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Education Loan — how it works

An education loan covers tuition and living costs for a course, usually paid out in stages directly toward fees rather than as one lump sum, with repayment typically starting only after the course ends.

Advertiser disclosure: Some links on this page are affiliate links. If you apply for a loan through a link here and are approved, we may earn a commission at no extra cost to you. Interest rates, fees and eligibility are set by the lender, change over time, and should always be confirmed on the lender's own page before applying. This is general information, not financial advice.

Typical numbers

Staged

Disbursed per term/year

Moratorium

Grace period after course ends

Co-applicant

Usually required

How a education loan works

1. Course & institution are assessed

Lenders often have lists of recognised institutions and courses, which can affect the loan amount and terms offered.

2. Staged disbursal

Funds are typically released per semester or year, often paid directly to the institution for tuition.

3. Moratorium period

Full repayment usually starts after the course finishes plus a grace period, though interest may still accrue during this time — check whether you can pay it off as you go.

4. Co-applicant & possible collateral

A parent or guardian usually co-signs, and larger loan amounts may require collateral or a third-party guarantee depending on the lender.

Eligibility & documents lenders usually ask for

Admission confirmation from a recognised institution/course
Co-applicant (usually a parent or guardian) with income proof
Academic record
Collateral or guarantor may be required above a certain loan amount, depending on the lender

Fees to check before you sign

Processing fee — sometimes waived for strong academic profiles or specific institutions
Interest during the moratorium period — check if it's simple interest you can pay as you go, or if it compounds and is added to the principal
Prepayment charges once repayment begins

Before you edit this page

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How to compare education loan offers

Compare not just the rate but the moratorium terms, whether interest is charged during that period, and whether collateral is required — these can matter as much as the headline rate.

Use an education loan responsibly

Borrow against a realistic view of future earning potential in the chosen field, and check whether paying the accruing interest during the moratorium (even partially) is an option, since it can meaningfully reduce the total cost.

Frequently asked questions

Do I have to start repaying while still studying? Usually not in full — most education loans have a moratorium period, though interest may still accrue during that time depending on the lender.

Are the offers on this site guaranteed? No. Eligibility, approval, rates and terms are determined by the relevant lender and can change at any time.