Education Loan Comparison: A Detailed Guide

    Updated on: 04 Sep 2023 8 min read

     

    The student community is a resilient one and the Covid-19 pandemic has not been able to dampen its spirit. Students in India are once again looking to go abroad for that esteemed “foreign degree” that will give wings to their careers. Though many factors play a role in their study abroad journey, one of the most deciding factors is the high cost associated with study abroad. Quite a lot of Indian students are hesitant to even dream of a foreign education for fear of the high cost associated with it, especially with the Covid-19 induced job and pay cuts. For these students, an education loan is the bridge that will make their dream a reality. An education loan takes care of all the study-related expenses at their dream foreign university and helps them overcome their financial constraints.

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    Things to Consider while comparing education loans

    Now that our readers have got a detailed understanding of differences between lenders and types of education loans, let us also list down some points that should be kept in mind when comparing loans - 

    1. Rate of interest - This tops our list of loan comparisons, simply because it plays a huge role in the total amount that you will eventually repay to the bank. Even a 1% difference in RoI has a substantial impact on your total interest paid, so compare the RoI before signing on any dotted line. Students should also check whether their RoI is fixed or floating. 
    2. Moratorium period - Most lenders offer a moratorium period during which the student does not have to make any loan repayment. The duration and conditions of the moratorium period vary from lender to lender, hence compare them well. 
    3. Processing fee - Comparing the processing fee is also a wise move as a lender can charge anywhere between 0% to 5% of the loan amount as a processing fee. Imagine paying INR 2 lakhs as a processing fee on a loan amount of INR 40 lakhs with a processing fee or 5% when you could have got it at a much lower or no processing fee. 
    4. Penalty on prepayment - This is another important comparison on our list. Lenders charge a prepayment penalty between 2% and 4% on education loans. Since many students wish to pre-pay their loan amount to avoid future interest amounts, having clarity on prepayment charges will help them plan their repayment better. 
    5. Interest subsidy scheme - Students would also compare if the loans they are comparing comes under the interest subsidy scheme.
    6. Loan tenure - A longer loan tenure would mean an increase in the total interest paid to the bank. Hence opting for a shorter loan tenure would be the wiser option. 

    Students can read here for a  more detailed understanding of the above-mentioned tips. 

    Still have doubts when comparing education loans? In that case, get help for free from GyanDhan for all your education loan-related queries now. 



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Written by Gurbani Kaur Suri

A keen lover of reading and loves to explore new things. A strong believer of spirituality and goodness.


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Reviewed by Aman Jain

Aman Jain graduated from IIT Kanpur, and currently functions as the CMO at GyanDhan. He is deeply passionate about creating equality in higher education and has directly interacted with 2 Lakh students in his 8-year-long journey.


Specializes in:
Education loan , Study Abroad Admissions


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GyanDhan is India's first education financing marketplace.



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