How to Apply for Education Loan in India?

Raghuvamshi Kanukruthi
Updated On:
Mar 20, 2025

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Financing can be a significant concern for many students when embarking on the journey of higher education. Understanding how to apply for an education loan is crucial in making this dream a reality. In India, the process of securing an education loan has become more streamlined and accessible, allowing students to pursue their academic aspirations without financial constraints. 

This guide will walk you through the steps involved in applying for a student education loan online in India, providing insights into the process, requirements, and essential information to help you navigate this important financial decision. Let's delve into how to get education loan.

Read on to know:

  • Various lenders have different eligibility criteria and document requirements that you must check. Apart from this, check out the list of things to do before applying for an education loan.
  • From covering educational expenses, to providing easy repayment, there are certain benefits that only an education loan can provide. Read on to know more.
  • Check out the complete process of applying for an education loan in banks or NBFCs.

Things To Do Before Applying For A Student Loan in India

Here are some crucial steps to take before initiating your loan application:

1. Check Your Eligibility

Each lender has specific eligibility requirements based on academic performance, institution reputation, and course type. Confirm that you meet these criteria before proceeding with the loan application.

2. Organize Essential Documents

Having the necessary documents ready can speed up the loan approval process.

3. Compare Lenders

Different banks and financial institutions offer varying interest rates, repayment terms, and additional charges. Research and compare multiple lenders to find the best deal that suits your financial situation.

4. Understand the Repayment Structure

Go through the loan repayment terms carefully, including the tenure, EMI amount, and any moratorium period provided. Some lenders offer flexible repayment options or grace periods after graduation, which can be beneficial.

5. Estimate Your Future Earnings

Assess your potential salary in the field you plan to enter after completing your studies. This will help ensure that your repayment obligations are manageable and prevent financial strain in the future.

6. Look for Alternative Funding Sources

Before depending entirely on an education loan, explore scholarships, grants, and part-time job opportunities that can help reduce the amount you need to borrow. This can significantly ease your financial burden.

7. Borrow Only What’s Necessary

While it may be tempting to secure a higher loan amount, it’s wise to calculate your actual educational expenses and borrow only the required sum. This will help you avoid excessive debt and minimize interest costs.

8. Check Collateral Requirements

For higher loan amounts, lenders might require collateral such as property, fixed deposits, or other assets. Be aware of these requirements and evaluate whether you can fulfill them.

9. Review Processing Fees & Additional Costs

Some lenders charge processing fees, administrative costs, or other service-related expenses. Factor in these additional costs before finalizing your loan application, as they can influence the total loan expense.

By preparing in advance and carefully evaluating these aspects, you can streamline the loan application process and secure a student loan that aligns with your financial capabilities and academic aspirations.

How to Apply for Student Loan in India

Securing an education loan in India can be a streamlined process if approached systematically. Here’s a step-by-step guide on how to take student loan:

1. Identify the Bank or Financial Institution Offering Student Loans

  • Research and choose a reputable bank or financial institution that provides education loan options.
  • Consider significant banks like the State Bank of India, ICICI Bank, and Bank of Baroda, known for their education loan schemes. It's also worth exploring options offered by Non-Banking Financial Companies (NBFCs) specialising in education loans. For instance, Propelld offers competitive rates and flexible repayment options, potentially complementing the offerings of traditional banks.

2. Check the Bank's Specific Eligibility Criteria

  • Understand the unique eligibility requirements set by the chosen bank or lender.
  • Factors such as academic performance, course of study, institution, and financial background may influence eligibility.

3. Compile the Necessary Documents for the Application

  • Gather essential documents like proof of identity, address, admission letter, and co-borrower's income details.
  • Documents may include mark sheets, admission letters, salary slips, and bank statements.

4. Fill out the Online Application Form Accurately

  • Utilize the convenience of online application forms provided by most banks and financial institutions.
  • Ensure all sections are completed accurately and attach the required documents as specified.

5. Submit the Completed Application Form

  • Submit the filled-out application form along with the necessary documents either online or at the bank branch.
  • The bank will initiate the review process to assess your eligibility for the education loan.

6. Await the Bank's Assessment and Loan Approval

  • Following submission, the bank will evaluate your application details to determine loan terms.
  • Upon approval, the loan amount will be disbursed, as per the agreed terms, directly to the educational institution or your bank account.

What are the Requirements for Education Loan? 

Lets see the eligibility criteria and documents requirements for education loan process:

Documents Required for Education Loan Procedure

Applying for an education loan in India involves submitting a comprehensive set of documents to the lender. These documents serve as proof of the applicant's identity, financial status, academic qualifications, and admission to the desired educational institution. Ensuring that all the required documents are in order is crucial for a smooth loan application process. 

