Education Loan for IIT Students 2025: Interest Rates, Eligibility & Process

Education Loan for IIT Students

IITs in India give students the chance to build secure and high-paying careers. Graduates from top IITs can earn between ₹20 lakh and ₹1 crore, while other IITs usually offer ₹20–50 lakh. But the high fees can be a challenge for many families.

Education loans help students pay for tuition and other expenses, making it possible to focus on studies without financial stress. So yes, IIT students can get education loans. Let’s look at their features, eligibility, and how to apply.

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Key Takeaways

IIT students can get fast, collateral-free education loans up to ₹50 lakh digitally.
Government schemes can make loans nearly interest-free for eligible students.
Interest rates range from 7.2%–11.6%, with tax deductions lowering overall cost.
Strong IIT placements reduce repayment risk when borrowing smartly.
Apply online or in-branch with key documents; compare lenders for best rates.

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Education Loans for IIT Programs- Types

Education loans for IIT students generally come in two types:

1. Government-Backed Education Loans

Banks like SBI, Bank of Baroda, Canara Bank, and Punjab National Bank offer loans for premier institutions. These loans can go up to ₹50 lakh without collateral, with flexible repayment options. Interest rates typically start from 7.75–8.35%, and repayment can extend up to 15 years after your study period.
Why choose government loans? They have structured timelines, moratorium benefits during your course, and 6–12 months of repayment relief after graduation.

2. Private Lender Education Loans

Private banks and NBFCs like ICICI, HDFC, and Propelld provide loans for students aged 18–35 based on academic merit and confirmed admission. These loans often process faster and offer more flexible terms.

Propelld processes your loan as fast as 24 hours, with completely flexible underwriting!

Learn more about Propelld’s loan processing timelines and service commitment

‍Get Education Loan with Higher Chances of Approval

PM Vidyalaxmi Scheme: Latest Government Support (2024-25)

What is the PM Vidyalaxmi Scheme?
Launched in November 2024, the PM Vidyalaxmi Scheme is a Central Sector initiative that provides collateral-free, guarantor-free education loans for IIT students and other top institutions.

Key Benefits for IIT Students

Zero Collateral & Guarantor Requirements

No property or security is needed for the loan.
Covers full tuition fees and course-related expenses.
The government provides 75% credit guarantee for loans up to ₹7.5 lakh.

Interest Subvention (3% Reduction)

Students from families with annual income up to ₹8 lakh get 3% interest reduction on loans up to ₹10 lakh during the moratorium period.
Example: A 9% interest rate effectively becomes 6%, saving over ₹90,000 on a ₹30 lakh loan.

Full Interest Subvention for Technical Courses

Students from families earning up to ₹4.5 lakh pursuing technical courses (like B.Tech at IITs) receive 100% interest support on loans up to ₹10 lakh during their study period—essentially an interest-free loan.

Eligibility

Admission to top 860 institutions, including all IITs
Government and private HEIs ranked in the top 100 by NIRF
Indian nationals
For interest subvention: Family income under ₹8 lakh
Loans sanctioned after November 6, 2024

How to Apply
Students can apply via the unified digital portal PM-Vidyalaxmi, which is used by all participating banks.

Quick Steps:

Visit pmvidyalaxmi.co.in
Register with Aadhaar and basic details
Upload IIT admission letter and supporting documents
Select your preferred bank
Submit family income proof (if claiming subvention)
Track application status in real-time

Additional Insights

The portal integrates with 13+ major banks, allowing students to compare offers instantly
The scheme has a budget of ₹3,600 crore for 2024-25 to 2030-31, aiming to benefit 7 lakh new students across India.

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Education Loan for IIT Students: Interest Rate Overview

Interest rates for IIT education loans typically range from 7.20% to 11.60% per annum, depending on the lender and your profile. Factors affecting your rate include:

Lender Type: Government banks (7.75%-9.55%) generally offer lower rates than private lenders (9%-11.60%).
Loan Amount: Higher loan amounts may qualify for better rates.
Academic Performance: Merit-based discounts are available for top-performing students.
Co-applicant Profile: A strong co-applicant credit profile can help secure lower rates.

