If you are planning to study abroad, you may come across two terms repeatedly: education loan and student loan.
At first glance, they may appear to mean exactly the same thing. Both involve borrowing money to pay for education, and both generally require the borrower to repay the principal plus interest.
However, the terms can have different meanings depending on the country, lender, and type of financing being discussed.
For international students, understanding the difference is particularly important because the loan options available to you may be very different from those available to domestic students.
An education loan may refer broadly to financing specifically designed to pay for higher education, including tuition and sometimes living expenses. A student loan is a broader term commonly used for money borrowed by students to finance their education, including government and private student loans.
In this guide, we’ll explain education loans vs. student loans, the major differences between them, how they work, eligibility requirements, interest rates, repayment options, and which type may be better for international students studying abroad.
Education Loan vs Student Loan: Quick Comparison
| Feature | Education Loan | Student Loan |
|---|---|---|
| Main purpose | Financing education expenses | Financing a student’s education |
| Tuition coverage | Usually | Usually |
| Living expenses | Often available | Depends on lender |
| Government financing | Sometimes | Common in some countries |
| Private financing | Yes | Yes |
| International students | Often available through specialized lenders | Depends on lender/program |
| Cosigner | May be required | May be required |
| Collateral | May be required | Usually depends on loan type |
| Repayment | Usually after or during study | Depends on loan |
| Interest | Usually charged | Usually charged |
| Eligibility | Depends on lender | Depends on lender/program |
The terms overlap significantly, which is why it’s important to look at the actual loan product and agreement rather than relying only on the name.
What Is an Education Loan?
An education loan is financing specifically intended to help pay for education-related expenses.
Depending on the lender, an education loan may cover:
- Tuition
- University fees
- Accommodation
- Food
- Books
- Computers and educational equipment
- Transportation
- Health insurance
- Airfare
- Other approved education-related expenses
Education loans are especially common in countries where banks and financial institutions offer dedicated financing products for students studying domestically or overseas.
For example, a bank in a student’s home country might offer an overseas education loan specifically for students who have been accepted into universities abroad.
What Is a Student Loan?
A student loan is money borrowed by a student to pay for education.
The term is particularly common in countries such as the United States, where student loans include federal and private education financing.
Student loans may be provided by:
- Federal governments
- State governments
- Banks
- Credit unions
- Private lenders
- Universities
- Specialized financial companies
Student loans can be used to cover tuition and, depending on the program, other costs associated with attending school.
Are Education Loans and Student Loans the Same?
Not always, but they often overlap.
In everyday conversation, people may use “education loan” and “student loan” interchangeably.
However, there can be a practical distinction.
An education loan is often marketed specifically around financing education, including international education.
A student loan can refer more broadly to financing borrowed by a student, including government student loans, private student loans, and specialized programs.
The exact meaning depends on the country and lender.
Education Loan vs Student Loan: The Biggest Difference
The biggest difference is usually how the financing product is structured and who it is designed for, rather than the name itself.
An education loan might be specifically designed for:
“Students who want to study abroad.”
A student loan might be designed for:
“Students enrolled at eligible colleges and universities.”
These products can have very different requirements.
For example, an international education loan may consider:
- Country of citizenship
- University
- Degree
- Tuition
- Future earning potential
- Cosigner
- Collateral
A traditional private student loan may place greater emphasis on:
- Credit score
- Income
- Credit history
- Cosigner
Education Loans for International Students
For international students, the distinction becomes more important.
Students studying abroad often don’t have:
- A local credit history
- A local Social Security number
- A local income history
- A domestic cosigner
This can make traditional student loans difficult to obtain.
Specialized education lenders have therefore developed products specifically for international students.
For example, MPOWER Financing offers financing to eligible international students studying at qualifying institutions in the United States and Canada without requiring a traditional cosigner or collateral. (mpowerfinancing.com)
Prodigy Finance also provides education financing to eligible international students in supported programs and countries without requiring traditional collateral or a cosigner. (support.prodigyfinance.com)
These types of products are particularly relevant to international students because they are designed around the circumstances of borrowers who may not have established credit in their destination country.
Student Loans for International Students
International students can sometimes obtain student loans, but eligibility depends heavily on the country and lender.
In the United States, for example, there is an important distinction between federal student loans and private student loans.
Federal Student Loans
Most international students studying in the United States on an F-1 visa do not qualify for federal student aid.
Federal student aid is generally limited to U.S. citizens and eligible noncitizens.
Certain noncitizens may qualify under specific categories, but simply holding a student visa generally does not make someone eligible.
Private Student Loans
International students may qualify for certain private student loans.
However, traditional private lenders may require a qualified U.S. cosigner.
Specialized lenders may provide alternative options without requiring a traditional domestic cosigner.
Education Loan vs Student Loan for Studying Abroad
If you’re planning to study abroad, an education loan may be particularly useful because it can be structured specifically around international education expenses.
Depending on the lender, the financing may cover:
- Tuition
- Housing
- Food
- Insurance
- Books
- Travel
- Other living expenses
However, not every education loan covers all of these costs.
