Apply for a Student Loan in India for UG Program

Introduction

Pursuing an undergraduate degree is a crucial step toward building a successful career, but the rising cost of education can be a challenge for many students. Education loans provide a financial bridge, ensuring that students can focus on their studies without worrying about immediate expenses. Various banks and financial institutions in India offer student loans with flexible repayment options, competitive interest rates, and minimal collateral requirements.

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Need a student loan for your UG program? Check out this guide to know:

Types of undergraduate student loans, the banks, NBFCs giving loan and interest rates on them that start from as low as 8%.
Moratorium of payment holiday is one key feature that makes UG education loan a fit. Read to know about all other key features. e
Know about education loan for online courses, eligibility criteria for all types and how to apply.

What are Undergraduate Student Loans?

Undergraduate student loans help cover tuition, accommodation, books, and other academic expenses. Offered by banks, NBFCs, and government schemes, they come with flexible repayment terms and may or may not require collateral.

Types of loans:

Secured Loans

Require collateral like property or fixed deposits.

Unsecured Loans

No collateral needed but may have stricter eligibility and higher interest rates.

Many banks offer a moratorium period, delaying repayment until after graduation. Government-backed schemes provide interest subsidies and credit guarantees for easier access.

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Interest Rates on Undergraduate Education Loans

Interest rates play a crucial role in choosing the right education loan, as they impact the total repayment amount. Different banks offer varying rates and processing fees based on factors like loan amount and collateral. The table below highlights the top banks providing undergraduate education loans to help students compare their options.

Top Banks Giving Undergraduate Education Loans

Here's a list of Banks giving Undergraduate Loans, their interest rates and processing fees:

Name of Bank	Interest Rate (p.a.)	Processing Fees
SBI	8.15% p.a. to 11.75% p.a.	Up to Rs.10,000
Central Bank of India	8.10% p.a. to 10.60% p.a.	Nil for studies in India, 1% for studies abroad (Max: Rs. 15,000)
PNB	9.20% p.a. onwards	Nil for studies in India, 1% for studies abroad (Max: Rs. 10,000)
Canara Bank	9.25% p.a. onwards	0.50% of the loan amount up to Rs.10,000 (100% collateral security) or Rs.20,000 (less than 100% collateral security)
IDFC FIRST Bank	10% p.a. to 15% p.a.	Up to 1.5% of the loan amount
IDBI Bank	8.50% p.a. onwards	Nil for studies in India, 1% for studies abroad (Max: Rs.5,000)
Bank of Baroda	8.15% p.a. onwards	No processing for charges up to Rs.7.50 lakh, 1% for charges above Rs. 7.50 lakh
Bank of India	11.05% p.a. to 11.85% p.a.	No processing fee for studies in India
ICICI Bank	9.85% p.a. onwards	Up to 2% + GST
Bank of Maharashtra	9.45% p.a. onwards	Contact the bank
Axis Bank	13.70% p.a. to 15.20% p.a.	2.00% of the loan plus GST
HDFC Bank	9.50% p.a.	Nil for studies in India, 1% for studies abroad
Kotak Mahindra Bank	Up to 16% p.a.	Nil
Federal Bank	12.55% onwards	Nil
Tamilnad Mercantile Bank	11.75% p.a. to 13.00% p.a.	1% for studies abroad (above Rs. 7.50 lakh)

Top NBFCs Giving Undergraduate Education Loans

Non-Banking Financial Companies (NBFCs) in India play a pivotal role in providing education loans to undergraduate students, offering flexible financing options tailored to individual needs. Here's an overview of some top NBFCs offering such loans:

