Complete Guide to Education Loans in India – Eligibility, Documents, Interest Rates

Introduction

The pursuit of an education in the higher levels is a goal for the majority of Indian students, however the high cost of education–whether within India or elsewhere–is often an obstacle. This is where the education loans can help. They do not just help provide financial assistance, but they also help students attain their academic and professional goals without having to compromise their preference of school.

In case you’re looking to learn engineering in India or take up your MBA at a school in the US or an institution in Europe, educational loans can prove to be an effective tool and only when you understand how you can use them correctly.

In this thorough guide, we’ll go through everything you should be aware of about loans for education in India in 2025- beginning with eligibility requirements and the required documentation to rates of interest in the country, payment options, as well as subsidy programs that are backed by the government. The guide will also review the top banks, highlighting the main differences between secured loans and unsecured ones and offer practical advice to increase your odds of getting approved.

If you’re an adult, or working professional who is looking to improve your skills and the skills of your employees, this is the ultimate resource to make well-informed financial choices regarding your journey through education.

Eligibility for Education Loans in India (2025)

Prior to applying for an educational loan to study in India you must be aware of the criteria for eligibility established by financial institutions. Although the requirements may differ somewhat between lenders, many are based on a common structure.

1. Student Eligibility Criteria

• Nationality The applicant is required to have the status of an Indian citizen (some banks provide credit to non-residents of India under specific plans).
• Academic Qualification:
• Have been able to secure acceptance to an approved program within India or in another country through an admission test or the merit-based system of selection.
• Must have an excellent academic track record (minimum 60 percent marks from 10+2 is typically preferable).
• Course Eligibility:
• Diploma, postgraduate, undergraduate and doctoral degrees are all eligible.
• Training is required to be specifically designed for the workplace and taught by a recognized organization (AICTE/UGC/Foreign Accreditation).
• Age Limit:
• Most commonly, 16 to 35 years however, it could differ depending on the lender.
• Admission Confirmation:
• A proof that you have been admitted (offer letter or admissions letter) is a requirement prior to distribution.

2. Co-applicant Requirement

• A co-applicant is required for almost all educational loans.
• A co-applicant may be an applicant’s partner, parent or guardian.
• The student is financially accountable to repay if the student does not pay.

3. Institution Eligibility

• For Indian Education Loans:
• The institution must be recognized as such by AICTE, UGC, or any other central government of a state..
• For Abroad Education Loans:
• The college or university should be included in the list of institutions that banks accept.
• The majority of lenders offer a preferred selection of universities (e.g. Top 200 international universities).

4. Income Criteria for Co-applicant

• Certain banks might require the minimum income requirement to co-applicants. This is especially true in the case of loans that are not secured.
• ITR (Income Tax Returns) of the past two years is often needed.

5. Collateral Requirement (Depends on Loan Amount)

• Up to Rs 7.5 lakhs generally don’t not need collateral but they might require an additional applicant.
• Credits over Rs7.5 lakhs may need the collateral of security including properties, fixed deposits, insurance policies, etc.

6. Credit Score

• Although it isn’t required for a student, the credit score of the co-applicant (usually more than 650) is a crucial factor in determining the approval.

List of Documents Required for Education Loans in India (2025)

Making sure you submit the proper document is vital in order to prevent delay or even rejection of the application for your education loan. This comprehensive list is categorized by applicant and applicant who is a co-applicant (usually parents or guardian).

1. Student’s Documents

2. Co-applicant’s Documents

3. Additional Documents (May Vary by Lender)

• Affidavit of not having any other loans obtained (some banks demand this)
• Formula A2 (for the international transfer of fees)
• The loan application must be completed.
• Statement of relation between the applicants and co-applicants
• Documentation of scholarships or assistantships (if the scholarship or assistantship is applicable)

Top Education Loan Providers in India (2025)

In response to the increasing demand for high-quality education both in India as well as abroad, a number of banks as well as Non-Banking Financial Companies (NBFCs) are now offering customized education loans. This list includes the most reliable education loan lenders in India in relation to charges and loan coverage, as well as the speed of processing, as well as accessibility to applicants.

Education Loan Interest Rate Comparison in India – 2025

The best education loan begins with studying and comparison of the rates that are offered by the leading banks as well as NFCs. In 2025, rates for interest differ significantly based on variables including the type of lender, the loan amount as well as collateral types, program, and the profile of the applicant.

Latest Interest Rate Comparison Table (2025)

Factors That Affect Interest Rates

• Secured. Secured vs. loans backed by collateral generally come with low interest rates.
• Sum of Loan The larger the loan amount might attract higher interest rates, specifically for high institutions.
• Applicant’s Profile:
• Achievements in the academic field
• University and course rankings
• Creditworthiness of the co-applicant
• Female Concession Most banks provide 0.25 percentage or 0.50 percent less interest rates to women customers.
• Premier institutions The loans for IITs, IIMs, ISB and more. are often eligible to receive particular rates.

Repayment, EMI, and Moratorium Period Explained (Education Loans India – 2025)

Knowing the way repayment functions is essential prior to making a decision to sign your agreement for an education loan. This is a detailed breakdown of the repayment process as well as the method of calculating EMIs as well as what is the actual meaning of a moratorium for both parents and students.

1. What Is the Moratorium Period?

Also known as “repayment holiday” Also known as the “repayment holiday,” the moratorium is a grace period when the person who is borrowing is not required to begin repaying the principal loan sum.

Key Points:

• The typical course will usually include the time that the program lasts plus up to one year following course completion or the job offer.
• At this point during this time, you could be required to:
• Only pay the cost of the interest (partial or partial EMI) (or
• There is no cost to pay (interest is charged and credited to the amount of loan)

2. EMI Explained

The EMI you pay is the each month you have to pay when the period of repayment commences. It comprises both the principal and interest.

