Many students dream of higher studies. But costs can be high. An education loan helps cover these costs. It lets you pay for tuition, books, and living expenses. Banks and government schemes make it easy to get one. In this guide, we cover everything you need to know about education loans in India. We include types, how to apply, rates, and latest news for 2025.
Education loans are popular in India. They help lakhs of students each year. Banks like SBI and Bank of Baroda offer them. The government also runs schemes to make loans cheaper. As of 2025, interest rates start from around 7%. You can borrow up to Rs. 1.5 crore or more. Repayment starts after you finish studies and get a job.
What is an Education Loan?
An education loan is money you borrow for studies. It covers school, college, or courses abroad. You pay it back later with interest. Banks give these loans to students or parents. No need for collateral if the amount is small.
These loans differ from other loans. They have a grace period. This means no payments during studies. Interest may build up, but you pay later. Loans help with tuition, hostel fees, books, and travel. In India, they follow RBI rules. This keeps things fair.
Types of Education Loans in India
There are many types of education loans. Each fits different needs. Here are the main ones.
- Domestic Education Loan: For studies in India. Covers courses in colleges here. Good for undergrad or postgrad.
- Overseas Education Loan: For studying abroad. Includes tuition, travel, and living costs. Higher amounts possible.
- Undergraduate Loans: For bachelor’s degrees. Simple terms for young students.
- Postgraduate Loans: For master’s or PhD. Often for professional courses like MBA or engineering.
- Skill Development Loans: For short courses or training. Like ITI or vocational programs. Limits up to Rs. 1.5 lakh.
- Loans for Parents: Parents borrow for child’s education. Based on parent’s income.
Here is a table to compare types:
| Type | Purpose | Loan Limit | Example Banks |
|---|---|---|---|
| Domestic | Studies in India | Up to Rs. 40 lakh | SBI, Axis Bank |
| Overseas | Studies abroad | Up to Rs. 1.5 crore | Bank of Baroda, ICICI |
| Skill | Vocational training | Up to Rs. 1.5 lakh | HDFC, Union Bank |
| Undergraduate | Bachelor’s courses | Varies by bank | All major banks |
| Postgraduate | Advanced degrees | Up to Rs. 50 lakh | SBI, Canara Bank |
Choose based on your course and location. Banks may add special schemes for girls or merit students.
Eligibility Criteria for Education Loan
Not everyone gets a loan. You must meet rules. Here are key points.
- You must be an Indian citizen.
- Age between 18 and 35 years.
- Secured admission in a recognized college.
- Good marks in last exams, like 50% or more.
- A co-borrower like parent or guardian with steady income.
- For abroad, valid passport and visa.
No loan if you have bad credit history. Banks check CIBIL score. For loans over Rs. 7.5 lakh, you may need collateral like house or FD.
Girls get lower rates sometimes. SC/ST students have special schemes. Check with bank for details.
Here is a table for quick view:
| Criteria | Details |
|---|---|
| Nationality | Indian |
| Age | 18-35 years |
| Academic | Admission letter, 50%+ marks |
| Co-borrower | Parent with income proof |
| Collateral | Needed above Rs. 7.5 lakh |
Meet these to apply fast.
How to Apply for Education Loan in India
Applying is simple. Do it online or at bank. Follow these steps.
- Choose a bank or scheme.
- Check eligibility.
- Gather documents: Admission letter, ID proof, income papers, photos.
- Fill form online via bank site or Vidya Lakshmi portal.
- Submit and wait for approval.
- Get loan amount in account or direct to college.
Apply after admission. It takes 15-30 days. Use Vidya Lakshmi for multiple banks at once. It’s free and easy.
Documents needed: PAN, Aadhaar, marksheets, bank statements, photos. For abroad, add visa.
Many apply via apps now. Banks like SBI have quick checks.
Education Loan Interest Rates in 2025
Rates vary by bank and loan type. In 2025, they range from 7% to 16%. Public banks offer lower rates. Girls get 0.5% discount often.