Always check the lender’s permitted uses before applying.
Interest Rates: Education Loan vs Student Loan
Interest rates vary significantly for both types of loans.
Your rate can depend on:
- Credit score
- Credit history
- Cosigner
- Loan amount
- Degree program
- University
- Country
- Loan term
- Fixed or variable structure
- Market conditions
A student with a strong domestic cosigner may qualify for a lower interest rate than an international student applying without one.
On the other hand, specialized international education loans may be accessible to students who would otherwise struggle to obtain financing.
Important:
Don’t choose a loan solely because it has the lowest advertised interest rate.
Compare the APR, fees, repayment period, and total repayment amount.
Fixed vs Variable Interest Rates
Both education loans and student loans can have fixed or variable interest rates.
Fixed Rate
The interest rate generally remains unchanged.
Advantages:
- Predictable monthly payments
- Easier budgeting
- Protection from rising rates
Disadvantages:
- May have a higher initial rate
Variable Rate
The interest rate can change over time.
Advantages:
- Potentially lower starting rate
Disadvantages:
- Payments can increase
- Long-term repayment is less predictable
For international students who may already face uncertainty around employment and immigration after graduation, predictable payments can be valuable.
Education Loan vs Student Loan: Eligibility
Eligibility requirements can differ considerably.
Education Loan Requirements
An international education loan may require:
- University admission
- Eligible degree program
- Passport
- Proof of citizenship
- Student visa
- Academic documents
- Tuition information
- Proof of funding requirements
- Financial information
- Cosigner, depending on the lender
Student Loan Requirements
A traditional student loan may require:
- Enrollment
- Eligible institution
- Credit history
- Minimum credit score
- Income
- Cosigner
- Proof of identity
The important takeaway is that the eligibility criteria matter more than the name of the loan.
Do Education Loans Require a Cosigner?
Some do.
Others don’t.
Traditional banks may require a cosigner when the borrower has limited credit history or income.
International students may have an additional challenge because they may not have someone in their destination country who meets the lender’s cosigner requirements.
Specialized international lenders can sometimes eliminate this requirement.
MPOWER, for example, states that eligible international students can apply without a cosigner or collateral. (mpowerfinancing.com)
Do Student Loans Require a Cosigner?
Not necessarily.
Government student loans may not require a cosigner.
Private student loans often do for borrowers who don’t meet the lender’s credit and income requirements.
For international students, a cosigner may be required by some private lenders because the lender wants additional assurance that the debt will be repaid.
Education Loan vs Student Loan: Collateral
Another important difference can involve collateral.
Some education loans, particularly certain bank loans in students’ home countries, may be secured against assets.
Collateral could include:
- Property
- Investments
- Savings
- Other valuable assets
Other education loans are unsecured.
Private student loans are also generally unsecured, although a cosigner may be required.
Specialized international lenders can provide unsecured financing to eligible students.
Repayment Differences
Repayment terms vary by lender rather than simply by whether the loan is called an education loan or student loan.
Possible repayment structures include:
- Payments while enrolled
- Interest-only payments while studying
- Grace period after graduation
- Full repayment after graduation
- Immediate repayment
- Income-based repayment for certain government programs
For example, MPOWER currently lists interest-only payments during school and a defined post-graduation period before full principal-and-interest repayment begins. (mpowerfinancing.com)
Always check the exact repayment schedule before accepting a loan.
Which Is Better: Education Loan or Student Loan?
There is no universal answer.
The better option is the loan that gives you the lowest reasonable total cost while meeting your financing needs.
An education loan may be better if:
- You’re studying abroad
- You don’t have local credit history
- You don’t have a domestic cosigner
- The lender specializes in international students
- The loan covers your required education expenses
A traditional student loan may be better if:
- You qualify for government financing
- You have a strong credit profile
- You have a qualified cosigner
- The interest rate is lower
- The repayment terms are more favorable
Education Loan vs Student Loan for International Students
For international students, the comparison often looks like this:
| Factor | Education Loan | Student Loan |
|---|---|---|
| International students | Often designed for them | Depends on lender |
| No cosigner | Available with some lenders | Less common with traditional private lenders |
| No local credit | Some lenders accommodate this | Can be difficult |
| Study abroad | Common use | Depends on program |
| Tuition | Usually covered | Usually covered |
| Living expenses | Often available | Depends |
| Collateral | May or may not be required | Usually unsecured for private loans |
| Government options | Depends on country | Common in some countries |
| Private options | Widely available | Widely available |
Which Loan Is Better for Studying Abroad?
If your primary objective is to study abroad, an education loan specifically designed for international education may be easier to access than a conventional student loan.
This is especially true if you:
- Have no domestic credit history
- Don’t have a local cosigner
- Are attending an eligible international university
- Need funding for both tuition and living expenses
However, if you have a qualified cosigner and strong credit access, you should also compare traditional private student loans.
