An education loan is one of the most common ways Indian families bridge the gap between savings and the real cost of a course — but the terms vary a lot between lenders, so it's worth understanding the moving parts before comparing offers.
Collateral vs. non-collateral loans
Banks typically offer education loans up to a certain amount without collateral, and require collateral (property, fixed deposits, or a guarantor) beyond that threshold — the exact cut-off and required documentation varies by bank and by scheme, so always ask a specific lender for their current policy rather than assuming a figure you've read elsewhere still applies.
The moratorium period
Most education loans include a moratorium — a period (commonly the course duration plus a further 6–12 months) during which you aren't required to make full EMI payments, though interest may still accrue. Ask explicitly whether interest is simple or compounding during this period, since that materially affects your total repayment.
Fixed vs. floating interest rates
A fixed rate stays the same for the loan tenure; a floating rate moves with the lender's benchmark rate over time. Floating rates are more common for education loans in India — ask what benchmark it's tied to and how often it resets.
A real tax benefit worth knowing about
Under Section 80E of the Income Tax Act, the interest paid on an education loan (not the principal) is eligible for a tax deduction for the person repaying it, for up to 8 years from the start of repayment — this can meaningfully reduce the real cost of the loan over its lifetime.
Before you sign
Compare the effective interest rate (not just the advertised rate), ask about processing fees and prepayment penalties, and use EduAspire's Education Loan EMI Calculator with the exact terms quoted to you to see the real total repayment — not just the monthly figure.