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The Varying Shapes and Sizes of Student Loans

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January 12, 2023


What’s Inside

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 decide 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 3different kinds of education loans you can apply for.

1. Collateral-based

One criterion for classifying student loans into different categories is the collateral requirement or lack thereof. 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. 

2. Course-based

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 from a bank or financial institution for domestic and overseas courses. 

Postgraduate loans

Postgraduate loans are available for students pursuing advanced studies directly after their undergraduate courses. These loans cover the expenses of postgraduate programs, both domestic and international, similar to undergraduate loans.

Career development loans

Professional education loans are provided to professionals seeking to pursue further education after gaining work experience. These loans aim to support career advancement, upskilling, or reskilling to enhance employability.

3. Location-based

student loans are based on the university's location or the institute where you plan 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 in India. Apart from this, different lenders may have criteria that must 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.

To conclude 

Each type of student loan is tailored to meet specific educational requirements and has 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 you will be eligible for depends on the course type 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 and 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. 

2. How much money does FAFSA give graduate students?

Graduates or professionals studying further can expect 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. 

3. 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. 


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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