EMI Depends On:

• Loan Amount
• Inflation Ratio (fixed and floating)
• The Tenure of a Loan (usually between 5 and 15 years)
• If interest was paid out during this moratorium

Sample EMI Calculation:

Utilize the internet-based EMI calculator, or request an amortization schedule from your bank.

3. Repayment Duration (Loan Tenure)

Many banks will offer five to fifteen years for repayment of your loan to attend college.

Certain lenders will extend it until twenty years in larger amounts (especially when it comes to international research).

4. Prepayment & Foreclosure

• Prepayment It is possible to pay off your loan prior to the term ends.
• Foreclosure Charges:
• Banks that are public typically with no fees.
• Private banks/NBFC may cost 1 – 4 % of the amount outstanding.

5. Repayment Options

• EMI after Moratorium (standard option)
• Interest Servicing During Course (lowers total interest burden)
• The Step-Up EMI (starts with a small amount, and grows over time as income grows)
• income-linked repayment (available along with NBFCs)

Government Education Loan Subsidies in India (2025)

To make higher-education more affordable To make higher education more accessible, the Government of India offers several programs to help with the cost of education specifically for students with lower incomes. The schemes are designed to ease the financial burden associated with interest specifically in the moratorium and study timeframe.

1. Central Sector Interest Subsidy Scheme (CSIS)

Key Features:

• A subsidy for interest is available for the duration of the moratorium (course length + one year).
• This is applicable to students who come from economically weaker groups (EWS).
• The family’s income should be lower than Rs4.5 lakh per year.
• This only applies to professional and technical training classes that are offered in India.
• Available only for loans made by established banks in the Indian Banks’ Association (IBA) educational loan model program.

Documents Required:

• A income certificate is provided by an authority that is competent
• Aadhaar/PAN card
• Letter of loan sanction from the bank

2. Dr. Ambedkar Central Sector Scheme (For OBCs and EBCs)

Key Features:

• Subventions for interest during the moratorium timeframe in the field of overseas studies.
• For Other Backward Classes (OBC) and Economically Backward Classes (EBC).
• Family income per year:
• EBC: = Rs2.5 lakh
• OBC: = Rs8 lakh
• It is only applicable to studying abroad for Masters, MPhil, or Ph.D. courses.

Additional Notes:

• The list includes the top 500 institutions across the globe.
• Apply through the National Scholarship Portal (NSP).

3. Padho Pardesh Scheme (Phased Out in 2023)

• This program offered interest subsidies to educational loans abroad specifically for people from minority groups.
• In 2025 it will end this program however, previously approved students will continue to benefit from it.

4. Vidya Lakshmi Portal (Loan + Scholarship Gateway)

• An online portal that students can
• You can apply for multiple educational loans by filling out one form.
• Monitor loan to see the status.
• Find the possibility of subsidy schemes that are eligible and scholarship programs.
• More than 40 banks that are part of the portal.

5. State-Specific Subsidy Schemes

Certain Indian states provide extra subsidies over central plans. Examples:

• Bihar Student Credit Card Scheme
• Tamil Nadu Education Loan Subsidy Scheme
• Kerala Education Loan Repayment Support Scheme

Visit your State government’s Higher Education department portal for the latest specials.

How to Apply for an Education Loan in India – Step-by-Step Guide (2025)

Achieving an education loan for education in India could be a daunting task however, with proper planning, you’ll be able to get the funds you need quickly for your study. This step-by-step tutorial is designed that will guide you with the application process regardless of whether you plan to pursue your studies in India or elsewhere.

Step 1: Research & Compare Lenders

When choosing a bank, or NBFC check out the following factors:

• Interest rates (fixed vs. floating)
• Collateral requirement
• Processing fees & hidden charges
• Credit coverage (tuition or accommodation transportation, etc.)
• Repayment terms & moratorium

Software such as Vidya Lakshmi Portal and private loan aggregators are able to assist you in comparing different choices quickly.

Step 2: Check Eligibility

Check that you are meeting the essential qualifications:

• Indian citizenship
• Acceptance into an institution that is recognized (India or elsewhere)
• Co-applicant (parent/guardian) who earns a regular source of income
• Collateral (if loan amount is more than Rs7.5 lakh or the amount required)

Step 3: Gather Required Documents

A majority of banks will require

• Admission letter
• University fee structure
• Records of academics (10th 12, 12th, graduation marks)
• KYC documents for applicants and co-applicant
• The income proof as well as the IT return of a co-applicant
• Documents that are collateral (if relevant)

Check out the complete list via the lender’s website or the local branch.

Step 4: Choose Application Mode

It is possible to apply for:

• Online using bank portals, and Vidya Lakshmi Portal (especially for banks in the public sector)
• Offline through the bank’s branch directly
• Utilizing aggregators such as Leap Finance, GyanDhan, WeMakeScholars (for NBFC loans or assistance with studying abroad)

Step 5: Submit the Loan Application

• Please fill out the form (online or in person)
• Upload or attach all the documents required
• Wait for verification and approval (can be 5 to 15 working days)

TIP: Make sure that the co-applicant is of good credit score in order to improve your approval likelihood.

Step 6: Loan Sanction & Disbursement

• If you are approved, you’ll be issued a note of loan approval.
• In the case of foreign universities, certain institutions will pay a portion of the loans prior to the visa being approved.
• The loans are usually paid directly to the institution by installments.

Frequently Asked Questions (FAQs) About Education Loans in India – 2025