest rates mainly depend on the type of course you opt for, the university, and your academic track record. Other factors like your credit rating, collateral, etc. also impact the interest rates. Hence, to get a loan at the lowest possible interest rate, you must ensure that you have a good credit rating before applying for an education loan.

Loan repayment:

The education loan repayment terms can differ for various lenders. Some lenders offer a moratorium period for the repayment of education loans. Here, your loan repayment will start only after your course ends. In loans without a moratorium, your loan EMI payment cycle starts immediately after the disbursal. Hence, you must know the loan repayment terms before availing the loan.

Tax Planning:

While availing an education loan, you must note that under Section 80E of the Income Tax Act, you can claim a tax deduction on the education loan interest paid for yourself, your spouse or children.


Funding your higher education with your own finances may seem like an ideal plan, however, it may not be possible due to the rising cost of education. Hence, to avoid excessive costs, you must consider the above factors, compare various education loan options, and then choose one that suits your needs. At CASHe, we offer instant loans for students to help them pursue the education of their choice. Know more about the instant education loans at CASHe and apply now!