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Funding Higher Education — Education Loan Myths Busted

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  • Post published:October 15, 2025

Pursuing higher education is one of the best investments you can make for your future. But with the rising cost of education in India and abroad, more students are turning to education loans to fund their academic dreams.

Unfortunately, there are still many myths and misconceptions surrounding education loans that stop students (and parents) from taking advantage of this financial support.

It’s time to bust some of the most common myths and help you make informed decisions about education and lifestyle loans.

Myth 1: Education Loans Are Only for Elite Institutions

Not true.

Many students believe that loans are only granted if they get admission into top-tier institutions like IITs, IIMs, or Ivy League universities.

Reality:
Most banks and NBFCs offer loans for a wide range of recognized universities, colleges, and courses—both in India and abroad. Even vocational and professional courses often qualify for financing.

Myth 2: You Need Collateral for Every Education Loan

Not always.

This is one of the biggest misconceptions.

Reality:

  • No-collateral loans are available up to certain limits, especially for undergraduate and postgraduate courses.

  • Many lenders assess your academic record, future earning potential, and the credibility of the institution rather than only relying on property as security.

  • Some NBFCs and fintech lenders offer fully collateral-free education and lifestyle loans with minimal documentation.

Myth 3: Repayment Starts Immediately

Wrong.

Many students worry about starting EMIs the moment they take a loan.

Reality:
Most education loans come with a moratorium period, which usually covers the course duration plus an additional 6 to 12 months after graduation. Repayments typically start once you’ve completed your studies or secured a job.

Myth 4: Education Loans Are Only for Tuition Fees

False.

Loans aren’t restricted to tuition alone.

Reality:
Education loans often cover a wide range of expenses, including:

  • Hostel or accommodation fees

  • Books, laptops, and study materials

  • Travel expenses for overseas students

  • Exam and library fees

  • Daily living expenses through lifestyle loans

This gives students the financial freedom to focus on their studies without constantly worrying about money.

Myth 5: Getting an Education Loan Is Complicated

Not anymore.

Gone are the days of endless paperwork and slow approvals.

Reality:
Today, the process is:

  • Fully digital for many lenders

  • Requires minimal documentation

  • Fast, with some approvals happening in as little as 24–48 hours

Fintech platforms and NBFCs have simplified loan applications, making funding accessible to students in both Tier-1 and Tier-2 cities.

Final Thoughts

Education and lifestyle loans are powerful tools to bridge the gap between ambition and affordability. Myths often discourage students from exploring these options, but the reality is:

  • You don’t need to be at a top college to get a loan

  • Collateral isn’t always required

  • Repayment terms are flexible and student-friendly

  • Loans can fund your entire educational journey — not just tuition

Don’t let misconceptions hold you back. The right loan can open doors to opportunities you never thought possible.

Looking to fund your higher education with ease?
UrbanMoney offers quick, collateral-free education and lifestyle loans with minimal documentation, designed especially for students. Focus on your dreams — we’ll take care of the rest.