NBFC Name	Loan Amount	Interest Rate (p.a.)	Collateral Requirement	Processing Fees	Key Highlights
Propelld	Up to ₹50 lakh	Customized rates	Not required	Low processing fees	Fast approval, flexible repayment, marks-based approval
HDFC Credila	Up to ₹1.5 crore	11.25% - 13.00%	Required for higher amounts	Contact provider	Customized loan solutions with flexible repayment
Avanse Financial Services	Up to ₹75 lakh (without collateral), ₹1.5 crore (with collateral)	12.50% - 13.50%	Not required up to ₹75 lakh	Up to 1% of the loan amount	Quick processing and wide course coverage
InCred	Up to ₹60 lakh (without collateral), ₹85 lakh (with collateral)	12.00% - 14.00%	Not required up to ₹60 lakh	Up to 1% of the loan amount	Personalized loan offerings with flexible repayment
Auxilo	Up to ₹65 lakh (without collateral), ₹85 lakh (with collateral)	11.25% - 14.00%	Not required up to ₹65 lakh	Up to 2% of the loan amount	Comprehensive coverage of educational expenses

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Key Features of Student Loans for Undergraduate Students

Undergraduate Student Loans cover tuition, accommodation, and academic expenses while offering competitive interest rates and collateral-free options.

Below are the other key features of this loan:

1. Loan Coverage

Education loans typically cover tuition fees, hostel charges, exam fees, books, and other academic expenses, ensuring students can focus on their studies without financial burdens.

2. Loan Amount & Collateral

Some lenders offer loans up to ₹50 lakh without collateral, while higher amounts (up to ₹1.5 crore) may require security. Unsecured loans often have slightly higher interest rates.

3. Moratorium Period

Most lenders provide a repayment holiday during the course and an additional 6–12 months after graduation before EMIs begin.

4. Interest Rates & Repayment Flexibility

Interest rates range from 8% to 16% per annum, depending on the lender and borrower’s profile. Some lenders offer flexible repayment options, such as step-up EMIs or income-based repayment.

5. Tax Benefits

Under Section 80E of the Income Tax Act, borrowers can claim tax deductions on the interest paid for up to 8 years, reducing the overall loan burden.

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If you're considering an education loan for international studies, understanding the eligibility criteria and application process is essential.

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‍Eligibility Criteria for Student Loans for Undergraduate Students

Student loans for undergraduate students are a strategic move by the government. However, before diving in, it's essential to understand the eligibility criteria established by lenders. Here's a breakdown of the common requirements:

1. Nationality

Applicants must be Indian citizens, NRIs, OCIs, or PIOs, depending on the lender's policy.

2. Age Limit

Students should be between 18 and 35 years old at the time of application.

3. Academic Performance

A strong academic record and admission into a recognized undergraduate program in India or abroad are required.

4. Course & Institution Eligibility

The course must be offered by a UGC, AICTE, or government-recognized institution in India or an accredited university abroad.

5. Co-Applicant Requirement

A parent, guardian, or spouse is usually required as a co-applicant, with their financial stability impacting loan approval.

6. Loan Amount & Collateral

Loans up to ₹7.5 lakh are usually collateral-free, while higher amounts may require security like property, FDs, or insurance.

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How Do Education Loans Work in India? This guide covers the education loan process in India, including eligibility, interest rates, repayment options, and more.

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List of Expenses Covered in Education Loan

Here's a breakdown of the common expenses typically covered by education loans:

1. Tuition Fees

Covers full or partial academic costs as per the institution’s fee structure.

2. Hostel & Accommodation

Includes on-campus or off-campus housing and living expenses.

3. Examination, Library & Lab Fees

Covers exam fees, lab charges, and library memberships.

4. Books & Study Materials

Includes textbooks, laptops, stationery, and essential supplies.

5. Travel & Visa (for Studying Abroad)

Supports airfare, visa fees, and related travel costs.

6. Insurance & Miscellaneous

Covers medical insurance, project work, study tours, and thesis submission.

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

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Undergraduate Education Loans for Online Courses

Online education offers a flexible and cost-effective way for working professionals to upskill while managing their jobs. Many banks and NBFCs provide education loans covering tuition fees, study materials, and certification costs for recognized online programs.

How Online Courses Benefit Working Professionals?

1. Flexible Learning

Study at your own pace while continuing to work.

