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Raghuvamshi Kanukruthi
Jun 14, 2024

Explore the different kinds of education loans provided by the government of India, their features, interest rates and how to apply.

Introduction 

Financing your education can feel like a complex puzzle. Between tuition fees, living expenses, and the ever-rising cost of textbooks, it's easy to feel overwhelmed. But fear not! The good news is there are government initiatives in place to help bridge the financial gap and make your educational dreams a reality. 

Let's get into the world of education loans by the government and see how they can empower you on your academic journey. 

Features of Education Loans by the Government of India

A variety of education loans by the government are available today to make education loans more accessible and affordable. 

Let's dive into the education loans offered by the government of India. 

Loan Scheme Eligibility Criteria Amount Offered Description
Education Loan Scheme of the NBCFDC Must belong to the OBC Category
Admission based on merit is a must
Family Income should be below 3.5 LPA
Upto 20 lakhs This scheme by the NBCFDC offers financial aid to OBC students pursuing graduate and higher studies. It covers up to 90% of the course fee for studies in India and 85% for abroad. Girls get a concessional interest rate.
Padho Pardesh Scheme (Discontinued) Minority Communities Students
Masters, M.Phil or Ph.D. Abroad
Family income should be less than 6 LPA
6 lakhs Due to overlap, limited benefits, and easier access to education loans at lower interest rates, the Padho Pardesh Scheme will be discontinued from 2022-23 onwards. Existing beneficiaries as of March 31, 2022, will still receive interest subsidies on their educational loans during the moratorium period, subject to compliance with existing guidelines.
ACSISOBCEBC Scheme OBC and EBC Students
Masters, M.Phil or Ph.D. Abroad
Complete tuition fee coverage as the loan amount The Assistance for Central Sector Institutions for Students from Overseas Indian Communities (ACSISOBCEBC) Scheme provides loans to OBC and EBC students pursuing higher education abroad.
Vidya Lakshmi Education Loan Indian Citizen
Age 18-35
Admission to a recognized institution
The loan amount is limited to tuition fees or collateral security This is a national scholarship program for students from all backgrounds.
Gujarat Loan for Study Abroad (Gujarat Govt.) Gujarat Domicile
Minimum 60% in Class 12
Family income should be less than 6 LPA
Admission to a foreign university
Upto 15 LPA This scheme by the Gujarat government offers financial aid to students from Gujarat pursuing higher education abroad.

Note: In addition to these common student loans, you can visit your state government's official websites to explore financial aid options available for students pursuing higher education in India and abroad. 

Overview of Government Initiatives to Support Students Financially

The government understands the importance of education for individual and national growth. That's why they've implemented various financial support programs to make higher education more accessible. 

These initiatives of education loans by the government take two main forms:

  • Education Loan Subsidies: These schemes offer partial relief on the interest accrued on your education loan. Essentially, the government shoulders some of the interest burden, making your loan repayments more manageable.
  • Loan Guarantee Programs: These programs act as a safety net for lenders. By guaranteeing a portion of the loan amount, they incentivize banks to offer education loans to students, even those who might not have extensive collateral.

Purpose of Government Sponsored Education Loan Subsidies and Guarantees

These education loans by the government serve a dual purpose:

  • Increased Access: Subsidies and guarantees make education loans more attractive, encouraging students from all economic backgrounds to pursue higher studies. This broadens the talent pool and fosters a more educated workforce.
  • Reduced Financial Burden: By easing the financial burden of education loans, these schemes enable students to focus on their studies without the constant worry of spiraling into debt. This improves academic performance and sets graduates up for a brighter financial future.

Now that you have a clearer understanding of these education loans by the government, the next steps involve exploring the specific schemes available and determining your eligibility. 

Let’s get into the details of these programs and guide you through the application process!

Advantages of Availing Education Loan by the Government

The government's availability of education loans has multiple advantages. Below are some notable benefits of obtaining an education loan through state or central government schemes:

  1. Low student loan interest rates.
  2. Interest subsidies.
  3. No requirement for collateral for loans up to 7.5 Lakhs.
  4. Loan financing up to INR 1.5 crore.
  5. Streamlined loan approval process.
  6. Flexible repayment options.
  7. 1-year moratorium period after course completion.

