Summary
- A lack of transparency in the loan approval process leads to misinformation or a lack of information about.
- A default on a parent’s unrelated loan can be enough to ruin the education loan bid.
- A typical 18-year-old often does not have a credit card or a credit score to their name.
India’s desire to pursue undergraduate studies abroad has reached new heights. Forecasts suggest that the number of Indian students studying abroad will increase to 2 million by the end of 2025. This is a significant increase from 2019, when the numbers were just over a million.
The desire for unparalleled education and better career prospects primarily drives this growth. However, the cost of studying abroad is fairly high.
Preliminary estimates suggest that Indian students are expected to spend a whopping $70 billion on foreign education by 2025. This includes tuition, living expenses, travelling, and other relevant costs.
Even within India, private colleges charge high fees. It can range from ₹5 lakhs to ₹25 lakhs annually based on the institution’s brand value.
These massive financial burdens highlight the need to secure education loans. However, the education loan market is a labyrinth that needs careful, strategic navigation. The current structure is cumbersome, with piles of documentation and technical jargon. Streamlined loan processes are virtually nonexistent.
GradRight seeks to mitigate these issues under its loan search platform. It has simplified undergraduate loan planning by transforming the loan accessibility process. It provides a centralised, transparent, student-focused solution while eliminating current challenges.
Challenges faced by students in UG loan planning
Parents and students often find it difficult to navigate UG loans. Unclear loan structure, slow approval process and limited lenders often result in delays or rejections.
Some frequent issues faced by students in UG loan planning are:
Lack of Transparency:
Individual bank branches often disseminate vague information. A lack of transparency in the loan approval process leads to misinformation or a lack of information about
- interest rates
- eligibility criteria
- repayment structure
- hidden charges
Cumbersome Paperwork:
Loan documentation involves tedious and cumbersome paperwork, resulting in sluggish response times. Applicants often have to visit banks 3-4 times to submit the same documents repeatedly.
Limited Lender Comparison:
A large pool of students does not have access to multiple loan providers. Unwilling to go through the documentation process again, students are often stuck with the first lender that accepts them. This results in the restriction of a fair loan rate comparison.
Fragmented Product Information:
Banks publish misleading interest-rate ads using phrases like “as low as”. However, actual costs become apparent only after including moratorium interest, processing fees (ranging from 0.5% to 2%), insurance add-ons, and GST.
Collateral Stress:
Public sector banks demand property collateral for loans above ₹7.5 lakh. This effectively shuts out all students whose families don’t have real estate assets.
Credit-Score Catch-22:
A typical 18-year-old often does not have a credit card or a credit score to their name. They would need their parent/guardian to be a co-applicant. However, a default on a parent’s unrelated loan can be enough to ruin the education loan bid.
Currency-Risk Blind Spots For Overseas Aspirants:
Most applicants do not factor in rupee depreciation during the moratorium. (Moratorium is a short period where loan repayment is temporarily suspended. Interest is still accrued, however, payment is postponed.) This often leads to a higher repayment cost, by over 8-10%.
Uncertainty in Approval:
Primary loan applicants are particularly susceptible to fluctuations in their credit score. Students without a parent as a strong co-applicant with a good credit score may face loan rejection.
Low Financial Literacy:
Parents and students often have a limited understanding of key loan terms, like
- moratorium period
- fixed vs. floating interest rates
- prepayment penalties
These factors often result in missed timelines and insufficient funding.
Emerging Challenges of 2025
Digital Fatigue:
Digitalisation would have you believe that the loan application process should get easier. The sad truth is that most online loan forms just replicate the paper processes. Applicants end up filing the same forms across multiple platforms, leading to digital exhaustion.
Hyper-Competitive Lender Landscape
There is an absence of a central loan comparison tool online. Students need to visit each site separately to get loan-related information. With multiple vendors, there is also a fear of information overload. This leads to confusion and unnecessary delays.
Scholarship-Loan Coordination Gaps
Applicants expecting a scholarship or waiver usually have to wait a couple of months. However, banks usually ask for information about the total costs upfront. This leads to over-borrowing.
Understanding student loans in India for undergraduate studies
Before applying for a loan, applicants need to understand how student loans in India work. Loan interest and collateral requirements are just some of the many factors that affect eligibility and repayment. Understanding these fundamental concepts helps applicants make sound financial decisions.