Note on Interest Calculation:
Most lenders quote rates on a reducing balance basis, not flat rates. This means:

Interest is charged only on the outstanding principal.
The effective cost is 40-50% lower than flat-rate loans.
APR (Annual Percentage Rate) includes processing fees.

Top Lenders: Interest Rates & Features Comparison (2025):

Program

Loan Amount

Interest Rate

Repayment Tenure

Key Feature

SBI Scholar Scheme

Up to ₹50 Lakh

Starts at 8.35%

Up to 15 years

Market leader, lowest rates for top institutes

Canara Bank

Example:

A student admitted to IIT Bombay with JEE Advanced rank <5000 and parent income >₹10 LPA usually qualifies for rates between 11.25%-12.5%.
Students from tier-2 IITs with JEE rank >10000 may get rates in the 13%-14.75% range.

For detailed APR calculations and EMI comparisons, visit the Interest Rates & APR Policy Page.

Tax Benefits on Education Loans: Save Under Section 80E

One major advantage of taking an IIT education loan is the tax benefit under Section 80E of the Income Tax Act, 1961, which can help you save ₹6–10 lakh or more over the repayment period.

Key Features:

Unlimited Deduction: No cap on the interest amount claimed.
8-Year Benefit: Available from the year repayment starts, for up to 8 years.
Interest Only: Deduction applies only to the interest component.
Eligible Borrowers: Both student and co-applicant (parent) can claim if they are co-borrowers.

Who Can Claim:

Individual taxpayers taking loans for higher education (post-12th) from banks or RBI-registered NBFCs.
Loans for yourself, spouse, children, or wards.
Indian or foreign educational institutions.

How to Claim:

Get annual interest certificate from your lender.
Use the old tax regime.
File ITR: Deductions → Section 80E → Enter interest paid → Attach certificate.
Keep loan agreement and interest certificates for at least 8 years.

‍Pro Tips:

Parents as co-borrowers can claim deductions.
Start claiming from Year 1; benefits grow as income rises.

For detailed examples, visit the Transparency Page‍

Is Taking a Large Education Loan Risky? Real Student Concerns

A prospective IIITB MTech CSE student recently posted on Reddit:

"Is it risky to take such a huge education loan for MTech CSE in the current market situation? I don't know what will be the market situation after 2 years. Placement percentage is also ~80% from last 2 years."

Key Insights

Market Uncertainty: Even with strong placement records, economic fluctuations can affect starting salaries and hiring trends.
Loan Repayment Pressure: Large loans increase financial stress if income post-graduation is lower than expected.
Placement Trends: Historical placement percentages (~80%) provide some guidance, but they are not a guarantee for future years.

Eligibility Criteria for Education Loans for IIT Students

To be eligible for an IIT education loan, Indian students need to meet certain standard criteria:

Admission: A confirmed IIT admission letter.
Citizenship: Must be an Indian citizen.
Age & Academics: Meet the lender’s age limits and course prerequisites.
Financial Proof: Bank statements, income tax returns, or other records to show repayment ability.
Co-applicant/Collateral: Provide a co-applicant or collateral if required.

Before applying, students can explore the IIT education loan guidelines that highlight key eligibility requirements and applicable categories.

Documents Required for Education Loans for IIT Students

The application process for education loans for IIT students necessitates submitting important documents for identity and educational document verification. The following paperwork must be gathered before submitting an IIT loan application:

Document	Purpose
Admission Letter	Official IIT admission letter as proof of enrollment.
Identity & Address Proof	Documents like passport or Aadhaar, plus utility bills or rental agreements.
Academic Records	Certificates and mark sheets from previous studies.
Cost of Education	Detailed breakdown of tuition, living expenses, insurance, and other costs.
Financial Statements	Bank statements, income tax returns, or other proof of repayment ability.
Co-Applicant Details	KYC documents of a parent or guardian acting as co-applicant.

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Minimal Docs, Maximum Approval - Apply Now

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Application Process for Education Loans for IIT Students

As an IIT student, the application procedure for an education loan is complex. You must know the loan application steps, which are as follows:

Step	Action
Step 1: Gather Documents	Collect all required documents: admission letter, academic records, ID & address proof, financial statements, co-applicant details, and any other documents requested by the bank.
Step 2: Apply for Loan	Submit the loan application either online or offline at the bank branch. Online is convenient, but verification may require a branch visit.
Step 3: Application Review	The bank scrutinizes your documents and eligibility, including academic performance, family income, and credit history. Additional documents may be requested.
Step 4: Sanction Letter	If approved, the bank issues a sanction letter specifying loan amount, interest rate, and repayment terms.
Step 5: Loan Disbursement	After accepting the terms, the loan amount is directly transferred to the IIT’s account for tuition and related expenses.