Eligibility to Apply for Government Student Loans 

Below is the list of eligibility criteria for obtaining education loans by the government:

  1. Attainment of 60% or higher in the 12th board examination.
  2. Valid documentation is required when applying for scholarships based on minority status, caste, or economically weaker sections (EWS).
  3. Mandatory submission of an admission letter from the university.
  4. Confirmation of the student's nationality.

Additional eligibility requirements may apply based on the specific loan scheme. For comprehensive details, refer to the official scholarship scheme website. 

How to Get an Education Loan from the Government 

Now that you've explored various education loans by the government, you might be wondering: How do I actually apply for these benefits? While the specific application process can vary slightly depending on the scheme and chosen bank, here's a general roadmap to guide you:

1. Research and Choose Your Scheme

The first step is to identify the scheme that best aligns with your needs. Consider factors like your course type, institution, family income, and desired loan amount. Explore the resources mentioned in the previous sections to understand the eligibility criteria and benefits of each scheme (CSIS, ACSISOBCEBC, etc.).

2. Contact Your Preferred Bank

Once you've chosen a relevant scheme, approach your preferred bank that offers education loans. Many banks participate in these government-backed programs. They can guide you through the specific application process for the chosen scheme and their internal requirements.

3. Gather Required Documents

Here are some general documents you might need for an education loan application, though the exact list might vary depending on the bank and scheme:

  1. Duly filled application form (provided by the bank)
  2. Admission letter from your chosen educational institution
  3. Academic transcripts from previous studies
  4. Proof of identity (Aadhaar Card, PAN Card, etc.)
  5. Income proof of your parents/guardian (salary slips, income tax returns, etc.)
  6. Caste certificate (if applicable for specific schemes)
  7. Sanction letter from a recognized scholarship program (if applicable)

4. Submit Your Application and Await Approval

Once you've compiled the required documents, submit your completed application form along with all supporting documents to the bank. The bank will then assess your eligibility for both the loan and the chosen government subsidy or guarantee program. This process might involve credit checks and verification of documents.

Conditions and Advisory for Applicants

  1. Eligibility is Key: Remember, each scheme has specific eligibility criteria. Ensure you meet all the requirements before applying.
  2. Carefully Read the Terms and Conditions of all the Programs: Carefully study the terms and conditions of both the education loan and the government scheme you're applying for. This includes understanding the interest rates, repayment timelines, and subsidy details.
  3. Choose Wisely: Borrow only what you need. Don't get carried away by the availability of loans. Plan your budget carefully and factor in future living expenses.
  4. Responsible Repayment is Crucial: Government subsidies and guarantees ease the burden, but the loan repayment responsibility ultimately lies with you. Develop a solid repayment plan to ensure a smooth financial future after graduation.

By following these steps and keeping the advisory points in mind, you can navigate the application process for education loans from the government with greater confidence. 

Remember, for the most up-to-date information and specific application procedures, consult the official websites of the relevant government ministry (e.g., Ministry of Education) and the chosen bank.

Now, let us take a look at the top banks of India that support education loans by the government. 

EMI and Interest Rate on Government Education Loans by Top Indian Banks

This table shows starting interest rates and EMI variations for student loans in India by the government and also for abroad from major Indian banks. Remember, these are estimates - contact the bank for your personalized offer.

Bank Interest Rate (For Studies in India) EMI Variation Interest Rate (For Studies Abroad) EMI Variation
State Bank of India (SBI) 8.10% - 12.50% p.a. Depends on loan amount, course, and borrower profile 8.15% - 14.50% p.a. Depends on loan amount, course, and borrower profile
HDFC Bank 8.60% - 11.35% p.a. Depends on loan amount, course, and borrower profile 8.95% - 15.00% p.a. Depends on loan amount, course, and borrower profile
ICICI Bank 11.60% - 12.85% p.a. Depends on loan amount, course, and borrower profile 12.05% - 14.55% p.a. Depends on loan amount, course, and borrower profile
Axis Bank 12.05% - 14.50% p.a. Depends on loan amount, course, and borrower profile 13.70% - 15.20% p.a. Depends on loan amount, course, and borrower profile
Kotak Mahindra Bank 8.50% - 11.10% p.a. Depends on loan amount, course, and borrower profile Not available Not available

Important Note:

  • The interest rates and EMI variations mentioned above are indicative and can vary depending on the individual bank's policies, loan amount, course of study, borrower's profile (credit score, academic record, etc.), and chosen loan scheme.
  • It's always recommended that you visit the official bank website or contact customer care for the latest interest rates and specific loan details.

