CGFSEL Education Loan Scheme: Eligibility, Application Process, & Benefits

CGFSEL Education Loan Scheme: Eligibility, Application Process & Benefits

The CGFSEL education loan scheme stands out as a game-changer for students aiming to achieve their academic goals. It offers flexible terms and streamlined application processes. 

This article will delve into the details of the scheme, explore its benefits, and guide you on how to leverage this opportunity effectively.

Keep reading to discover how the CGFSEL education loan scheme can be the key to unlocking your academic and professional future.

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What is the CGFSEL Education Loan Scheme?

The CGFSEL full form is Credit Guarantee Fund Scheme for Education Loans (CGFSEL). The government of India introduced it on September 16, 2015, to facilitate accessibility to education loans for students from economically weaker sections. 

This initiative is part of the Model Education Loan Scheme developed by the Indian Banks’ Association (IBA). It aims to support students who face challenges in providing collateral or third-party guarantees.

Under the CGFSEL, the Central Government offers a guarantee for education loans up to INR 7.5 lakhs. This means that students can secure loans without having to pledge any collateral or provide a third-party guarantee. 

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CGFSEL Education Loan Scheme: Key Features 

The table below provides a quick overview of the credit guarantee fund scheme for education loans.

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What are the Requirements for the CGFSEL Education Loan Scheme?

The Credit Guarantee Fund Scheme for Education Loans is designed to provide financial support to students who lack the means to offer collateral or third-party guarantees. Understanding the requirements for this scheme is crucial for students seeking to benefit from its provisions.

Here’s what you need to know about the requirements for availing of this scheme.

1. Belong to the Economically Weaker Sections (EWS)

The student must come from an economically weaker family.

2. Family Income Limit

The household income should be below INR 4.50 lakhs annually.

3. Admission to a Recognised Institution

The student must have secured admission to a recognised university in India or abroad, specifically to an approved technical or professional course following Class XII.

4. Nationality

Candidates have to be citizens of India.

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Which Loans Will Be Covered Under the CGFSEL Education Loan Scheme?

The CGFSEL scheme provides a government-backed guarantee for education loans, making it easier for students to secure funding without needing collateral or a third-party guarantee. 

The types of loans covered under the credit guarantee fund scheme for education loans are listed below.

1. Central Sector Interest Subsidy (CSIS) Scheme
2. Interest-Free Education Loans for Your Students
3. SBI Global Ed-vantage Scheme
4. IBA Model of Education Loan Schemes
5. International Student Loan Without Cosigner
6. Education Loan Without Collateral For Abroad Studies

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Which Loans will not be Covered Under the CGFSEL Education Loan Scheme?

While the Credit Guarantee Fund Scheme for Education Loans provides substantial support for students seeking education loans, specific types of loans and conditions must be covered under this scheme. 

Here’s a detailed overview of the loans and situations the CGFSEL does not cover.

1. Excess Loan Amounts

The CGFSEL covers loans up to INR 7.5 lakhs. Loans exceeding this amount are not covered under the scheme. 

2. High Interest Rates

Loans sanctioned by banks with an interest rate exceeding 2% above the base rate are not covered. The CGFSEL is designed to support loans with reasonable interest rates.

3. Non-Compliance with Regulations

Loans not adhering to the guidelines, laws, provisions, and instructions laid down by the Reserve Bank of India (RBI) or the Central Government are excluded from coverage.

4. Already Covered Risks

The scheme does not cover loans where the Government or another authority already covers the risk in any manner.

Minimal Documentation. Higher Chances of Approval. Easy Online Processes. Check Your Eligibility. 

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Eligible Courses Under the CGFSEL Education Loan Scheme

The Credit Guarantee Fund Scheme for Education Loans supports various educational programs in India and abroad. The types of courses that are eligible for financial assistance under this scheme are listed below.

For Studies in India

1. Graduate and Postgraduate Degrees

Courses that lead to degrees or diplomas at recognised colleges or universities accredited by bodies such as UGC, AICTE, AIBMS, ICMR, and similar authorities are eligible.