Let's explore the key documents needed for the education loan process in India.

1. Duly Filled Application Form

The first step in applying for an education loan in India is to submit a duly filled application form. This form typically includes personal details, academic records, and financial information. Ensuring that all fields are accurately filled and signed is crucial to avoid any issues during the loan processing stage.

2. Bank Statements

Bank statements are required to verify the applicant's and co-applicant's financial stability. These statements should include the last 6 months of transactions, which helps lenders assess the applicant's ability to repay the loan.

3. Passport-Sized Photos

Passport-sized photos are necessary for identification purposes. These photos are used to verify the applicant's identity and ensure that the loan is disbursed to the correct individual.

4. Photo Id

A valid photo ID, such as a PAN card, passport, or voter ID, is required to prove the applicant's identity. This document is essential for the loan application process.

5. Residence Proof

Residence proof, such as a utility bill or lease agreement, is necessary to verify the applicant's address. This document helps lenders track the applicant's location and ensure that the loan is disbursed correctly.

6. Academic Documents

Academic documents, including mark sheets, certificates, and admission letters, are crucial for the loan application process. These documents demonstrate the applicant's academic performance and eligibility for the loan.

7. Proof of Admission

Proof of admission, such as an offer letter or admission letter from the institution, is necessary to confirm the applicant's admission status. This document ensures that the loan is disbursed correctly and for the intended purpose.

8. Additional Documents

Depending on the lender and the specific loan requirements, additional documents may be requested. These can include proof of income, business documents, or collateral documents. It is essential to review the loan terms and conditions carefully to ensure that all necessary documents are submitted.

Eligibility Criteria for Education Loan

Understanding the eligibility criteria for an education loan is crucial before embarking on the application process. Different financial institutions have specific requirements that applicants must meet to qualify for a student loan. Here are the essential eligibility criteria: 

1. Indian Citizenship

To be eligible for an education loan, applicants must hold Indian citizenship. This criterion is a fundamental requirement across various banks and financial institutions offering student loans.

2. Academic Performance

Applicants are typically required to achieve a minimum of 50% marks in their Higher Secondary Certificate (HSC) and graduation. Academic performance plays a significant role in determining eligibility for education loans.

3. Course Selection

Eligibility often depends on gaining admission to career-focused courses such as medicine, engineering, management, etc., at either the graduate or postgraduate levels. Course selection is a critical factor in determining eligibility for an education loan.

4. Income Proof of Co-Applicant

It is mandatory for the co-applicant, who can be parents, siblings, or a guarantor, to provide proof of regular income. This requirement ensures that there is financial backing to support the loan repayment.

5. Admission Status

Securing admission in India or abroad based on entrance exams or a merit-based selection process after completing HSC (10+2) is a common eligibility criterion. Proof of admission to a recognized institution is essential for the loan application process.

By meeting these eligibility criteria, applicants can enhance their chances of successfully applying for an education loan online in India.

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Features and Benefits of Education Loans

The key features and benefits of education loans in India include:

1. Comprehensive Coverage of Education-Related Expenses

  • Education loans cover a wide range of expenses, including tuition fees, living costs, study materials, travel, laptops, library fees, and more.
  • This comprehensive coverage ensures that students have access to the necessary financial resources to pursue their educational goals without financial constraints.

2. Building a Positive Credit History

  • Repaying an education loan responsibly helps students establish a strong credit history.
  • A good credit profile can be beneficial for future financial endeavors, such as obtaining favorable terms for loans or other financial transactions.

3. Tax Benefits on Interest Repayment

  • Under Section 80E of the Income Tax Act, 1961, borrowers or their co-applicants can claim a tax exemption on the interest paid towards the education loan.
  • This tax benefit helps reduce the overall financial burden on the borrower.

4. Moratorium Period

  • Education loans often offer a moratorium period, where borrowers are not required to make repayments during their study period.
  • This repayment holiday provides students with financial flexibility and allows them to focus on their education without immediate repayment obligations.

5. Promoting Financial Independence

  • Education loans enable students to fund their own education, reducing dependence on family resources.
  • This fosters financial independence and responsible financial management skills among students.

By leveraging these features and benefits, students can access the necessary financial support to pursue their educational aspirations and build a strong foundation for their future.

Financing your education shouldn't be a hurdle on your path to success. With the knowledge you gained from this guide, you're well-equipped on ‘how to take education loan’.. By understanding the eligibility criteria, required documents, and the features and benefits of education loans, you can make an informed decision about financing your academic aspirations.

