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The Varying Shapes and Sizes of Student Loans

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The Varying Shapes and Sizes of Student Loans

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A student loan sounds like something easy enough to understand, a loan for higher education, right? Student loans come in all sorts of shapes and sizes. If you’re considering applying for one, knowing the different types of student loan options available can help you make a smarter decision about which kind of loan to apply for. 

Types of student loans in India 

Depending on different criteria like the location of the college or university, the nature or level of the course and the collateral sought, there are different kinds of education loans you can apply for.


One criterion for classifying student loans into different categories is the collateral requirement or the lack of it. Based on this, the following types of student loans are available. 

Loan against deposits, property or securities 

These are secured loans where an asset like a deposit, a house property or securities must be pledged as collateral to avail of the loan. Typically, education loans over ₹7.5 lakh require some kind of collateral. 

Loan against a third-party guarantee 

For these loans, no asset needs to be pledged as collateral. However, the lender will require a guarantee from a third party to disburse the loan. Generally, student loans over ₹4 lakh but below ₹7.5 lakh require a third-party guarantee. 

Unsecured loans

As the name suggests, these loans require no collateral or guarantee. Typically, student loans below ₹4 lakh do not require any kind of collateral or third-party guarantee. 


There are different kinds of courses that students may want to pursue. Depending on the level of education that the course belongs to, you can avail of the following types of student loans in India.

Undergraduate loans

Undergraduate courses are typically 3 to 4 years long. Undergraduate loans can be availed for both domestic as well overseas courses from a bank or a financial institution. 

Postgraduate loans

Some students may want to pursue a postgraduate program right after their undergraduate courses. Postgraduate loans can cover the costs of these courses. Like undergraduate loans, these loans can also be taken for both domestic and foreign postgraduate programs.  

Career development loans

Also known as professional education loans, this kind of financing is offered to professionals who wish to go back and pursue further education after a few years of working. The purpose of such education may be to further their career or to upskill or reskill themselves to better fit into the job market. 


There are different kinds of student loans based on the location of the university or the institute in which you are planning to pursue the course, either in India or abroad. Depending on these criteria, the following types of student loans are available. 

Domestic student loan

This type of student loan can only be availed if you wish to be admitted to an educational institution that is located in India. Apart from this, different lenders may have their own criteria that need to be met. 

Overseas student loan

To qualify for this type of student loan, the educational institution that you will be enrolled in should be located outside India. In addition to the course fees, overseas student loans may also cover the cost of air travel, accommodation, and other costs that students may incur.

Each type of student loan is tailored to meet specific educational requirements and comes with its own advantages. Take some time to figure out your financial position so that you don’t end up with a loan you struggle to repay. The Fi Money app can help you keep track of your income and expenditure across bank accounts to give you a holistic view of your finances. 

Frequently Asked Questions 

  1. What loan amount can a graduate student get on a student loan?

Typically, the amount of financing that you will be eligible for depends on the type of course you wish to pursue and whether you want to pursue that course in India or abroad. The quantum of loans can vary from one bank to another, as well as from one student to the next. That said, under the National Backward Classes Finance & Development Corporation’s (NBCDC’s) loan scheme in India, the maximum amount of education loan is capped at ₹15 lakh for studying in India and ₹20 lakh for studying abroad. 

  1. How much money does FAFSA give graduate students?

Graduates or professionals studying further can expect to get student loans up to $20,500 from FAFSA or the Free Application for Federal Student Aid. This is typically offered as a direct, unsubsidised loan. 

  1. Does FAFSA cover graduate school?

Yes, FAFSA offers education loans for students attending graduate schools too. So, if you are applying for graduate school, you can get a student loan to cover the costs. 

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