NBFC Education Loan in India
Looking to fund your higher education but facing hurdles with traditional banks? That's where NBFC (Non-Banking Financial Company) education loans in India are emerging as a strong alternative. They offer quicker approvals, flexible criteria, and funding even when banks say no. Especially helpful for students with no collateral or low co-applicant income.
In this blog, we’ll explore all about NBFCs. What they are, how they work, their features, interest rates, eligibility, and the types of courses they cover, thus helping you make an informed choice for your academic journey.
What are NBFCs?
NBFCs, or Non-Banking Financial Companies, are financial institutions that offer services similar to banks—but without holding a full banking license. They are regulated by the Reserve Bank of India (RBI) and can provide loans, credit facilities, insurance, and investment options. However, unlike banks, NBFCs cannot accept demand deposits such as savings or current accounts.
For students, NBFCs have emerged as a vital source of education financing. They often provide more flexible terms, faster processing, and wider course coverage compared to traditional banks, making higher education loans more accessible. New-age NBFCs such as Propelld are known for their student-centric approach, offering customized repayment options and quicker approvals, which especially benefits those pursuing non-traditional or specialized courses.
NBFC Market Impact & Growth
India's NBFC sector has experienced remarkable expansion, becoming a cornerstone of the country's financial ecosystem:
Market Size & Reach:
- 9,000+ registered NBFCs currently operating in India
- 3rd largest non-banking financial sector globally
- Education loans among fastest-growing NBFC segments (CRISIL report)
Economic Contribution:
- GDP contribution growth: From 18% (2002) to 60% (2020)
- Credit gap bridging: Serving underbanked segments effectively
Sector focus: Education, healthcare, rural development financing
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NBFC Education Loan Interest Rates
Comparing NBFC education loan interest rates is absolutely essential for making an informed decision. Unlike banks, NBFCs often provide quicker approvals, flexible collateral requirements, and customized repayment options.
Below is a comparison of the top NBFCs for education loans in India, including loan amounts, processing fees, and repayment tenure.
Why Rates Vary?
Rates depend on factors like academic performance, co-applicant income, and target university. For example, students with strong entrance exam scores, high ranks, good academic background or admissions to top-ranked institutions may qualify for the lower end of the band.
Before finalizing, always check whether the NBFC has tie-ups with your university. This can impact both approval speed and loan terms.
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Top NBFCs for Education Loans in India: Detailed Analysis 2025
Several leading NBFCs in India offer student-friendly education loans with flexible repayment, quick approvals, and higher loan limits than traditional banks. Below is a detailed analysis of the top NBFCs for education loans in 2025:
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Key Features of NBFC Education Loans
Non-Banking Financial Companies (NBFCs) have become a popular choice for students looking for faster and more flexible education loan options. Compared to traditional banks, NBFCs are known for quicker approvals, minimal documentation, and tailored repayment structures.
Let’s see the key features of NBFC education loans:
What is the Moratorium Period for NBFC Education Loans?
Most NBFCs offer a moratorium of 6–12 months post-course completion. Students usually pay simple/partial interest during studies, with full EMI starting after the grace period.
How NBFCs Transform Education Financing?
We have read the features of NBFC above. Now let’s see how these features help bridge the education financing gap for the segments that are not so easily covered by banks.
Addressing Traditional Banking Gaps: NBFCs fill critical credit voids left by conventional banks, particularly in:
- Alternative income assessment for self-employed families
- Lower credit score acceptance for first-time borrowers
- Faster disbursement for urgent admission requirements
- Flexible repayment options aligned with career timelines
- Student-Centric Approach: Unlike banks with standardized products, NBFCs often customize education loans based on:
- Course-specific requirements and earning potential
- Institution ranking and placement records
- Individual family financial situations
- Future income projections for repayment planning
Ready for hassle-free education financing? Propelld offers all above benefits with quick digital approvals.
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NBFC Education Loan without Collateral
Education loans help students cover tuition, housing, books, and other academic expenses. NBFCs often provide such loans without requiring collateral, making them accessible to students without substantial assets.
These loans are granted based on creditworthiness, academic performance, and future earning potential. Applicants must meet specific eligibility criteria, including course duration and, in some cases, a co-borrower with a stable financial background.
Here are some top NBFCs offering education loans without collateral:
To know more, explore collateral free education loans - check list of banks, eligibility, documents required, how to choose the right loan and get your application approved.
NBFC Education Loan Eligibility
While specific conditions may vary slightly between NBFCs, some general eligibility criteria for benefiting from an education loan from an NBFC include:
Also, check out the eligibility for education loans.