Also, consider exploring NBFCs like Propelld for a potentially faster and more flexible financing option.

How Education Loan can Help in Higher Studies?

Education costs have been steadily increasing, making it challenging for many students to afford higher studies without financial assistance. 

Education loans enable students to pursue higher education in India or abroad, covering expenses like tuition, fees, books, and living costs. By providing financial support, education loans open doors to prestigious institutions and ensure that students can focus on their studies without the burden of financial constraints.

Here are some of the reasons why education loan is a saviour for those with higher education dreams: 

1. Covers Complete Educational Expenses

Loans cover tuition, hostel fees, exam charges, and even travel costs for studying abroad, ensuring uninterrupted education.

2. Reduces Financial Burden on Families

Instead of relying on family savings, students can finance their education independently, keeping household finances stable.

3. Flexible Repayment with a Grace Period

Most loans offer a moratorium period, allowing students to begin repayment only after completing their course and securing a job.

4. Affordable Interest Rates and Tax Benefits

Education loans usually have lower interest rates than personal loans, and borrowers can claim tax deductions under Section 80E of the Income Tax Act.

5. No Collateral for Certain Loan Amounts

Many lenders provide unsecured loans up to a specific limit, making funds accessible without pledging assets.

6. Builds a Strong Credit History

Timely repayment improves credit scores, benefiting students when applying for future loans.

7. Enables Admission to Top Institutions

Students can enroll in reputed universities in India and abroad without financial constraints, improving career prospects.

With structured repayment plans and financial flexibility, education loans make quality higher education accessible, allowing students to focus on their academic and career goals stress-free.

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FAQs on the Education Loan Process in India

What are the interest rates for education loans in India?

Interest rates for education loans can vary depending on the lender, loan amount, course of study, and the applicant's credit profile. It's advisable to compare rates offered by different lenders before finalizing a loan.

What is the process of education loan to study abroad?

Yes, education loans are available to cover educational expenses for studies pursued abroad. However, specific eligibility criteria and documents required may differ for international education loans.

Can I get ₹10,000 as an education loan?

While education loans typically cover larger amounts, some banks and financial institutions may offer smaller loans, including amounts as low as ₹10,000. However, this depends on the specific lender's policies. Microfinance institutions and specific educational schemes may also provide smaller education loans.

Am I eligible to get ₹50,000 on 0% interest?

Some banks and financial institutions may offer interest-free or low-interest education loans, but these are typically rare and often subject to specific conditions. Zero-interest loans might be available through certain scholarships, government schemes, or during promotional periods​​. However, it's crucial to read the terms and conditions carefully before applying for such loans.

What is the moratorium period for education loans?

The moratorium period is a feature of education loans where borrowers are not required to make repayments during their study period and for a specified period after course completion​​. This period provides financial flexibility to students before they begin repayment.

What is the role of a co-applicant in an education loan?

A co-applicant, often a parent, sibling, or guarantor, provides financial backing to support the loan repayment. The income proof of the co-applicant is generally required to ensure the loan's financial backing. 

What's the maximum loan amount I can get? 

The maximum loan amount varies depending on whether you're studying in India or abroad. Generally, loans for domestic studies range from Rs. 10 lahks to Rs. 15 lakhs, while loans for international studies can go from Rs. 20 lakhs to Rs. 30 lakhs. Some lenders may offer higher amounts with collateral.

What is employment verification for a co-signer? 

Employment verification is when the lender confirms the job information provided by your co-signer, usually a parent, guardian, or spouse. This helps ensure the accuracy of the information and may impact your loan approval.

Can I save on taxes with an education loan? 

Yes! Under Section 80E of the Income Tax Act, you can claim tax deductions on the interest paid towards your education loan. This benefit is separate from the Rs. 1.5 lakh deduction allowed under Section 80C. You can claim this deduction from the time you start paying interest on the loan, up to a maximum of 8 years or until the entire interest is paid off, whichever comes first.

How does the education loan process work?

The education loan process starts with researching lenders, checking eligibility, gathering documents, applying, undergoing verification, receiving approval, and finally, loan disbursal. Repayment usually begins after the moratorium period.

What does an education loan cover?

Education loans typically cover tuition fees, hostel charges, examination fees, study materials, travel expenses (for international studies), and other academic costs.

Do I need collateral for an education loan?

For loans up to ₹4 lakh, no collateral is required. Loans above ₹7.5 lakh generally require tangible security, depending on the lender’s policy.

Who can be a co-applicant for an education loan?

A co-applicant can be a parent, guardian, spouse, or sibling who provides financial support to back the loan repayment.

How long does it take to process an education loan?