2. Professional Certifications

The scheme covers professional courses such as those for the Institute of Cost Accountants of India (ICAI), Chartered Accountants (CA), and Chartered Financial Analyst (CFA).

3. Prestigious Institutions

Programs offered by renowned institutions like the Indian Institutes of Management (IIMs), Indian Institutes of Technology (IITs), Indian Institute of Science (IISc), XLRI, National Institute of Fashion Technology (NIFT), and National Institute of Design (NID) are eligible.

4. Specialised Courses

Courses include aeronautical studies, pilot training, shipping, nursing, and other disciplines approved by regulatory bodies such as the Director General of Civil Aviation, Director General of Shipping, or the Indian Nursing Council.

5. Programs by Foreign Universities

Courses from reputable foreign universities operating in India are also eligible for financial assistance.

For Studies in Abroad

1. Undergraduate Programs

Loans are available for undergraduate courses that are job-oriented and offered by reputable universities abroad.

2. Postgraduate Programs

Loans cover postgraduate programs such as Master of Computer Applications (MCA), Master of Business Administration (MBA), Master of Science (MS), and other equivalent degrees.

3. Professional Courses Abroad

Education loans may be provided for courses conducted by internationally recognised professional bodies, such as CIMA (UK), CPA (USA), and other institutions.

4. Degree and Diploma Courses

Degree and diploma courses recognised by relevant regulatory bodies in India or abroad for employment purposes are eligible. 

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Benefits of the CGFSEL Education Loan Scheme

The key benefits of the CGFSEL Education Loan Scheme are listed below.

1. Collateral-Free Loans

One of the CGFSEL's most significant advantages is that it allows students to obtain loans without the need for collateral. This is particularly beneficial for students from economically weaker backgrounds who may not have assets to pledge. 

2. No Third-Party Guarantee Needed

The scheme eliminates the requirement for a third-party guarantor, which can be a significant hurdle for many students. 

3. Financial Support for Up to INR 7.5 Lakhs

CGFSEL provides a substantial loan amount of up to ₹7.5 lakhs. This amount is designed to cover significant educational expenses, including tuition fees, books, and living costs. 

4. Safety Net Against Default

The CGFSEL education loan scheme provides an additional layer of security by ensuring that the National Credit Guarantee Trustee Company Ltd. (NCGTC) will cover 75% of the defaulted amount if a borrower defaults on their loan. 

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Expenses Covered Under the CGFSEL Education Loan Scheme

Under the Credit Guarantee Fund Scheme for Education Loans, various expenses can be covered to support students in their educational journey. Here’s an overview of what can be included. 

1. Education Related Fees

The scheme typically covers tuition, hostel accommodation, examination fees, library access, and laboratory expenses.

2. International Study Costs

Expenses such as travel and passage fares may also be covered for students pursuing education abroad.

3. Insurance Premiums

If applicable, insurance premiums for the student borrower can be included in the loan coverage.

4. Deposits and Refundable Fees

Costs related to caution deposits, building funds, or other refundable deposits, provided institutional receipts or bills support them, may be considered.

5. Academic Supplies

The loan amount can include expenses for books, equipment, instruments, and uniforms necessary for the course.

6. Computers

If a computer is essential for completing the course, its reasonable cost can be added to the loan.

7. Additional Course-Related Costs

Other essential expenses such as study tours, project work, and thesis-related costs might also be covered.

8. Scholarships and Fee Waivers

Any scholarships or fee waivers received by the student can reduce the total loan amount.

9. Management Quota Fees

Fees for seats under the management quota are eligible if approved by the State Government or a government-recognised regulatory body and provided repayment conditions are feasible.

10. Lodging and Boarding

Reasonable costs for lodging and boarding for students living off-campus may be considered.

11. Expense Caps

Certain expenses might be limited to a percentage of the total tuition fees, with caps like 10% for particular items and up to 20% for books, equipment, and other unlisted college-related fees.

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Repayment Guidelines for Loans Under the CGFSEL Education Loan Scheme

Under the Credit Guarantee Fund Scheme for Education Loans, the repayment process is designed to be flexible and manageable for student borrowers, particularly those from economically weaker sections. 