Latest rates as of August 2025:
| Bank | Interest Rate (p.a.) | Processing Fee |
|---|---|---|
| SBI | 8.15% – 11.75% | Up to 1% |
| Bank of Baroda | 7.1% – 10.5% | Nil for some |
| Axis Bank | 9.5% – 13% | 1-2% |
| ICICI Bank | 9% – 12% | Up to 1% |
| HDFC Bank | 9% – 14% | 1% |
| Punjab National Bank | 8.5% – 11% | Nil |
Rates float with repo rate. Check bank site for updates. Subsidy schemes cut effective rate.
Repayment Options for Education Loan
Repay after studies. There is a moratorium. This is course time plus 6-12 months.
Options:
- Start EMI after moratorium.
- Pay interest during studies to save.
- Extend repayment up to 15 years.
- Prepay with no penalty.
If you default, it hurts credit. Banks offer restructure if needed.
In moratorium, simple interest applies. EMIs cover principal and interest later.
Use EMI calculator on bank sites. For Rs. 10 lakh at 9%, EMI is about Rs. 12,000 for 10 years.
Government rules say no prepay charges.
Government Schemes and Subsidies for Education Loans
Government helps with loans. Key schemes in 2025:
- Credit Guarantee Fund Scheme for Education Loans (CGFSEL): Guarantee up to Rs. 7.5 lakh. No collateral needed. Apply via bank.
- Central Sector Interest Subsidy (CSIS): Full interest subsidy during moratorium. For families with income under Rs. 4.5 lakh. For studies in India.
- Padho Pardesh: For minorities. Interest subsidy for abroad studies.
- Dr. Ambedkar Scheme: For OBC/EBC. Similar subsidy.
- New Scheme 2024-25: Up to Rs. 10 lakh for domestic studies. Rolled out in October 2024. Focus on e-vouchers and internships.
Apply via Canara Bank for subsidies. Check income limits.
These cut costs a lot. Lakhs benefit each year.
Latest Updates on Education Loans in 2025
In 2025, things change. RBI keeps rates stable. Banks go digital for faster loans.
Key updates:
- Revamped scheme offers Rs. 10 lakh loans. For higher education in India. Announced in Budget 2024.
- Interest subsidy extended. More families qualify.
- Vidya Lakshmi portal updated. Now handles more applications.
- Banks report more loans. SBI gave Rs. 32,000 crore in recent years.
- Focus on skill loans. For jobs in new sectors.
Check news for changes. As of August 2025, no big hikes in rates.
For US, student loan forgiveness is active. But for India, focus on subsidies.
Benefits and Risks of Education Loans
Benefits:
- Fund dreams without savings.
- Tax deduction on interest under Section 80E.
- Build credit history.
- Flexible terms.
Risks:
- Debt burden if no job.
- Interest adds up.
- Default hurts future loans.
- Currency risk for abroad loans.
Weigh pros and cons. Plan repayment well.
Official Websites and Important Dates
Apply via official sites. Avoid scams.
- Vidya Lakshmi Portal: www.vidyalakshmi.co.in. For all banks.
- Ministry of Education: www.education.gov.in. For schemes.
- SBI: sbi.co.in/personal-banking/loans/education-loans.
- Bank of Baroda: www.bankofbaroda.in/personal-banking/loans/education-loan.
- Axis Bank: www.axisbank.com/retail/loans/education-loan.
No fixed dates for applications. Apply anytime after admission. But for subsidies, before March 31 for financial year.
For 2025-26, apply early for aid. College deadlines vary, often June-July.
FAQs on Education Loan
What is the maximum amount for education loan?
It varies. Up to Rs. 1.5 crore for abroad. Rs. 40 lakh for India. No limit with collateral.
Can I get loan without collateral?
Yes, up to Rs. 7.5 lakh under CGFSEL. Above that, need security.
Is there subsidy for girls?
Yes, some banks give 0.5% rate cut. Check schemes like Padho Pardesh.
How long is repayment period?
Up to 15 years after moratorium.
What if I can’t repay?
Talk to bank. They may extend or restructure. Avoid default.
Do I pay tax on loan?
No. But interest paid is tax deductible.
Can NRIs get loan?
Yes, if co-borrower in India.
What courses qualify?
Recognized degrees, diplomas, vocational. From approved colleges.
How to check status?
Via bank app or Vidya Lakshmi.
Is prepayment free?
Yes, no charges as per RBI.