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While IITs offer various scholarships and fee waivers, students should still review the IIT BTech tuition fee structure to understand the actual costs involved.

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Fund Your Dream of Studying at IIT with Propelld

Getting into an IIT is itself a task that demands dedication and surrender to study. As prestigious and beneficial as this institute is, Propelld knows that it brings a lot of expenses with it. We are dedicated to taking this challenge out by offering you tailored financial solutions to fund your education. On this journey, you will also get access to:

Private Student Loans: It will help you cover all your expenses until you complete the program.
Seamless Loan Process: Focus on your study without getting into the hassles of documentation and tedious paperwork, as our process is digital.
Moratorium: Pay only when you get a job.

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Securing an education loan for IITs shouldn't be overwhelming. With high placement potential and subsidized government schemes, the financial burden is easier to manage than it seems. However, it's crucial to compare lenders, check eligibility, and prepare documentation early. For students seeking a fast, hassle-free process, apply through Propelld at Propelld.com—designed to meet the unique needs of IIT aspirants. Choosing the right funding path now can shape your academic journey and future success.

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Frequently Asked Questions

Which IIT has the lowest fees?

The fee structure across all IITs (Indian Institutes of Technology) is relatively similar, as they are centrally funded by the Government of India. However, IIT Guwahati and IIT Bhubaneswar are generally considered to have slightly lower fees compared to other IITs.

Can I study in IIT for free?

While IITs do not offer free education, they provide substantial fee waivers and scholarships based on merit and financial need.

What is the IIT student purchase program?

The IIT student purchase program allows students to purchase laptops, software, and other educational resources at discounted rates from various vendors.

Is education free in IIT?

No, education at IITs is not entirely free. However, the government heavily subsidizes the tuition fees, making IIT education relatively affordable compared to private institutions.

Do IIT students get an education loan?

Yes, IIT students are eligible for education loans from various banks and financial institutions. These loans are typically offered at subsidized interest rates and flexible repayment terms to help students finance their education.

Can I get a 100% education loan?

Education loans offer several advantages, including 100% financing that covers course fees and living and travel expenses.

Is education loan interest free?

No, education loan is not interest-free in India. However, student loan without interest is a possibility in India with scholarships and subsidies. You can negate the effect of interest on your education loan by availing 0% interest scholarships or subsidies with Government subsidy schemes.

About the Author

Vaishali Pandey

Content Marketer

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A banker turned content marketer with expertise in growth-focused content strategies for the finance and digital sectors. She currently drives data-backed content initiatives at Propelld, through high-impact storytelling.

Before moving into content marketing, Vaishali spent nearly a decade in banking, across their asset and lending divisions and spent almost a decade in finance. An MBA in Marketing and a writer at heart, she finally took up content marketing and now simplifies money talks for the readers.

She is also a certified digital marketer (MICA), combining data-driven insights with creative storytelling to deliver measurable business growth.

Beyond work, Vaishali is a handcrafted brand founder, avid reader, and travel & food blogger, blending creativity and strategy in everything she does.

Victor Senapaty

Co Founder, Propelld

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Victor Senapaty is the Co-Founder of Propelld, a pioneering fintech platform revolutionizing education financing in India. An IIT Madras and FMS Delhi alumnus, Victor brings a rare blend of investment banking expertise, startup leadership, and financial innovation to the education lending space.

He is a serial entrepreneur with ventures spanning edtech, hyperlocal commerce, and consumer experiences, and an ex-Deutsche Bank investment banker with deep expertise in financial modeling, valuation, and strategic growth. At Propelld, Victor focuses on unlocking financial access for students by creating future-potential-based lending models, helping thousands pursue higher education without traditional credit barriers.

A National Maths Olympiad gold medalist, FRM Level 1 certified professional, an avid traveler and football enthusiast, Victor is passionate about building products that meaningfully impact lives and transform access to education in India.

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