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| March 2, 2023

Should You Take A Gold Loan For Higher Education Expenses?

Every parent wants the best for his child and the same goes for education as well. A child works very hard to get into a premier institution. No parent would want their child’s dream to get over due to lack of finances. That’s the reason parents take the most obvious route of an education loan. What many people fail to learn and understand is that a student loan is an unsecured loan that attracts a high-interest rate. A large chunk of their income goes into servicing student loan EMIs. Apart from that, education loans had the highest non-performing assets among personal loans in the last financial year. Because of the high instances of default in such loans, most lenders have laid stringent conditions for customers wanting to apply for a student loan. So, is there a way out? There certainly is. Gold loans have emerged as one of the most popular tools to fulfill a child’s educational aspirations.

Challenges of Applying for a Student Loan

Many banks and NBFCs offer student loans. Although the eligibility criteria for different lenders could vary slightly, there’s no denying that the process is tedious and the conditions are difficult to comply with.

  • Education loans are granted to only those students who have been accepted by recognized colleges and universities.

  • For students seeking international admission, only Ivy League colleges or their equivalent are considered for education loan interest rate subsidies.

  • Student loans only cover tuition fees, and additional university or college charges. Other essential expenditures such as medical expenses, travel and accommodation fees, food, etc. are not covered. These additional costs have to be borne out of pocket.

  • Since these loans are unsecured credit facilities, there’s a higher associated risk for lenders. This risk is mitigated by charging borrowers a high rate of interest.

  • Just like other unsecured loans such as personal loans, a student loan requires solid financial backing, good credit history, a high credit score, and fulfillment of other eligibility criteria.

With so many hurdles, applying for an education loan becomes an arduous task.

Alternative to Student Loans

What if we told you there’s an untapped asset that could be the perfect alternative to an education loan? Most Indian households have some gold in the form of gold jewelry, coins, bars, bullion, etc. A loan taken out against gold is one of the cheapest, fastest, and most convenient ways of securing financing for your child’s education. And you can complete the entire process from the comfort of your home. Many lenders such as Muthoot Finance not only offer the most attractive gold loan schemes but also provide online and doorstep gold loans. And all you need to do is to visit the lender’s website.

Why Choose a Gold Loan over an Education Loan?

Unlike a student loan, gold loans are secured loans in which physical gold articles are pledged as collateral. The entire process of applying for a gold loan is quick and hassle-free.

Here are some more reasons to consider gold loans as an alternative to education loans:

Feature Benefit
Eligibility Criteria Any adult resident Indian who is the rightful owner of the to-be-pledged gold items is eligible for a gold loan
Flexibility No requirement of the student to fulfill stringent criteria including the standing of the educational institution
End-Use Restriction There’s no restriction on how the gold loan amount is utilized. The amount can be used to fund tuition fees, living expenses, travelling etc.
Credit History/Credit Score Gold loan applications do not require the credit history or credit score of the borrower
Loan Amount Most lenders lend up to 75% of the gold value
Ease of Documentation Basic KYC, a simple application form and minimum documentation is required
Interest Rates When compared to unsecured loans like personal loans and student loans, the gold loan interest rates are quite affordable
Repayment Options Gold loans come with flexible repayment options that the borrower can choose according to preference.


The ease of a gold loan has spurred many parents to reconsider student loans. And why not? New-age gold loan companies like Muthoot Finance have enabled many borrowers to save their time, effort, and money.

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