Reasons Why People hate Education Loans But they Should Not

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Table of content

  1. Introduction
  2. 1. Employment insecurity
  3. 2. Higher rate of interest
  4. 3. Short repayment duration
  5. 4. Time Taking Sanction Process
  6. 5. Banks don't sanction loans for all courses and universities
  7. 6. An education loan does not cover all expenses
  8. 7. Need for Collateral for secured loans
  9. Conclusion
  10. FAQ's
  11. Need Help? Ask Here!

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The number of Indian students opting for higher education abroad grew from 440,000 in 2016 to 770,000 in 2019 and is set to grow further to roughly 1.8 million by 2024, says the report. And so is the cost of education on the rise.

India is the seventh-largest country area-wise with a 1.41 billion population; its youth is the largest shareholder of this huge population. It is the most valuable thing that any country would want or need for its growth of the economy in multiple dimensions. As the youth, more will be the availability of a workforce to run and grow the country’s economy at a greater pace. But, to utilize this huge human resource for the country’s benefit, their accessibility to quality education is a must. In today's dynamic world where Millennials and Gen Z are projected to make 75% of the global workforce by 2025. It becomes very important that students focus more on their quality education. 

Even as the number of Indian students opting for higher education overseas grows annually, their abroad spending is set to rise from the current annual $28 billion to $80 billion by 2024, the latest report by consulting firm RedSeer estimates. The cost of higher education whether in India or Abroad has risen subsequently over time and therefore, the number of students applying for education loans has shown a significant surge in recent years.

Yet, there is a large population in India that is still unfamiliar with the concept of education loans and also some consider it as a last resort.

In this article, we will tell you about the most common reasons why people hate education loans but they should not so that all the misconceptions are removed and the image of education loans changes from a curse to a boon for students and their families.

1. Employment insecurity

We all have seen the great recession in the US in 2008. Post covid condition of jobs was like a deja-vu, the market is still facing the aftereffects of the Covid pandemic. Amidst this, there is no doubt that the students and their parents might not see any point in taking huge sums as education loans for studies abroad when there is no guarantee of employment.

But, we should not forget that an investment made in quality education, pays the best interest. Quality education is the keyword here because the well-qualified ones find it easy to make their way through the crowd of unqualified ones. If you too are ambitious to get a high-paying job then, quality education is a must and you should not have any second thoughts about pursuing it or not, for the sake of your bright future.

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2. Higher rate of interest

When it comes to repayment of education loans most people fear the fact that they will have to repay twice the amount of the education loan taken back to the banks over the years. It is a huge deal because right now when the student needs say suppose 45 lacs to pursue their higher education but does not have the amount. It will be very difficult for them to consider an education loan as an option, thinking that they will have to repay an amount of almost 90 lacs to the bank.

This is not true at all because taking an education loan comes under the government's scheme for tax exemption. Under Section 80E of the IT Act 1961, you may claim a deduction of interest paid on the loan acquired for higher education from your taxable income. The entire interest paid on the EMI throughout the financial year is eligible for a deduction under Section 80E. That is how an education loan not only helps you fund your education abroad but also helps you save your tax. And when you choose WeMakeScholars as your loan partner you are assured to get full negotiation support on the offered rate of interest from Private lenders (NBFCs). Isn't it amazingly awesome?

3. Short repayment duration

Generally, for any education loan, the repayment duration after the moratorium period finishes is 10-15 years irrespective of the lender. During this repayment period, a floating rate of interest is applicable to calculate the monthly EMI of the loan. The relation between the repayment duration and the monthly EMI amount to be paid to the banks is inversely proportional, which means if the repayment duration is less then more will be the monthly EMI amount. And that is why shorter repayment duration is one of the reasons why people hate education loans.

But, little did they know that they can save lacs of rupees over the years, just by keeping the repayment duration as shorter as possible. Because then they will have to give the same interest rate on a lesser amount each time. You can even make a prepayment of some amount in bulk if you have a surplus to repay the education loan as soon as possible.

4. Time Taking Sanction Process

This is the most common reason why most people hesitate and even sometimes hate education loans. No doubt the process of education loan sanctioning is challenging and time taking, but, don’t you think, good things take time? This is a general saying which applies to all the good things that happen in our lives. And the process of taking a suitable education loan with the cheapest rate of interest is one such good thing which might take some of your time and may seem like boiling an ocean, but I assure you that it is worth it for the sake of quality education and knowledge which you get in return while studying abroad. 

So, you should never discard the option of an education loan to raise funds for your higher studies only because the process is an uphill task. You can visit our website to get more information about education loans or you can get in touch with our Financial officer, who will help you process your education loan faster in the comfort of your home.

5. Banks don't sanction loans for all courses and universities

The ultimate purpose of obtaining high-class quality education abroad is to gain knowledge and exposure to speed up the process from academic growth to professional growth. “An abroad education loan is a great opportunity to skyrocket your career in any field of interest” - many of you fall prey to this statement because majorly private banks do not sanction education loans for non-STEM educational programs or passion-based courses like cooking, fashion designing, Commercial Pilot Training, etc, very easily. 

This sometimes becomes a reason for hatred towards education loans, but, if you try and understand the bank's perspective to do so then I am sure you will feel guilty about hating education. The banks want to make sure that you have ample good job opportunities after you complete the course of your choice so that you earn well and repay the loan installments on time. Therefore, in order not to gain Non-Performing Assets, private banks do not sanction loans for passion-based courses. But we have helped thousands of students with strong education loan profiles who were facing the same issue. And with our consistent efforts, we were able to help them out. If you too are in the same spot, click here to get your loan profile analyzed or directly request a callback from us. We will leave no stone unturned to help you out in processing your education loan for your higher studies.