2. Career Growth

Gain industry-relevant skills for promotions or job shifts.

3. Global Education

Access top universities and certifications remotely.

4. Cost-Effective

Lower fees compared to traditional courses.

Does an Education Loan Cover Online Courses?

Yes, lenders offer loans for online programs from recognized institutions, covering:

1. Tuition fees and study materials

2. Examination and certification costs

How an Education Loan Helps?

An Education Loan:

1. Reduces financial burden with easy repayment options

2. Enhances career prospects with better job opportunities

3. Allows upskilling without affecting savings

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No Collateral Required. Approval Based on Student Potential. Check Your Eligibility

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List of Documents Required to Avail Loans for College Students

Applying for a student loan for undergraduate students in India can streamline the process toward your academic goals. To ensure a smooth application journey, it's crucial to gather the necessary documents required by lenders. Here's a checklist to help you prepare:

Category	Document Name & Description
Personal Documents	Completed Application Form – Filled form as per lender requirements.
	Proof of Identity – Aadhaar, PAN, Passport, Voter ID, or Driving License.
	Proof of Address – Aadhaar, Voter ID, utility bills, rent agreement, or passport.
	Passport-size Photographs – Recent photos as per lender specifications.
Academic Documents	Class 10 & 12 Mark Sheets – Attested copies of board exam results.
Academic Documents	Entrance Exam Scorecard – If applicable (JEE, NEET, etc.).
Financial Documents	Bank Statements – Past 6 months of co-applicant or student (if employed).
Financial Documents	Income Proof of Co-applicant – Salary slips, ITR, or income certificate.
Admission Documents	Offer Letter/Admission Letter – From the university or college.
Additional Documents	Fee Structure – Detailed breakdown of tuition and other fees.
	Statement of Purpose (SOP) – Some lenders may require this.
	Previous Loan Repayment Records – If applicable, to show creditworthiness.

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

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How to Apply for Undergraduate Student Loan?

Below, we have curated a step-by-step process for you to secure student loans for undergraduate students.

Online Application	Offline Application
Visit the lender’s official website. Check out the education loan section. Select the type of education loan. Fill out the application form with the required details. Upload necessary documents. Submit the application for processing.	Visit the nearest bank or NBFC branch. Request an education loan application form. Fill out the form with the required information. Attach the necessary documents. Submit the application to the bank representative.

Mistakes to Avoid While Taking an Education Loan Learn about common pitfalls students encounter when securing education loans, such as borrowing excessive amounts and miscalculating repayment capabilities.

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Government Schemes and Subsidies for Undergraduate Student Loans

The Indian government provides various schemes and subsidies to support undergraduate students in financing their higher education. These initiatives aim to make education more accessible, especially for students from economically weaker backgrounds.

1. Central Sector Interest Subsidy Scheme (CSIS)

CSIS provides a full interest subsidy during the moratorium period (course duration plus one year) on education loans.
Available for students from economically weaker sections (EWS) with an annual family income up to ₹4.5 lakh.
Covers loans up to ₹7.5 lakh without collateral for professional and technical courses in India.

2. Credit Guarantee Fund Scheme for Education Loans (CGFSEL)

CGFSEL offers a government guarantee for education loans up to ₹7.5 lakh.
No need for collateral or third-party guarantees.
Available under the Indian Banks' Association (IBA) Model Education Loan Scheme for studies in India.

3. Padho Pardesh Scheme

Padho Pardesh Scheme provides interest subsidies for students from minority communities pursuing studies abroad.
Applicable to students from notified minority communities with an annual family income of up to ₹6 lakh.
Covers interest payments during the moratorium period.

4. Dr. Ambedkar Central Sector Scheme of Interest Subsidy

Offers interest subsidies to students from Other Backward Classes (OBC) and Economically Backward Classes (EBC) for overseas studies.
Covers interest payments during the moratorium period.

