Top 5 Myths regarding Student Loans

Top 5 Myths regarding Student Loans

Even if you have flawless marks and test scores, obtaining funding for your international education can be difficult. Many crucial procedures are involved in applying to study in another nation, one of which is determining which kind of loans will best suit their needs.

In today's fast-paced society, where everyone wants things right now (even more than before), it appears that there isn't much time left to complete anything properly! When considering a move away from home or pursuing an advanced degree abroad.

This is due to the fact that, despite the many advantages of funding higher education abroad with an overseas education loan, there are some fallacies that make the idea of borrowing an education loan for the same a frightening process. This essay will address some of the prevalent misconceptions about obtaining a loan for higher education overseas, one by one.



This is merely a legend. Universities around the world allow applications from applicants from all walks of life, regardless of their social or financial conditions. At the end of the day, a student's academic ability takes precedence over their financial situation.

One of the advantages of funding higher education abroad with the help of an education loan is that people from financially disadvantaged families can apply. Such programmes enable students from economically disadvantaged backgrounds to study abroad despite financial constraints.


This claim is only a legend. Collateral security is required for education loans. This does not have to be the case on a consistent basis. The international student loan process divides education loans into two types, depending on whether or not collateral is required. To acquire an education loan in India, you must have a thorough understanding of both types of abroad education loans.

  • Secured Education Loan: A secured education loan is a loan that is backed up by collateral. For secured education loans, the standard abroad student loan process asks students to pledge one of three types of assets as collateral against their school loan. All of India's major government banks are lending these funds. The moratorium period, which is a loan holiday offered to all candidates before the payback period begins, is one of the most significant advantages of secured education loans acquired from government banks. This embargo gives other students enough time to obtain work and start repaying their student loans.


  • Unsecured Education Loan: An unsecured education loan is one that does not require collateral. These loans don't demand any kind of security. Private financial companies known as NBFCs (Non-Banking Finance Companies) and a few other private banks are the main lenders.

Top 5 Myths regarding Student Loans


Living expenditures are one of the two most crucial components of an education loan for further studies abroad, the other being tuition fees. Both governmental and commercial lenders provide overseas education loan programs that cover a student's complete expenses for the duration of their course abroad. In fact, an education loan covers practically all of the expenses that students are likely to incur during their time abroad.


When students apply for an international higher education loan, they usually have some idea of how their tuition charge will be paid. However, many students are still uncertain about how government banks distribute living expenses from school loans for study abroad.

Many students believe that their living expenses are simply transferred to the university by most banks. If you're thinking along the same lines, here's something to consider: this is a myth.

The living costs transfer mechanism used by major banks is different. Universities are never reimbursed for living expenses. It is, on the other hand, deposited into an FTC (Foreign Travel Card).

When students approach banks directly for an education loan for higher education abroad, they are frequently misled about this aspect of the education loan for the studies abroad disbursement process. It usually occurs because many bank officials are unaware of their bank's policies regarding the release of education loans for studies abroad. If you find yourself in a similar circumstance, please contact the financial team for assistance.

In the case of unsecured education loans, NBFCs and private banks distribute the amount needed for living expenses while studying overseas, based on the student's preferences.



This statement is somewhat true because the repayment period for an NBFC education loan without collateral begins a month after the loan amount is disbursed.

The repayment of student loans is heavily influenced by the policies of various lenders. The two primary types of education loan providers in India are government banks and non-banking financial companies (NBFCs) (Non-Banking Finance Companies). Government banks and non-bank financial firms (NBFCs) have quite varying laws and repayment regulations for school loans due to the types of loans they provide.

The majority of private banks offer a payment-free time. That is, candidates who acquired their education loans from private banks do not have to start paying back their debts until the moratorium period is through.

The moratorium period usually lasts for the duration of the course plus six to twelve months afterward (depending on your lending bank's rules). Banks calculate interest on a simple interest basis for this time period.


MYTH 5: Only transportable property can be used as collateral for a loan for higher education abroad.

There are two sorts of collateral security: tangible and immaterial. Immovable properties that meet the majority of the lending institution's requirements are referred to as tangible collateral security. Liquid assets, such as fixed deposits and government bonds, are examples of intangible assets. Here is a complete overview of the many types of collateral that banks accept for an education loan for international study.


  • Immovable Property: One of the most commonly pledged kinds of assets as collateral against an international education loan is immovable property. A house, a residential flat, a plot with defined borders, an independent house, non-agricultural land, and other assets fall under this category. The property's value must be greater than the total amount of education loans required by the candidates. This is a condition that all candidates must meet in order to be considered for a government bank education loan.


  • Liquid Security: Did you know that some banks will accept liquid assets as collateral for a student loan in another country? Fixed deposits, government bonds, life insurance plans from government-approved lenders, and so on are examples of assets.


  • Third-Party Assets: If an applicant does not have any of the above assets, or if their values are insufficient to cover the requisite school loan amount, they can use the assets of a third party as collateral security for government student loans. Individuals who are not members of the candidate's direct family are referred to as third parties. For example, the candidate's uncle, aunt, pals, major co-applicant, and so on.