Advantages and Disadvantages of Student Loans in India

Posted In education loan On March 1, 2019
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With ever increasing price of quality education, the cost of studying at a reputed institution is already quite expensive. According to a recent study, the cost of modern education is increasing rapidly at an average of 12-18% per annum. Keeping this in mind, an Education Loan for the career of a child is definitely the best option without compromising with the quality of education that he/she receives.

Advantage of Education loan:

  1. People of all classes can get an Educational Loan irrespective of their source of income.

In short, no finding the middle ground with the value of education one receives.

  1. An Education Loan can indirectly instil a sense of responsibility in the students from the very beginning of their career.

  2. Now-a-days banks and private or public organizations have made it really easy to avail Education Loan. After all the document verification, an Education Loan is generally issued within a week.

  3. These loans have comparatively low interest rates to ease the repayment by the students.

  4. A tax benefit on this loan is a good way to invest the amount somewhere else.

  5. A loan borrower is given a holiday period commonly called the Moratorium period after the completion of the course to find a job for himself after which he can start repaying the loan back. In some cases, the repayment period is also extended at special request of the borrower.

  6. For girl children and persons with disability, a few public banks offer a 0.5%-1% interest subsidy for Educational Loans in India.

Disadvantage of Education loan:

  1. The banks ask for the mark sheet before disbursing the loan, so it is important to maintain a good academic record. (Now that you know, don’t let this be a disadvantage factor in your case).

  2. The Education Loan has a floating Rate of Interest with a variable index which changes with time. Depending on banks and type of loans that one is taking, the interest rate may change.

  3. Loans below 4 lakhs require no guarantor but for the ones above this amount a guarantor is mandatory.

  4. Obtaining an Education Loan for courses which doesn’t guarantee much employment rate is a complicated task. So banks can refuse a student this loan if he/she is taking admission to “mere degree granting colleges”.

  5. A few banks does not allow for change of course or college after the reimbursement of loans. Do check with the bank before applying for the loan.


The advantages of student loans definitely overpower the disadvantages of Student Loan helping the students to carry on their career responsibly for their better future. Parents can invest in their own lives or business to secure the future of the family and their children.

We at Credenc, continue to deliver on its commitment to disrupt and innovate the traditional way of financing education loans in India. In less than a year, Credenc has approved loans worth 100 crores and works as the exclusive financial aid desk for more than 70 colleges across the country.



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