Documents Required for NBFC Education Loan
Applying for an NBFC education loan requires both the student (applicant) and the co-applicant to submit specific documents. The co-applicant may be either salaried or self-employed, and the paperwork varies accordingly.
Let’s see the list of documents required by each person:
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Types of Courses Covered by NBFC Education Loans
Here are the different types of courses covered by NBFC education loans, ensuring financial assistance for students pursuing diverse academic and professional paths.
Let’s see some specific courses covered by NBFCs:
Factors to Consider While Taking NBFC Education Loans
NBFCs usually offer flexible repayment terms compared to traditional banks. Here are key aspects to consider:
Is it Safe to Take an Education Loan from NBFC?
Yes, taking an education loan from an NBFC is absolutely safe. NBFCs are regulated by the Reserve Bank of India (RBI), which ensures compliance and borrower protection.
NBFCs are known for their USPs of quick fund disbursal, flexible repayment and personalised solutions. However, carefully reviewing the terms is indispensable.
Precautions to Keep in Mind
While NBFC loans are safe, it’s important to:
- Compare lenders – Interest rates, processing fees, and repayment flexibility can vary significantly.
- Read the fine print – Check for hidden charges, foreclosure penalties, or mandatory insurance.
- Assess repayment capacity – Ensure that the EMI schedule aligns with your future earning potential to avoid financial stress.
- Choose RBI-registered NBFCs – always verify that the lender is an authorized financial institution.
Get Education Loan for Any College in India. Propelld- An RBI Registered NBFC
Why are NBFCs a Better Option for an Education Loan? Bank vs NBFC
Unlike traditional banks, NBFCs offer more flexibility, faster processing, and better coverage for students pursuing diverse courses. Here’s a detailed comparison:
Education Loan Denied by Banks? NBFCs Can Still Fund it.
NBFCs have relaxed rules and easier processes when it comes to loan approvals. If you’ve faced roadblocks with traditional banks, you're not alone. Many students on platforms like Reddit have shared their struggles, often due to factors beyond their control.
Let’s look at two real cases that highlight how NBFCs can help where banks fall short:
Reddit User in r/Indians_StudyAbroad shared:
“I'm graduating with a Bachelor's in IT and got into ASU with a 307 GRE and 8-band IELTS. But HDFC rejected my loan due to my father’s low credit score. Despite my profile, they won’t fund me. I feel stuck—should I try other banks or will it be the same?”
Insight: Traditional banks heavily factor in your co-applicant’s credit history. NBFCs however, offer more flexibility, even allowing you to choose relatives other than your parents as co-applicants.
Another Reddit User on r/india posted:
“One of my friend (23yo) got into a top German university for master’s. She needs a loan of ₹10–12 lakhs, but does not have any collateral to pledge and her father, who’s retired with a small pension, doesn’t qualify as co-applicant. No bank or loan scheme is helping. Are there really no options for students from weak financial backgrounds?”
Insight: NBFCs are way quicker and less bureaucratic than banks. Even in cases where no collateral is available and there are issues with the co applicant, NBFCs can sanction the loan with an alternate co-applicant.
What do we infer from the above cases?
NBFCs can be your solution for education loan due to their:
- Flexible co-applicant criteria
- Lower dependency on CIBIL scores
- No Collateral Requirements even for higher loan amounts
- Faster processing timelines
Tip: If your parent isn’t eligible as a co-applicant, consider using a relative or sibling. Many NBFCs now allow this. About Collateral, most of them don't even ask for it!
Other Situations where NBFCs can be a Perfect Option for an Education Loan
What is Margin Money in Education Loan?
Margin money is the portion of educational expenses a borrower must pay from their own funds, with the rest covered by the loan. Typically ranging from 5% to 15%, it reflects the borrower's financial commitment and varies based on whether the education is pursued in India or abroad.
Margin Money in NBFCs
NBFCs often provide more flexible loans compared to banks. Many of them, like Propelld, do not even require margin money. They offer to cover 100% of the education expenses, making them appealing for students seeking full financial support.
List of Banks Providing Education Loans in India
Learn about the education loan moratorium period, a time when payments are temporarily paused. Find out how it can help manage finances and what you need to know during this period.
List of Non-Banking Finance Companies Providing Education Loans in India
If you are considering an educational loan, check out Propelld.
Propelld understands the difficulties students encounter in funding their education. We offer superfast approvals, no collateral, minimal documentation, easy repayment plans, among many other USPs that fit each student's needs.
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