Propelld Your Educational Partner 

Education loans by the government are a great starting point, but complexities and limitations can arise. Don't get bogged down in the details – Propelld empowers you to seamlessly bridge the gap and take your education journey further.

Propelld goes beyond traditional loan structures, offering:

  1. Faster approvals: Our streamlined process is 10x quicker than banks, getting you the funds you need efficiently.
  2. No collateral required: Focus on your studies, not securing a guarantor. Propelld believes in your potential.
  3. Flexible repayment options: Tailored plans that adjust to your future earning potential, ensuring a stress-free repayment journey.
  4. Focus on employability: We invest in your future, with an approach that considers your career goals.

Propelld isn't just a lender; we're your partner in achieving your academic dreams. With a network of prestigious institutions like Upgrade, Simplilearn, Great Learning, and BITS Pilani, we open doors to exceptional education.

Visit Propelld today and explore the possibilities. Let's turn your educational aspirations into reality together.

Education Loan by the Government: Eligibility and Application 2024

Raghuvamshi Kanukruthi
June 14, 2024
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Shivam Bhardwaj
March 15th 2022

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Introduction 

Financing your education can feel like a complex puzzle. Between tuition fees, living expenses, and the ever-rising cost of textbooks, it's easy to feel overwhelmed. But fear not! The good news is there are government initiatives in place to help bridge the financial gap and make your educational dreams a reality. 

Let's get into the world of education loans by the government and see how they can empower you on your academic journey. 

Features of Education Loans by the Government of India

A variety of education loans by the government are available today to make education loans more accessible and affordable. 

Let's dive into the education loans offered by the government of India. 

Loan Scheme Eligibility Criteria Amount Offered Description
Education Loan Scheme of the NBCFDC Must belong to the OBC Category
Admission based on merit is a must
Family Income should be below 3.5 LPA
Upto 20 lakhs This scheme by the NBCFDC offers financial aid to OBC students pursuing graduate and higher studies. It covers up to 90% of the course fee for studies in India and 85% for abroad. Girls get a concessional interest rate.
Padho Pardesh Scheme (Discontinued) Minority Communities Students
Masters, M.Phil or Ph.D. Abroad
Family income should be less than 6 LPA
6 lakhs Due to overlap, limited benefits, and easier access to education loans at lower interest rates, the Padho Pardesh Scheme will be discontinued from 2022-23 onwards. Existing beneficiaries as of March 31, 2022, will still receive interest subsidies on their educational loans during the moratorium period, subject to compliance with existing guidelines.
ACSISOBCEBC Scheme OBC and EBC Students
Masters, M.Phil or Ph.D. Abroad
Complete tuition fee coverage as the loan amount The Assistance for Central Sector Institutions for Students from Overseas Indian Communities (ACSISOBCEBC) Scheme provides loans to OBC and EBC students pursuing higher education abroad.
Vidya Lakshmi Education Loan Indian Citizen
Age 18-35
Admission to a recognized institution
The loan amount is limited to tuition fees or collateral security This is a national scholarship program for students from all backgrounds.
Gujarat Loan for Study Abroad (Gujarat Govt.) Gujarat Domicile
Minimum 60% in Class 12
Family income should be less than 6 LPA
Admission to a foreign university
Upto 15 LPA This scheme by the Gujarat government offers financial aid to students from Gujarat pursuing higher education abroad.

Note: In addition to these common student loans, you can visit your state government's official websites to explore financial aid options available for students pursuing higher education in India and abroad. 