The approval process varies by lender but typically takes a few days to a couple of weeks, depending on documentation and verification requirements.

Can I prepay my education loan?

Yes, education loans can be prepaid. However, some lenders may charge a prepayment penalty, so it’s best to confirm the terms beforehand.

Is there a moratorium period on education loans?

Yes, most lenders provide a moratorium period, allowing students to start repaying only after completing their course and securing a job.

Can I apply for an education loan before securing admission?

Most banks require proof of admission before approving a loan, but you can initiate the application process earlier.

What is the maximum loan amount I can get?

Loan amounts vary depending on the course and country of study. Typically, domestic loans range from ₹10–₹15 lakh, while international study loans can go up to ₹30 lakh or more.

Are there tax benefits on education loans?

Yes, under Section 80E of the Income Tax Act, borrowers can claim tax deductions on the interest paid for up to 8 years.

Are there interest rate concessions for female students?

Many banks offer lower interest rates for female students as an incentive to encourage higher education.

Can I get an education loan for distance learning or part-time courses?

Most lenders provide loans for full-time courses, but select banks may consider funding part-time or distance learning programs from recognized institutions.

What documents are required to apply for an education loan?

Essential documents include admission letters, academic records, identity and address proof, income proof of co-applicant, and collateral documents (if required).

Can NRIs apply for an education loan in India?

Yes, some banks offer education loans to NRIs, but the eligibility criteria and required documents may vary.

What happens if I discontinue my course after taking a loan?

Loan repayment obligations remain, even if the course is discontinued. The lender may revise repayment terms based on the situation.

Can I get an education loan without a co-applicant?

Most lenders require a co-applicant, but a few banks may offer loans without one if the applicant has a strong credit profile.

Is health or travel insurance mandatory for students studying abroad?

Many lenders require insurance coverage for students studying overseas as a safeguard against unexpected situations.

Can I avail of an education loan for vocational courses?

Yes, many banks provide loans for skill-based and vocational training programs recognized by government bodies or reputed institutions.

What is the typical repayment tenure for an education loan?

Repayment periods range from 10 to 15 years, excluding the moratorium period. Some banks offer flexible repayment options.

Do education loans have processing fees?

Some banks charge processing fees, while others waive them, particularly for collateral-free loans. It’s advisable to check with the lender.

Can I change my co-applicant during the loan tenure?

In some cases, banks may allow a co-applicant change if the existing co-applicant cannot continue fulfilling obligations.

Can I take an education loan for studying in a non-listed institute?

Lenders typically fund recognized institutions, but some may consider non-listed institutes based on their evaluation criteria.

What happens if I fail to repay my education loan?

Failure to repay can negatively impact your credit score and may lead to legal action or asset seizure (if collateral was pledged).

Can I get a 0% interest education loan?

Interest-free loans are rare but may be available under government schemes or scholarships for eligible students.

How is the EMI for an education loan calculated?

EMIs are calculated based on the loan amount, tenure, and interest rate using the formula: EMI = [P x R x (1+R)^N]/[(1+R)^N-1].

Are education loans available for pilot training programs?

Yes, many banks provide loans for pilot training courses, especially those conducted by DGCA-approved institutions.

What is employment verification for a co-applicant?

Lenders verify the co-applicant’s job details to ensure they have a stable income to support loan repayment.

Can I apply for multiple education loans from different banks?

While possible, taking multiple loans can be challenging as lenders check existing liabilities before approving additional funding.

Can I transfer my education loan to another bank?

Yes, some banks offer loan transfer options where you can shift to a lender with lower interest rates.

What are the eligibility criteria for an education loan?

Eligibility varies but generally includes academic performance, admission to a recognized institution, and a financially stable co-applicant.

Can I extend my loan repayment tenure?

Some banks allow tenure extensions in special cases, but this may result in higher interest payments over time.

Are there government schemes for education loans?

Yes, schemes like the Central Sector Interest Subsidy (CSIS) provide benefits for students from economically weaker sections.

Can students get an education loan without a guarantor?

For small amounts (typically up to ₹4 lakh), lenders may not require a guarantor. Higher amounts usually need a guarantor or collateral.

Can I use an education loan to cover expenses for entrance exams?

Most lenders provide loans only after admission confirmation, but some may offer funds for preparatory expenses.

Will my loan application be rejected if my co-applicant has a low credit score?

A poor credit score of the co-applicant may impact loan approval, but some banks consider the student’s academic profile and future earning potential.

What happens if I secure a scholarship after taking a loan?

If you receive a scholarship, you can use the funds to prepay part of your loan or request the lender to adjust disbursements accordingly.

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