The cheapest available financing is generally preferable when the terms and risks are manageable.
How to Choose Between an Education Loan and Student Loan
Don’t make the decision based on the terminology.
Instead, compare the actual loan offers.
1. Compare Interest Rates
Look at the actual rate you qualify for rather than just the advertised starting rate.
2. Compare APR
APR can help reveal the broader cost of borrowing.
3. Compare Fees
Check for:
- Origination fees
- Application fees
- Late fees
- Administrative fees
4. Compare Repayment Terms
Find out when repayment begins and how long you have to repay.
5. Check Cosigner Requirements
Determine whether you need someone else to guarantee the loan.
6. Check Prepayment Rules
Ideally, you should be able to pay your loan early without a penalty.
7. Calculate Total Repayment
Don’t focus only on the monthly payment.
Calculate the total amount you could repay over the entire loan term.
Example: Education Loan vs Student Loan
Imagine an international student is accepted into a two-year master’s program in the United States.
The student needs:
Tuition: $50,000
Living expenses: $20,000
Total: $70,000
The student receives a $15,000 scholarship and has $10,000 in savings.
The remaining funding gap is:
$70,000 − $15,000 − $10,000 = $45,000
The student now has two potential financing options.
Option A: Specialized Education Loan
- Designed for international students
- No cosigner
- Higher interest rate
- Covers tuition and eligible living expenses
Option B: Private Student Loan
- Requires qualified U.S. cosigner
- Lower interest rate
- More favorable repayment terms
If the student has a strong cosigner, Option B could potentially be cheaper.
If the student doesn’t have a cosigner, Option A may be the more realistic option.
This illustrates why eligibility and total cost are more important than the name of the loan.
Are Education Loans and Student Loans Tax Deductible?
Tax treatment varies by country and individual circumstances.
In the United States, certain student loan interest payments may qualify for a student loan interest deduction if the borrower meets applicable requirements.
However, international students should not assume that they qualify for a tax benefit simply because the financing is called an education loan or student loan.
Tax rules can depend on:
- Residency
- Income
- Type of loan
- Educational institution
- Tax filing status
- Country
Consult an appropriately qualified tax professional for advice about your specific circumstances.
Common Mistakes When Choosing an Education Loan
Choosing the Loan With the Lowest Advertised Rate
The advertised rate may not be the rate you receive.
Ignoring Fees
A loan with a lower interest rate can still be more expensive if it has substantial fees.
Borrowing Too Much
Don’t borrow the maximum just because you’re approved for it.
Focusing Only on Monthly Payments
A longer loan term can reduce the monthly payment while increasing total interest.
Ignoring Currency Risk
If you borrow in one currency and expect to earn income in another, exchange-rate fluctuations can affect your repayment burden.
Not Checking University Eligibility
Some international lenders only finance specific universities and programs.
Frequently Asked Questions
Is an education loan the same as a student loan?
Not necessarily. The terms are often used interchangeably, but an education loan may specifically refer to financing for education, while student loan is a broader term for money borrowed by students. The actual differences depend on the lender and country.
Which is better, an education loan or student loan?
Neither is automatically better. Compare interest rates, APR, fees, repayment terms, eligibility, cosigner requirements, and total repayment cost.
Can international students get education loans?
Yes. Certain banks and specialized international lenders offer education financing to eligible international students.
Can international students get student loans?
Yes, depending on the country and lender. International students may have access to private student loans or specialized international student financing. Federal student aid in the United States is generally limited to citizens and eligible noncitizens.
Can I get an education loan without a cosigner?
Yes. Some specialized lenders offer no-cosigner financing to eligible international students.
Can an education loan pay for living expenses?
Some lenders allow borrowers to use financing for eligible living expenses in addition to tuition.
Do education loans require collateral?
Not always. Some loans are unsecured, while others may require collateral depending on the lender and loan amount.
Which loan should I choose to study abroad?
Choose the financing option with terms you can realistically afford. For international students without a local cosigner or credit history, specialized international education loans may be worth considering. Students with strong credit access or a qualified cosigner should also compare traditional private student loans.
Final Verdict: Education Loan vs Student Loan
The difference between an education loan and a student loan is often less about the name and more about the specific financing product.
An education loan is generally designed specifically to finance education-related costs and is commonly used for domestic or international study. A student loan is a broader term that can include government loans, private loans, and other forms of education financing.
For international students, the most important considerations are not the label but:
- Eligibility
- Interest rate
- APR
- Loan fees
- Cosigner requirements
- Collateral
- Repayment period
- Grace period
- Eligible universities
- Eligible expenses
- Total repayment cost
If you’re studying abroad and don’t have a local credit history or cosigner, specialized international education lenders may offer an important alternative. If you do have access to a qualified cosigner and strong credit, traditional private student loans may provide more competitive pricing.
Before borrowing, compare multiple options and calculate how much you will ultimately repay.
The best education loan is not necessarily the one that approves the largest amount. It is the one that provides the funding you need at a cost and repayment structure you can realistically manage.