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6. An education loan does not cover all expenses

Imagine a situation, in which you are studying abroad on an education loan of an amount equal to university tuition fees. Now you have a restricted amount with you along with a long list of expenses apart from the university’s tuition fees, like, books and stationary costs, travel, and accommodation expenses, laptop purchasing cost, etc. You will be in a fix and it might become very difficult for you to focus on your studies even, which was the main purpose of your to go and stay abroad. Most students fear this situation and that is the reason why they hate taking an education loan. When seen from a wider perspective, this reason is the worst of all for hating education loans because that situation could easily been avoided. 

We here at WeMakeScholars suggest students take some extra amount for these miscellaneous expenses along with living expenses and tuition fees amount for the entire course duration all at once while applying for an education loan. There is a myth among parents and students about education loans, that interest rates will be charged on the entire loan sanction amount, this is completely wrong. The interest rate is charged only on the disbursed amount of the education loan. 

For example, if you need 45 lacs for your abroad education then you should apply for a 50 lacs loan and keep the amount of 5 lacs as a safe side margin. If you disburse only 40 lacs then the interest rate will only be charged on 40 lacs and your rest of 10 lacs will lapse automatically, and you will not have to pay any interest on it. So it is misinformation that an education loan does not cover all the expenses, it does but it needs to be planned and applied accordingly.

7. Need for Collateral for secured loans

Property or asset bought with hard-earned money is dearer to everyone, Especially a home because many times parents have a long reel of memories and emotions attached to their homes and when they are proposed to pledge their property or asset as collateral against their children’s education loan, it becomes a tough call for them to choose between their emotional attachment and their child’s future. 

But let me show you the brighter side of it if you pledge your house or any other asset like FDs, government bonds, or LIC policies. You will be eligible to get your education loan from a public bank like SBI, BOB, etc, at a cheaper rate of interest along with perks like longer repayment duration, longer moratorium period, freedom to pursue any course in any country, and most importantly you will have trusted lenders.


Though getting rid of the education loan is the only thing people “like” it is sometimes inevitable, especially when you can see your bright future after you graduate. Aspiring for quality education is the master key to unlocking the door to infinite career opportunities in life, so taking an education loan to balance the lack of funds is always a wise decision rather than giving up the plan for higher studies or compromising it with some plan B.

On that note, I would like to tell you that we are empanelled with 14+ public and private banks and handle thousands of loan files daily. With our great experience in this field, we can assure you that you will have the most hassle-free experience processing your education loan with WeMakeScholars. To know more, request a callback today, and get started with your education loan process. 

Still not sure about your decision whether to hate education loans or not? Don’t worry, we’ve got you covered. You can visit our website and read about the processing flow of education loans at WeMakeScholars to get better clarity on this. You can click here and check the scholarship opportunities to raise funds for your abroad education. Also, you can get in touch with the team of WeMakeScholars to get assistance in processing your education loan.

Global education is a life-changing experience and if you too are planning to change your life by going abroad for your higher education, then I am sure you will find these articles insightful.

Education Loan FAQs

  • Are education loan only available for Masters course? can I apply for other courses as well ?

    No, education loans are available for almost all types of courses such as bachelor's degrees, diploma courses, certificate courses, and vocational courses. But the Loan amount, interest rate, loan margin, and eligibility criteria may differ based on course types and duration. To get a proper idea of your course and its eligibility for an education loan, you can reach us, our financial officer will help you out.

  • What are the reasons behind the negative perception of education loans and how can one overcome it?

    The negative perception of education loans stems from the high costs of higher education, the burden of student loan debt, employment insecurity, higher rate of interest, and the need for collateral To overcome this, one can research and compare different loan options, seek financial aid and scholarships, consider alternative funding sources, and plan ahead for loan repayment. Your one-stop solution is WeMakeScholars, We provide all our services free of cost and make your education funding journey smooth and hassle-free.

  • Is taking an education loan a wise investment for achieving long-term career success and financial stability?

    Taking an education loan can be a wise investment, it provides the means to obtain higher education, develop valuable skills and knowledge, and meet the requirements of certain occupations. This can improve job prospects and increase earning potential, especially in fields that require specialised training or degrees, which will directly lead you to long-term career success and financial stability.

  • Is it possible to negotiate the interest rates and terms of education loans and what are the factors to consider before doing so?

    It is hard but it is possible to negotiate the interest rates and terms of education loans, especially for private loans. Mostly, applicants are not experts in negotiating with lenders. So, they end up paying a higher rate of interest and compromised terms and conditions, but WeMakeScholars financial officers are well-trained and experienced in negotiating with lenders on the applicant's behalf for all terms and conditions. While, factors to consider before negotiating, include your credit score, income, and loan history.

  • What expenses are typically covered by education loans, is it only limited to tuition fees of collage or university?

    Education loans typically cover tuition fees, exam fees, and even all expenses associated with pursuing higher education, such as living expenses, travel costs, and other miscellaneous expenses. You can get your estimated loan amount for your higher education and the process associated with the education loan.

Our Education Loan team will help you with any questions

Abhinav Raj
WeMakeScholars- supported by IT Ministry, Govt. of India.
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