Overview of Government Initiatives to Support Students Financially

The government understands the importance of education for individual and national growth. That's why they've implemented various financial support programs to make higher education more accessible. 

These initiatives of education loans by the government take two main forms:

  • Education Loan Subsidies: These schemes offer partial relief on the interest accrued on your education loan. Essentially, the government shoulders some of the interest burden, making your loan repayments more manageable.
  • Loan Guarantee Programs: These programs act as a safety net for lenders. By guaranteeing a portion of the loan amount, they incentivize banks to offer education loans to students, even those who might not have extensive collateral.

Purpose of Government Sponsored Education Loan Subsidies and Guarantees

These education loans by the government serve a dual purpose:

  • Increased Access: Subsidies and guarantees make education loans more attractive, encouraging students from all economic backgrounds to pursue higher studies. This broadens the talent pool and fosters a more educated workforce.
  • Reduced Financial Burden: By easing the financial burden of education loans, these schemes enable students to focus on their studies without the constant worry of spiraling into debt. This improves academic performance and sets graduates up for a brighter financial future.

Now that you have a clearer understanding of these education loans by the government, the next steps involve exploring the specific schemes available and determining your eligibility. 

Let’s get into the details of these programs and guide you through the application process!

Advantages of Availing Education Loan by the Government

The government's availability of education loans has multiple advantages. Below are some notable benefits of obtaining an education loan through state or central government schemes:

  1. Low student loan interest rates.
  2. Interest subsidies.
  3. No requirement for collateral for loans up to 7.5 Lakhs.
  4. Loan financing up to INR 1.5 crore.
  5. Streamlined loan approval process.
  6. Flexible repayment options.
  7. 1-year moratorium period after course completion.

Eligibility to Apply for Government Student Loans 

Below is the list of eligibility criteria for obtaining education loans by the government:

  1. Attainment of 60% or higher in the 12th board examination.
  2. Valid documentation is required when applying for scholarships based on minority status, caste, or economically weaker sections (EWS).
  3. Mandatory submission of an admission letter from the university.
  4. Confirmation of the student's nationality.

Additional eligibility requirements may apply based on the specific loan scheme. For comprehensive details, refer to the official scholarship scheme website. 

How to Get an Education Loan from the Government 

Now that you've explored various education loans by the government, you might be wondering: How do I actually apply for these benefits? While the specific application process can vary slightly depending on the scheme and chosen bank, here's a general roadmap to guide you:

1. Research and Choose Your Scheme

The first step is to identify the scheme that best aligns with your needs. Consider factors like your course type, institution, family income, and desired loan amount. Explore the resources mentioned in the previous sections to understand the eligibility criteria and benefits of each scheme (CSIS, ACSISOBCEBC, etc.).

2. Contact Your Preferred Bank

Once you've chosen a relevant scheme, approach your preferred bank that offers education loans. Many banks participate in these government-backed programs. They can guide you through the specific application process for the chosen scheme and their internal requirements.

3. Gather Required Documents

Here are some general documents you might need for an education loan application, though the exact list might vary depending on the bank and scheme:

  1. Duly filled application form (provided by the bank)
  2. Admission letter from your chosen educational institution
  3. Academic transcripts from previous studies
  4. Proof of identity (Aadhaar Card, PAN Card, etc.)
  5. Income proof of your parents/guardian (salary slips, income tax returns, etc.)
  6. Caste certificate (if applicable for specific schemes)
  7. Sanction letter from a recognized scholarship program (if applicable)

4. Submit Your Application and Await Approval

Once you've compiled the required documents, submit your completed application form along with all supporting documents to the bank. The bank will then assess your eligibility for both the loan and the chosen government subsidy or guarantee program. This process might involve credit checks and verification of documents.

Conditions and Advisory for Applicants

  1. Eligibility is Key: Remember, each scheme has specific eligibility criteria. Ensure you meet all the requirements before applying.
  2. Carefully Read the Terms and Conditions of all the Programs: Carefully study the terms and conditions of both the education loan and the government scheme you're applying for. This includes understanding the interest rates, repayment timelines, and subsidy details.
  3. Choose Wisely: Borrow only what you need. Don't get carried away by the availability of loans. Plan your budget carefully and factor in future living expenses.
  4. Responsible Repayment is Crucial: Government subsidies and guarantees ease the burden, but the loan repayment responsibility ultimately lies with you. Develop a solid repayment plan to ensure a smooth financial future after graduation.