Student loan options in India aim to finance higher education, whether domestically or internationally. Usually, these loans pay for tuition, boarding, travelling, and books. Nonetheless, the structure and requirements differ greatly between different platforms. The three different loan platforms available in India are:
- Public sector banks
- Private lenders
- NBFCs and emerging fintech platforms
Common Loan Terms You Should Know
| Term | Meaning |
| Moratorium Period | The time during which repayment is not required—usually the course duration + 6-12 months. |
| Collateral | Security pledged for larger loans (property, FD, etc)—required for most loans above ₹7.5 lakh. |
| Margin Money | The part of the expenses borne by the applicant (typically 5–15%). |
| Interest Rate | Can be fixed or floating. Ranges between 8% and 14%, depending on the lender and risk profile. |
| EMI | Monthly amount to be paid after the moratorium—includes both principal and interest. |
Categories of Undergraduate Education Loans
Domestic education loans: Available for undergraduate studies within India. Generally have lower rates of interest. However, there is a cap on the limit of loan amount.
Study abroad loans: Targeted towards students going for undergraduate degrees overseas. Higher loan amounts, although they may come with stricter terms.
The terms and criteria for these two types of loans differ greatly. For example:
- Public banks may have a higher demand for collateral. They may also need a more favourable co-applicant profile compared to private banks.
- NBFCs have less stringent documentation requirements, but often charge higher interest rates.
- Most private banks have stringent acceptance criteria. Many require students to have outstanding academic results and admission to top-tier schools.
The lack of uniformity in these approaches leads to a lot of confusion.
Study abroad loans: Special considerations for UG students
For students pursuing undergraduate courses abroad, the complexity increases. Some things that need to be considered are:
Foreign Exchange Risks:
Spending in foreign currency but repaying in INR can result in disproportionately high repayment amounts.
Cost of Living:
Additional expenses like accommodation, food, transport, and insurance add to the tuition fee and increase the loan amount. It often amounts to 30–50% of total education expense.
Visa-Related Financial Proof:
Most countries require proof of finances. This is to ensure sufficient funding for the visa application process.
Limited Post-Study Work Options:
Postgraduate students have comparatively relaxed visa restrictions than their undergraduate counterparts. Hence, they are seen as lower risks by lenders. UG students often have fewer work opportunities post-completion of studies. Lenders often perceive them as having lower repayment capacities.
These factors indicate a need for affordable, flexible, and long-term loan options for undergraduate students applying for higher studies abroad. This is exactly where GradRight can help applicants.
How GradRight is simplifying the loan approval process
GradRight’s streamlined student-centric approach simplifies the undergraduate education loan process. GradRight personalises loan approvals for students by digitising applications, reducing paperwork, and connecting multiple lenders simultaneously.
Here’s how GradRight expedites the loan approval process:
Centralised Platform
With a single sign-in, students can create a profile and access multiple loan offers from various lenders, like:
- Public and Private banks
- NBFCs
- Fintech companies
Smart Matching
GradRight provides profile-based loan customisation. Our advanced AI algorithms are designed to match student profiles with the best loan offers according to their
- Academic credentials
- Financial need
- Selected institute
No Bias, No Commission
GradRight doesn’t charge any commission from lenders. Students receive unbiased recommendations and approval within a few days. A lot of students get pre-approved offers within 2 to 5 working days
Expert Guidance
Our team of advisors help students with every aspect of loan offers. They help applicants to:
- Understand the terms and conditions,
- Negotiate better terms
- Handle the paperwork
Paperless KYC & Document Locker
Paperless KYC, Aadhaar-based e-signature verification, document submission, and real-time credit checks eliminate offline branch visits.
Exploring GradRight’s platform for smarter education financing in India
GradRight, the first education loan bidding platform in India, offers intelligent matching, unbiased comparisons, and access to more than 15+ lenders.
How GradRight Works:
GradRight functions as the “financial cockpit”. A modular stack that consolidates multiple lenders, scholarship organisations, and forex services, seamlessly integrating them within one ecosystem.
Anonymous bidding
Once a profile is created, it is shared anonymously with lenders, thus boosting bargaining power.
Side-by-side offer matrix
In 15 minutes, users can access interest rates, loan tenure, moratorium periods, processing fees, and collateral requirements from various lenders. All the information is ranked by present net cost.
Syncing scholarship
Scholarship cross-referencing is done for over 2,000 scholarship databases. The loan amount is adjusted based on the likelihood of getting grants or merit-based scholarships.
Coordination with forex partners
GradRight has partnered with leading Forex aggregators. This allows us to lock in the exchange rate for up to 48 hrs, reducing fluctuations in currency rate conversion.
Security and compliance
Zero third-party ad tracking with ISO 27001-certified data vaults ensures privacy and security. Direct loan repayment to bank accounts post-loan disbursement ensures compliance with RBI guidelines on digital lending.
