Studying abroad is a dream for thousands of Indian students every year. Access to world-class education, international exposure and global career opportunities make foreign education very attractive. However, one of the biggest challenges students and parents face is financing the costs of studying abroad. With rising school fees, living costs, travel and insurance costs, financial planning becomes important.
Two of the most common funding options are scholarships and education loans. Although both can help you achieve your studies abroad, choosing the right option depends on several factors such as qualification, financial background, academic profile and long-term career plans.
In this blog, we will compare scholarships vs education loans, discuss the pros and cons, and help Indian students decide which option – or combination – works best for them.
Understand the costs of studying abroad
Before choosing a financing option, it is important to understand the approximate costs involved:
● Tuition: ₹ 10-40 lakhs (depending on country, university and course)
● Cost of Living: ₹8–15 lakh per annum
● Other costs: Visa fees, health insurance, travel, books, accommodation deposit
For most Indian families, it is difficult to self-finance the entire amount, which makes grants and loans essential.
What are the scholarships?
Scholarships are financial awards that do not have to be repaid. They are offered by governments, universities, private organizations and international institutions to support deserving students.
Types of Scholarships for Indian Students
- Merit-based scholarships
Awarded based on academic merit, test scores or achievement.
- Need-based scholarships
Awarded to students from economically weaker backgrounds.
- Country-specific grants
Examples include Chevening (UK), Fulbright (USA), DAAD (Germany) and Australia Awards.
- University-specific grants
Many universities offer partial or full tuition waivers.
- Course-specific or field-based scholarships
For programs such as STEM, MBA, research or social sciences.
Benefits of scholarships
1. No repayment required
The biggest advantage is that scholarships are free money. Students graduate without financial burden or debt.
2.Reduces Financial Stress
With lower tuition or living costs, students can focus more on academics.
3. Improves your profile
Winning a scholarship adds strong value to your resume and future career opportunities.
4. Encourages competence and excellence
Scholarships reward students for academic achievement, leadership or extracurricular achievements.
Limitations of Scholarships
1. Highly competitive
The scholarships are limited and attract applicants from all over the world.
2. Partial coverage
Many scholarships only cover tuition fees, not living expenses.
3. Strict eligibility criteria
High academic performance, strong SOPs, recommendations and test scores are often required.
4. Limited availability
Not all universities or courses offer scholarships for international students.
What are education loans?
An education loan is a borrowed amount given by banks or financial institutions to cover the expenses of studying abroad. The loan must be repaid with interest after completion of the course or during employment.
Types of Education Loans in India
- Secured loan
Security such as property or a fixed deposit is required.
- Unsecured loan
Collateral is not required, but interest rates are usually high.
- Government bank loan
Offered by SBI, Bank of Baroda, PNB etc.
- NBFC loans
Provided by institutions like HDFC Credila, Avance, Auxillo etc.
Advantages of education loans
1. Covers the entire cost of education
Loans can fund tuition, living expenses, travel, insurance, and study materials.
2. Easy accessibility
Compared to grants, loans are more accessible to a wider range of students.
3. Helps build financial discipline
Paying off debt teaches money management and financial responsibility.
4. Tax benefits
Under Section 80E of the Income Tax Act, interest paid on education loans is tax-deductible.
Limitations of Education Loans
1. Down payment burden
Students start their careers with financial obligations.
2. Interest accumulation
Interest increases the total repayment amount significantly.
3. Security and guarantor requirements
Secured loans require assets, which may not be available to all households.
4. Career pressure
Graduates may feel pressured to choose high-paying jobs over passion-driven roles.
Scholarships vs Education Loans: A Comparison
Which option is better for Indian students?
The answer depends on your profile and financial situation.
Scholarships are best if:
● You have strong academic and test results
● You apply early
● You can manage partial financing
● You want to take the exam debt-free
Education loans are better if:
● You are not eligible for larger grants
● You need full financing
● You have a strong earning potential after your studies
● Your family can provide security or support for co-applicants
Smart approach: combine both
For most Indian students, the best strategy is a combination of scholarships and education loans.
● Use scholarships to lower tuition fees
● Only take an education loan for the remaining amount
● Minimize the interest burden
● Maintain financial flexibility
This balanced approach ensures reasonable prices without compromising educational quality.
How NexCognitive helps you make the right choice
At NexCognitive, we understand that financing your study abroad is a big decision. Our experts help Indian students:
● Identify eligible scholarships
● Build strong SOP and profile to maximize scholarship chances
● Compare education loan options from top banks and NBFCs
● Choose the most cost-effective financing plan
● Plan finances in line with long-term career goals
With the right guidance, studying abroad does not have to be financially burdensome.
Final Thoughts
There is no clear answer to the debate about grants vs. education loan. Scholarships provide debt relief but are competitive, while education loans provide access with financial responsibility.
The key is early planning, informed decision-making and expert guidance. By evaluating your academic strengths, financial background and career prospects, you can choose the funding path that best supports your studies abroad.
If you are planning to study abroad and are unsure how to finance your education, NexCognitive is here to guide you every step of the way.