5. Jagananna Vidya Deevena (Andhra Pradesh)

A state government scheme providing full fee reimbursement for economically disadvantaged students.
Covers tuition, special, and examination fees for ITI, polytechnic, and degree programs in Andhra Pradesh.

6. National Scholarship Portal (NSP)

A central platform hosting various scholarship schemes from central and state governments.
Provides financial assistance, including scholarships and fee reimbursements, to eligible students.

Students should explore these schemes and check their eligibility to benefit from government financial assistance for undergraduate education.

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Tax Benefits on Undergraduate Student Loans

The Indian government provides tax benefits on education loans under Section 80E of the Income Tax Act, allowing borrowers to claim a deduction on the interest paid. This helps reduce the financial burden of higher education.

1. Eligibility

The deduction can be claimed by individuals who have taken an education loan for themselves, their spouse, children, or a legally dependent ward.

2. Deductible Amount

Only the interest component of the EMI qualifies for deduction, while the principal amount is not eligible.

3. Maximum Deduction Period

There is no upper limit on the deduction amount, but the benefit is available for up to 8 years or until the interest is fully repaid.

4. Applicable Loans

The loan must be availed from a recognized bank, NBFC, or approved financial institution for higher education in India or abroad.

By reducing taxable income, this benefit makes education loans more affordable and accessible for students and their families.

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No Collateral Student Loans for Undergraduate Students

Many banks and NBFCs like Propelld, offer education loans without collateral to help students fund their undergraduate studies. These loans are ideal for students who may not have assets to pledge but have strong academic records and career potential.

This table provides a clear comparison of collateral-free education loan options from different lenders.

Lenders	Loan Amount (Without Collateral)	Interest Rate Range
Public Banks	Up to ₹7.5 Lakhs	8-12%
Private Banks	Up to ₹40 Lakhs	10-12%
NBFCs	Up to ₹40 Lakhs	10-18%
Foreign Lenders	Up to 80% of total expenses	10-16%

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Looking for an Education Loan Above 7.5 Lakhs & Without Collateral? Check Propelld.

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Undergraduate Student Loans for Studying Abroad

‍Education loans help students cover tuition, living expenses, and other study-related costs abroad. Banks and NBFCs offer loans with competitive interest rates and flexible repayment terms.

Loan Providers & Offerings

Bank	Starting Interest Rate
HDFC Bank	9.50%
ICICI Bank	Repo Rate + 3.5%
State Bank of India (SBI)	11.15%
Axis Bank	13.70% - 15.20%
Punjab National Bank (PNB)	9.40% - 12.10%
Bank of Baroda (Baroda Scholar)	9.70% - 12.20%
Indian Bank	8.80% - 11.40%
Union Bank of India	10.90% - 12.55%

Eligibility Criteria

Admission to a recognized foreign institution
Strong academic background
Co-applicant (parent/guardian) with stable income

Required Documents

Identity proof (PAN card, passport)
Address proof (Aadhaar, utility bill)
Academic transcripts & admission letter
Co-applicant’s income proof & bank statements

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Pursuing an undergraduate degree, whether in India or abroad, is now more accessible with various student loan options. From collateral-free loans to government subsidies and tax benefits, students have multiple financial aids to support their education.

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Your dream education is within reach— Propelld makes it easier with tailored loan solutions designed for your success. Secure your future with the right financial support today!

Propelld is an RBI registered NBFC that provides, hassle free education loans without any non collateral or co-applicant.

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Why Propelld?

Here are the major benefits of Propelld education loan:

Particulars	Details
Max Loan Amount	50 Lakhs
Collateral	Not Required
Moratorium	Available
Processing Time	10 Times Faster than Banks
Disbursal Time	7 Days
Approval Rate	Higher than Other Banks
Special USP	Marks Based Approval
% Financed	100% of Fees

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FAQs for Student Loans for Undergraduate Students

What expenses are covered under a student loan for undergraduate students?

Education loans typically cover tuition fees, hostel charges, travel expenses, books, study materials, and other education-related costs.