Now, let’s examine the specific repayment guidelines for loans under the CGFSEL, highlighting important details that borrowers should be aware of.

1. Moratorium Period

This period includes the time to complete the course plus an additional year or six months after gaining employment, whichever comes first.

2. Course Extensions

If students cannot finish their course within the scheduled time frame, they may be granted an extension of up to two years to complete it.

3. Course Discontinuation

In cases where students discontinue their studies, the bank will work with the student and their parents to devise an appropriate repayment plan.

4. Interest Concession

Some banks may offer a 1% interest rate reduction if the borrower opts to pay the interest during the study period and throughout the moratorium.

5. Repayment Duration

Loans of up to INR 7.5 lakh must be repaid within a maximum period of 10-15 years.

6. Repayment Method

Repayment is done through equal monthly instalments (EMIs), and there is no penalty for early loan repayment at any point.

Also Read: Education Loan without Collateral 2024: Banks & Interest Rates

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CGFSEL Education Loan Scheme: Application Process

Students must follow a specific process to ensure their application is successful when applying for the Credit Guarantee Fund Scheme for Education Loans. 

Here's a detailed breakdown of how you can apply.

You can follow these steps through the Vidya Lakshmi portal to apply for the Credit Guarantee Fund Scheme for Education Loans (CGFSEL).

Step 1

Go to the Vidya Lakshmi website at vidyalakshmi.co.in and access the online application form for the CGFSEL scheme.

Step 2

Select the ‘Register’ option and fill in the necessary details to create a new account.

Step 3

Banks will require documents to verify your identity, financial status, admission proof, and other details. Essential documents usually include:

1. Proof of admission
2. Income certificate
3. Identity proof (Aadhar card, PAN card)
4. Address proof
5. Educational qualifications

Step 4

Once registered, use the ‘Student Login’ option to enter your email, password, and the captcha code.

Step 5

After logging in, complete the application form with your personal information, such as name, email address, phone number, and any required documentation.

Step 6

Upon submission, save and download the completed application form for future reference.

Also Read: Vidya Lakshmi Education Loan Interest Rate for Banks (2024)

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CGFSEL Education Loan Scheme: Participating Banks

Multiple banks play a key role in the CGFSEL Education Loan Scheme, providing access to funds for students who need financial support for their education. 

Let’s help you explore the list of participating banks and the critical points related to their involvement in the CGFSEL Education Loan Scheme.

Regional Rural Banks

1. Andhra Pragathi Grameena Bank
2. Chaitanya Godawari Grameena Bank
3. Saptagiri Grameena Bank
4. Chhattisgarh Rajya Gramin Bank
5. Baroda Gujarat Gramin Bank
6. Saurashtra Gramin Bank
7. Sarva Haryana Gramin Bank
8. Himachal Pradesh Gramin Bank
9. Jharkhand Rajya Gramin Bank
10. Karnataka Vikas Grameena Bank
11. Kerala Gramin Bank
12. Maharashtra Gramin Bank
13. Meghalaya Rural Bank
14. Mizoram Rural Bank
15. Puduvai Bharathiar Grama Bank
16. Punjab Gramin Bank
17. Baroda Rajasthan Kshetriya Gramin Bank
18. Rajasthan Marudhara Gramin Bank
19. Tamil Nadu Grama Bank
20. Andhra Pradesh Grameena Vikas Bank
21. Telangana Grameena Bank
22. Uttar Banga Kshetriya Gramin Bank
23. Tripura Gramin Bank
24. Aryavart Bank
25. Baroda U.P. Bank
26. Prathama U.P Gramin Bank
27. Uttarakhand Gramin Bank

Public Sector Banks

1. Bank of India
2. Bank of Baroda
3. Bank of Maharashtra
4. Canara Bank
5. Central Bank of India
6. Indian Bank
7. Indian Overseas Bank
8. Punjab & Sind Bank
9. Punjab National Bank
10. State Bank of India
11. UCO Bank
12. Union Bank of India
    

Private Sector Banks

1. Dhanlaxmi Bank
2. Jammu & Kashmir Bank
3. Karnataka Bank Ltd.
4. Tamilnad Mercantile Bank Ltd.
5. The Karur Vysya Bank Limited
6. The South Indian Bank Ltd.
   