Key Features of GradRight:
GradRight replaces five parallel workflows with a single window interface:
- rate shopping,
- scholarship search,
- advisory,
- forex booking, and
- disbursement tracking
Based on GradRight’s 2024 impact report, GradRight has removed ₹38,000 of hidden costs per student. Here are the key features of the platform:
- Loan bidding system:
Students are matched with over 15+ lenders who bid on their profiles in the Loan Bidding System. - Personalised dashboards:
Students view, filter, and compare loan offers on a single interface with personalised dashboards. - Secure documentation:
Candidates only need to upload documentation once to securely share information with all selected lending institutions - Real-time comparisons:
Evaluate EMIs, processing fees, disbursal timelines, and moratoriums in seconds.
Key benefits of using GradRight for UG education loans
GradRight allows students to evaluate, select, and acquire loan offers in a matter of days by streamlining the loan application process. GradRight is not just optimising workflows. It is redesigning the power dynamics in education finance.
Key Benefits of Using GradRight
- GradRight promotes competition between lenders, resulting in reduced market interest rates.
- Every loan bid enriches the training set, sharpening the risk models. This allows students from tier II cities (under-represented in bureau data) to access better pricing. Lenders also trust the platform’s risk grading, which results in faster approvals.
- GradRight follows the RBI’s 2023 Digital Lending Guidelines, requiring APR disclosure and direct-to-bank disbursement.
- GradRight’s program-discovery tool links academic ROI analytics with financing. This intervention mitigates over-borrowing and pushes students towards more cost-effective institutions.
- GradRight counselling converted 12 % of UG applicants from applying for personal loans to education loans. By eliminating debt-related stress, student dropout risks are also minimised.
Why GradRight is a Game-Changer for UG Loan Planning in 2025
GradRight has revolutionised the loan application process for undergraduates. It offers a student-first platform that streamlines and simplifies the loan application process. Applicants don’t need to visit several branches or face multiple rejections due to collateral issues. Students from tier II cities, too, can now apply for student loans in a matter of minutes.
Unlike other platforms that concentrate on postgraduate funding, GradRight’s UG-first model is a breath of fresh air. The loan approval process has been reduced from several weeks to a couple of days. Its loan auction platform ensures students get complete transparency and the lowest interest offers. Access to real-time loan details, interest rates, and expected returns empowers students to make informed decisions.
Tips for students to maximise their loan opportunities with GradRight
There are multiple ways to maximise loan opportunities with GradRight. Here we have listed a few:
Build a Strong Profile Early: Good academic credentials, a good credit score, and above-average test results are important. Enrollment in a renowned school also increases your chances significantly.
Explore All Lenders: Don’t settle for the first offer that you get. Compare different lenders and negotiate using the GradRight dashboard.
Start Early: Visa processing usually has a strict timeline. Having a 3–6 month window before the course start date allows for smooth loan processing.
Ask Questions: Make sure to ask GradRight’s advisors anything you need clarified before signing.
ROI is a Primary Factor: Evaluate the course ROI and prospective post-study employment. This analysis can be done with GradRight’s help.
Utilise off-peak bidding windows: There are fewer underwriters available on Friday evenings. Submitting your profile between 7 to 10 pm IST tends to be more responsive.
Upload Provisional Scorecards: Do not wait for the official board-issued marksheet. Using attested provisional documents cuts down the loan approval timeline by 10-15 days.
Request a Rate Lock Extension: Reach out to support if you’re waiting for an overdue admission decision. Lenders can be pushed to extend the 30-day limit, and success rates hover around 60%.
Use Forex and Health Insurance Partners: By using both forex and insurance partners through the GradRight platform, you can earn cashback. The cashback amount can be used towards your next EMI payment.
FAQs
1. How does GradRight simplify UG loan planning for students?
GradRight’s consolidated loan planning tool allows students to compare offers from multiple lenders. Advanced algorithms match student profiles with the best loan offer, based on their academic credentials and personal finance details.
2. What is GradRight’s loan search platform, and how does it help with education loans?
GradRight is an innovative education loan marketplace. It enables over 15+ lenders to compete to fund a student’s education by bidding on their profile. This ensures students receive the best interest rates, flexible terms, and personalised offers.
3. Can GradRight help students secure study abroad loans for UG courses?
Of Course. GradRight offers visa-compliant loans tailored to a UG course, including tuition, lodging, and travel costs. Both collateral and non-collateral loans are available.
4. What are the benefits of choosing GradRight over traditional loan options?
GradRight has numerous benefits over traditional loan options:
- Consolidated access to over 15 lenders within a single platform.
- Complete neutrality for all bank comparisons (GradRight earns no commission from any banks).
- Interest bidding by lenders results in better rates.
- Faster approval times (in less than 5 working days in some cases).
- Many undergraduate courses have no collateral required.
- Continuous expert assistance during the entire process.
5. How does GradRight improve the loan approval process for undergraduate students?
GradRight simplifies and streamlines the loan application process through digitalisation. Only relevant offers are made available to students. Students also receive assistance through the platform that helps them avoid common mistakes.