What is the maximum loan amount that can be availed?

Education loans generally range from ₹50,000 up to ₹40 lakhs or more, depending on the lender, course, and applicant eligibility.

What is the typical repayment tenure for undergraduate student loans?

Repayment tenure can extend up to 15 years after course completion, depending on the lender’s terms.

Are there any tax benefits available on student loans for undergraduate students?

Yes, interest paid on education loans is eligible for tax deduction under Section 80E of the Income Tax Act for up to 8 years.

How is the interest rate determined for undergraduate student loans?

Interest rates may be fixed or floating and are usually linked to RBI’s repo rate, varying based on lender policy and borrower profile.

What happens if there is a default in repayment of an education loan?

Defaulting can lead to penalties, a reduced credit score, and in severe cases, legal action or collateral enforcement.

Can I apply for a student loan without a co-signer or guarantor?

Yes, some banks and NBFCs offer unsecured education loans without a co-signer, depending on the applicant’s profile and institution.

What are the eligibility criteria for obtaining a student loan?

Eligibility includes admission to a recognised institution, academic performance, course type, and financial background of the applicant or co-applicant.

Are there any moratorium periods on student loans?

Yes, most loans offer a moratorium period covering the course duration plus 6–12 months after completion before repayment begins.

How can I apply for a student loan online?

Applications can be made through bank websites, NBFC portals, or government platforms by submitting documents and completing verification.

What documents are required to apply for a student loan?

Common documents include admission letter, academic records, identity proof, address proof, income proof of co-applicant, and collateral documents if applicable.

Can I avail an education loan without collateral?

Yes, unsecured loans are available up to around ₹7.5 lakh under certain government and bank schemes.

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

Parents, guardians, siblings, spouses, or other financially stable family members can act as co-applicants depending on lender policies.

Is there any concession in interest rates for female students?

Yes, many banks offer interest rate concessions (typically around 0.5%) for female applicants.

Do I need to start repaying the loan during the course period?

Generally no, repayment starts after the moratorium period, but some lenders allow partial interest payments during study.

Are there any government subsidy schemes available for education loans?

Yes, schemes like the Central Sector Interest Subsidy (CSIS) provide benefits to eligible economically weaker students.

Can I prepay my education loan?

Yes, most lenders allow prepayment or foreclosure, sometimes with minimal or no penalty.

What happens if I discontinue my course after availing the loan?

The loan remains payable, and the lender must be informed immediately for restructuring or repayment planning.

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

Yes, some lenders offer loans for approved part-time or distance education programs.

How is the loan amount disbursed?

The loan is usually disbursed directly to the educational institution as per fee structure and requirements.

What if I secure a scholarship after availing the loan?

Scholarship amounts can be adjusted against the loan, reducing the total outstanding amount.

Is life insurance mandatory for education loan applicants?

Some banks may require or recommend a life insurance policy linked to the loan amount.

Can I transfer my education loan to another bank?

Yes, education loans can be transferred (balance transfer/refinancing) for better interest rates or terms.

How does an education loan affect my credit score?

Timely repayment improves credit score, while defaults negatively impact future loan eligibility.

How can undergraduate students apply for a student loan?

Students can apply through banks, NBFCs, or online education loan portals by submitting required documents and completing verification.

Can I apply for additional student loans if I need more funds?

Yes, you can request a top-up loan or apply for additional financing based on eligibility and lender approval.

Are there specific loans available for college students?

Yes, several banks and NBFCs offer dedicated education loans for undergraduate students covering tuition and living expenses.

What are the basic requirements for getting a student loan?

Requirements include admission to a recognised institution, valid academic records, a co-applicant (in most cases), and financial documentation.

How can I apply for a student loan?

You can apply online via banks, NBFCs, or education loan platforms by filling the application form and uploading documents.

Is there a specific education loan for undergraduate students?

Yes, most banks and financial institutions offer dedicated undergraduate education loan schemes.

Education Loans for Undergraduate Students

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