The essential guide to education loans in India

These days, students are often clear about their career aspirations and prefer financial independence to reliance on family support. Thus, education financing has become the go-to option to fund academic ambitions.

With many financing options available, it’s important to understand key aspects of the loan process for a smooth and informed journey.

Understand the total cost

Before applying for an education loan, students must have a clear estimate of the total cost of education, including tuition fees, accommodation and living expenses, academic resources, travel and more. One of the main expenses after tuition is the cost of living, which students should be aware of before applying for a loan as it differs between countries. In the US, the average tuition fee for a two-year postgraduate course ranges from $70,000 to $90,000. Monthly living expenses typically range from $1,200 to $1,500, which adds up to $28,800 to $36,000 over two years.

Students should account for unforeseen costs. For instance, those going to the US should know that healthcare is extremely expensive there. According to some student-centric research websites, fixing a broken leg could set you back up to $7,500, a visit to the doctor and some simple tests could cost $3,000 to $5,000, and a three-day hospital stay could blow a $30,000 hole in your bank account. This is why some US universities make health insurance mantatory for international students.

How education loans work

Most students applying for an education loan don’t have a strong credit history. Education-focused lenders instead evaluate students’ academic performance, entrance exam scores, chosen course and university, and other aspects to estimate their future earning potential. These factors collectively determine the terms of the loan, including the amount and interest rate.

Before deciding to apply for an education loan, students should first learn the basics, such as secured vs unsecured loans, the various repayment options available, the importance of repaying on time to build a strong credit history, the various components of interest rates, and more. It is essential to understand how lenders use these parameters to asses risk. Being aware of these aspects can help students make more responsible financial choices.

Eligibility criteria, documents and timelines

Each lender has specific eligibility norms for students and co-applicants, so it’s essential to understand the process early. A well-organised documentation flow covering the admission letter, fee structure, ID proof, academic records, and co-applicant income proof is critical. These documents are often required for admission, visa, and fee payments. For fall 2026 aspirants, starting early and following a structured timeline will ensure a smooth and timely application journey.

• July: Start preparing for entrance tests
• Aug-Sept: Gather essential documents(academic transcripts, statement of purpose, letters of recommendation, etc.)
• Oct-Nov: Appear for entrance exams and apply to universities through their websites.
• Dec- Jan: Submit education loan applications, ensuring alignment with university and visa deadlines.
• Feb-Apr: Time to receive admission offers and to finalise the college/university.
• May-Jun: Complete the education loan sanction process and initiate the visa application procedure.
• Jun-Sept: By this time, students prepare for departure and are all set to begin their academic programme.

Securing an education loan can be straightforward with the right approach. Early planning, thorough research, and a clear understanding of the financial landscape can help students make informed choices. With a reliable financial partner and smart preparation, they can focus on what truly matters—pursuing their goals and building a bright future.

Amit Yadav, chief strategy officer, Avanse Financial Services