By following these steps and keeping the advisory points in mind, you can navigate the application process for education loans from the government with greater confidence. 

Remember, for the most up-to-date information and specific application procedures, consult the official websites of the relevant government ministry (e.g., Ministry of Education) and the chosen bank.

Now, let us take a look at the top banks of India that support education loans by the government. 

EMI and Interest Rate on Government Education Loans by Top Indian Banks

This table shows starting interest rates and EMI variations for student loans in India by the government and also for abroad from major Indian banks. Remember, these are estimates - contact the bank for your personalized offer.

Bank Interest Rate (For Studies in India) EMI Variation Interest Rate (For Studies Abroad) EMI Variation
State Bank of India (SBI) 8.10% - 12.50% p.a. Depends on loan amount, course, and borrower profile 8.15% - 14.50% p.a. Depends on loan amount, course, and borrower profile
HDFC Bank 8.60% - 11.35% p.a. Depends on loan amount, course, and borrower profile 8.95% - 15.00% p.a. Depends on loan amount, course, and borrower profile
ICICI Bank 11.60% - 12.85% p.a. Depends on loan amount, course, and borrower profile 12.05% - 14.55% p.a. Depends on loan amount, course, and borrower profile
Axis Bank 12.05% - 14.50% p.a. Depends on loan amount, course, and borrower profile 13.70% - 15.20% p.a. Depends on loan amount, course, and borrower profile
Kotak Mahindra Bank 8.50% - 11.10% p.a. Depends on loan amount, course, and borrower profile Not available Not available

Important Note:

  • The interest rates and EMI variations mentioned above are indicative and can vary depending on the individual bank's policies, loan amount, course of study, borrower's profile (credit score, academic record, etc.), and chosen loan scheme.
  • It's always recommended that you visit the official bank website or contact customer care for the latest interest rates and specific loan details.

Propelld Your Educational Partner 

Education loans by the government are a great starting point, but complexities and limitations can arise. Don't get bogged down in the details – Propelld empowers you to seamlessly bridge the gap and take your education journey further.

Propelld goes beyond traditional loan structures, offering:

  1. Faster approvals: Our streamlined process is 10x quicker than banks, getting you the funds you need efficiently.
  2. No collateral required: Focus on your studies, not securing a guarantor. Propelld believes in your potential.
  3. Flexible repayment options: Tailored plans that adjust to your future earning potential, ensuring a stress-free repayment journey.
  4. Focus on employability: We invest in your future, with an approach that considers your career goals.

Propelld isn't just a lender; we're your partner in achieving your academic dreams. With a network of prestigious institutions like Upgrade, Simplilearn, Great Learning, and BITS Pilani, we open doors to exceptional education.

Visit Propelld today and explore the possibilities. Let's turn your educational aspirations into reality together.

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FAQ for Education Loans by the Government 

What are the eligibility requirements for Indian students studying abroad to obtain an education loan?

The eligibility criteria typically include academic performance (such as a minimum of 60% in the 12th board exam), nationality verification, submission of valid proof for scholarships (if applicable), and a confirmed admission letter from the university.

Can I apply for an education loan to study abroad before receiving an admission offer letter?

Generally, a confirmed admission letter from the university is required to apply for an education loan to study abroad.

Are there specific restrictions on the countries or courses eligible for education loans for studying abroad?

Education loans for studying abroad usually cover a wide range of countries and courses, but it's recommended to check with the loan provider for any specific restrictions.

What is the repayment period for education loans for studying abroad?

The repayment period for education loans for studying abroad typically starts after a moratorium period of 6 months to 1 year after course completion and can extend up to 5-7 years or more, depending on the loan amount and terms.

Can I get a loan for living expenses and other educational-related costs in addition to tuition fees?

Yes, education loans for studying abroad often cover not only tuition fees but also living expenses, travel costs, and other educational-related expenses.

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