Also Read: Banks That Give Education Loans without Collateral for Abroad

CGFSEL Education Loan Scheme: Security Amount

Different security requirements are applied based on the loan amount when applying for a loan under the Credit Guarantee Fund Scheme for Education Loans. The security structure under CGFSEL is designed to make education loans more accessible, while also providing adequate safeguards for the banks.

Here’s how the security requirements are structured under the CGFSEL scheme.

For loans up to INR 4 lakh

• Parents must act as joint borrowers for the loan.
• No collateral security or third-party guarantee is required.

For loans above INR 4 lakh and up to INR 7.5 lakh

• In addition to parents being joint borrowers, a suitable third-party guarantee may be required as collateral security.
• In some instances, the bank may waive the third-party guarantee if it is satisfied with the financial standing or net worth of the parent(s) who are joint borrowers.

For loans exceeding INR 7.5 lakh

• Parents will need to be joint borrowers.
• Tangible collateral security of a value acceptable to the bank is required.
• The student's future income will be committed to the loan repayment through instalments.

In conclusion, the CGFSEL Education Loan Scheme offers a lifeline for students from economically weaker sections, providing collateral-free loans and flexible repayment options. With the government's backing, this scheme makes quality education accessible without the financial burden often associated with higher education. 

Ready to take the leap into higher education without financial worries? Propelld is here to make it happen! With our seamless digital application, rapid approval process, and flexible repayment plans, securing an education loan has never been easier. 

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FAQs About CGFSEL Education Loan Scheme

What is the CGFSEL full form? 

The CGFSEL full form is Credit Guarantee Fund Scheme for Education Loans. It is a government-backed initiative to provide collateral-free loans to students from economically weaker sections.

Who is eligible for the CGFSEL education loan scheme? 

Students from economically weaker sections who have secured admission to a recognised university in India or abroad are eligible for the CGFSEL education loan scheme.

What is the maximum loan amount covered under the CGFSEL scheme? 

The maximum loan amount covered under the CGFSEL scheme is INR 7.5 lakhs.

Do I need to provide collateral or a third-party guarantee for the CGFSEL loan? 

No, the CGFSEL loan does not require collateral or a third-party guarantee for loans up to INR 4 lakhs. A suitable third-party guarantee may be required for loans above INR 4 lakhs.

What is the interest rate for the CGFSEL loan? 

The interest rate for the CGFSEL loan is 2% over the base rate (per annum).

What is the repayment tenure for the CGFSEL loan? 

The repayment tenure for the CGFSEL loan is up to 15 years.

Can I apply for the CGFSEL loan online? 

You can apply for the CGFSEL loan online through the Vidya Lakshmi portal.

What documents are required for the CGFSEL Education Loan Scheme application? 

The required documents for the CGFSEL loan application include proof of admission, income certificate, identity proof, address proof, and educational qualifications.

Which banks participate in the CGFSEL Education Loan Scheme? 

Multiple banks, including public sector banks, private sector banks, and regional rural banks, participate in the CGFSEL education loan scheme.

Can I use the CGFSEL Education Loan Scheme to study abroad? 

Yes, the CGFSEL loan can be used for studies abroad, including undergraduate and postgraduate programs.

What expenses are covered under the CGFSEL Education Loan Scheme? 

The CGFSEL loan covers various expenses, including tuition fees, hostel accommodation, examination fees, and other education-related costs.

Is there a moratorium period for the CGFSEL Education Loan Scheme? 

Yes, the CGFSEL loan has a moratorium period that includes the time to complete the course plus an additional year or six months after gaining employment, whichever comes first.

Can I repay the CGFSEL loan early? 

Yes, you can repay the CGFSEL loan early without any penalty.

What is the security amount required for the CGFSEL loan? 

The security amount required for the CGFSEL loan varies depending on the loan amount. Parents must act as joint borrowers for loans up to INR 4 lakhs. A suitable third-party guarantee may be required for loans above INR 4 lakhs.