What are Student Loans?

Post By
Payal Jain
0 minute read
December 14, 2022
What are Student Loans?

Getting the best education for ourselves has always been a top priority. With a country as big as ours, there is no shortage of quality educational institutes that offer an eclectic variety of courses suited for the brilliant minds of our country. However, the cost of quality education has slowly been rising in our country. That makes it harder for most people in our country to secure a good future with good education.

This is where education loans come in. It helps numerous students to fulfil their dreams and get into the institute of their dreams.

Student loans, or as they are called in India, Education loans are very popular nowadays. It is a loan taken by a student to finance their higher education. They are classified as a good investment, which means that they are beneficial to society.

The beauty of student loans is that it gives returns on two channels: The first return is from the human capital channel as it allows you to get the best education you want, turning you into an asset for the country and the second returns are the subsequent financial returns due to better employment opportunities courtesy of higher education.


Students are the main borrowers of these loans and a co applicant is usually a parent who helps get the loan.

Student loans are offered for most courses in both undergraduate and postgraduate levels both in the country and outside of it. They are offered by all government banks and some private banks in the country.

The loan covers the tuition fees along with accommodation and other miscellaneous charges related to the institute or the course.

Now one thing that must be remembered is that they are very different from a scholarship or maybe a student grant. These need not be paid back as they have been essentially awarded to the student for their academic achievement.

A student loan however, is a financial aid taken from a bank to fund their college fees. It has to be repaid with interest in fixed installments over a period of time.


There are very simple parameters to get the loan, the student needs to be an Indian citizen, must have secured a seat in an institute recognised by the bank , either in the country or abroad and must have completed higher secondary.

There is no Age Limit for applying for a student loan as per the Reserve Bank of India, although some specific private banks may have an age range for the bank to grant loans. The age range is usually between 18-35 years.

Almost all of the financing is done by the banks. In India, 5% of the amount must be paid by the student and for institutions abroad, 15% of the amount must be paid by the student.

Here’s an interesting fact: The maximum loan amount allowed is Rs 1 crore

The repayment of the loan starts after completion of the course. Some banks give 6-12 months relaxation before the repayment of the loan starts to give the students an opportunity to get employment. The repayment term is usually 5-7 years but may be extendable, some even extend to 15 years.


Although applying for a student loan is easy and getting it is as easy, usually approved within two days, one must be careful about student loans.

Since the amount needs to be repaid, one must do through analysis of what they can afford and what the best course for them would be to repay the loan. A lucrative course that offers good employment opportunities is highly recommended as it helps in repayment of the loan with easy employment opportunities post the graduation of the student.

All over, student loans are encouraged but like all good things, must be approached with caution and appropriate study to make sure one does not fall into debt trap in the future.

About Author
Payal Jain
Payal Jain
Payal is the founder and CEO of Funngro, she comes with rich experience of handling complex technology solutions, managing business at scale and most importantly a parent of a 16 year old.