Education loan guide

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Education Loan for higher studies in India and abroad

Understand what an education loan can cover, how a co-applicant and moratorium period work, and submit an enquiry to discuss your plan.

  • May cover tuition, living costs, travel and other approved study expenses.
  • A parent, guardian or spouse is often needed as co-applicant.
  • Repayment may start after a moratorium period, as per lender terms.
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Education loan basics

What is an education loan?

An education loan helps a student pay for higher studies in India or abroad. Depending on the lender and the course, it can cover tuition fees, hostel or living costs, books and equipment, travel, and other expenses the institution or lender accepts.

Students usually have no income yet, so lenders look closely at the course and institution, the student's academic record and the co-applicant's income and credit history. Repayment often starts after a moratorium period that covers the course and some time after it, as per the lender's terms.

Education loan at a glance

What it covers
Tuition, living costs, travel and other approved study expenses
Applicant
The student, usually with a parent, guardian or spouse as co-applicant
Repayment
Often after a moratorium period linked to the course
Collateral
Depends on the lender, loan amount, course and any scheme you qualify for
Interest rate & fees
Set by the lender — check the sanction letter and KFS
Eligibility

Education loan eligibility

Each lender sets its own criteria. In short, it wants confidence that the course leads to employment and that the loan will be repaid. Commonly reviewed factors are:

  • Confirmed admission to a course and institution the lender accepts, in India or abroad.
  • The student's academic record and, where relevant, entrance or test scores.
  • A co-applicant, such as a parent, guardian or spouse, with steady income and a healthy credit history.
  • Collateral or a third-party guarantee, where the lender requires it for the loan amount.
  • The total cost of the course and how much the family will contribute.

Documents required for an education loan

Lenders ask for documents about the course, the student and the co-applicant. The exact list depends on the lender, the course and whether you study in India or abroad.

Student documents

  • KYC: PAN card, Aadhaar or passport, and photographs.
  • Admission letter or offer letter from the institution.
  • Fee schedule or cost of study issued by the institution.
  • Marksheets and certificates, and entrance or test score cards where relevant.
  • For study abroad: passport, and visa documents when available.
How it works

Education loan process: step by step

Apply once you have an admission offer, and leave time before the fee due date. The usual sequence is:

  1. Admission and cost of study

    Get the admission letter and the fee schedule. The loan amount is based on the cost of the course and what the family will contribute.

  2. Application with co-applicant

    The student and co-applicant apply together and submit KYC, academic and income documents.

  3. Assessment

    The lender reviews the course, the institution, the co-applicant's credit report and income, and any collateral offered.

  4. Sanction letter and Key Fact Statement

    If approved, you receive the amount, rate, moratorium terms and charges with a Key Fact Statement (KFS) showing the APR. Check how interest is treated during the moratorium.

  5. Agreement and security

    You sign the agreement and complete any collateral or guarantee formalities. For study abroad, many lenders issue a sanction letter you can use for visa purposes.

  6. Disbursal in instalments

    Fees are usually paid directly to the institution, term by term or year by year, as per the fee schedule.

Banks and NBFCs regulated by the RBI must give you a Key Fact Statement, including the annual percentage rate (APR) and repayment schedule, before you sign a retail or MSME term loan agreement. Source: RBI circular on Key Facts Statement, 15 April 2024.

Plan your EMI

Know your education loan EMI before you apply

Enter a loan amount, the interest rate from your offer and the repayment tenure after the moratorium to see the monthly EMI.

  • If interest builds up during the moratorium and is added to the loan, the amount you repay on will be higher than the amount disbursed.
  • Paying the interest during the course, where you can, keeps the balance from growing.
  • Plan the EMI against a realistic starting salary for the course.

Example only, not an offer

Estimated monthly EMI  
Total interest
 
Total repayment
 

Reducing-balance calculation on the amount you will repay after the moratorium. It excludes interest added during the moratorium, fees and charges. Open the full EMI calculator

Moratorium

Moratorium period and interest on an education loan

The moratorium is the period, usually the course plus some time after it, during which full EMIs do not start. It gives the student time to finish studies and find work. The length is set by the lender.

Interest usually keeps accruing during the moratorium. Depending on the lender, you may pay it as you go, or it may be added to the loan when EMIs begin. Paying the interest during the course can reduce what you repay later.

Under the government's PM-Vidyalaxmi scheme, students admitted to eligible higher education institutions can get loans without collateral or a guarantor, with interest support during the moratorium for eligible families.

Full EMI calculator Personal loan for smaller costs

Paying interest during the course vs adding it to the loan

Pay interest during courseAdd interest to loan
During the course Pay interest during courseYou pay the interest each month Add interest to loanNothing to pay; interest builds up
When EMIs begin Pay interest during courseYou repay only the amount disbursed Add interest to loanYou repay the disbursed amount plus the interest added
Total cost Pay interest during courseLower Add interest to loanHigher
Suits you if Pay interest during courseThe family can pay small monthly amounts Add interest to loanThe family cannot pay during the course
Options

Types of education loan

Education loans differ by where you study, the kind of course and whether security is needed. Availability depends on the lender.

Loan for study in India

For courses at universities, colleges and institutes in India that the lender accepts.

Loan for study abroad

For courses overseas. It can cover tuition, living costs and travel, and a sanction letter may support the visa application.

Secured education loan

Backed by collateral such as property or a fixed deposit. Often used for larger amounts.

Unsecured education loan

No collateral, based on the course, institution and co-applicant's profile, as per lender policy.

Skill and vocational course loan

For shorter job-oriented or vocational courses, where the lender offers it.

PM-Vidyalaxmi loan

A government scheme for students admitted to eligible institutions, with loans free of collateral and guarantor.

PM-Vidyalaxmi covers students admitted to quality higher education institutions as defined by the scheme using NIRF rankings. It offers loans without collateral or guarantor, a 75% government credit guarantee on loans up to ₹7.5 lakh, and 3% interest subvention during the moratorium on loans up to ₹10 lakh for families earning up to ₹8 lakh a year who do not get other government scholarships or interest subvention. Source: PIB, Cabinet approves PM-Vidyalaxmi scheme, 6 November 2024.

Know the full cost

How to compare education loan offers

Look beyond the headline rate. When you compare:

  • Compare the APR in each Key Fact Statement, which includes the lender's charges.
  • Check what the loan covers: tuition only, or living costs, travel and equipment too.
  • Check the moratorium length and how interest is treated during it.
  • Ask whether collateral, a guarantor or insurance is required.
  • Check whether you qualify for PM-Vidyalaxmi or other government schemes before you decide.

Estimate your EMI after the moratorium

Charges to check in your sanction letter and KFS

Beyond the interest rate, charges differ by lender. Check each of these in writing:

Processing fee

Charged for evaluating your application. Some lenders may not charge it on certain loans.

Interest during the moratorium

Whether it is simple or compounded, and whether it is added to the loan.

Prepayment and foreclosure charges

What you pay to repay early, if the lender is allowed to charge.

Late payment charges

Penalties if an EMI is missed or paid late.

Valuation and legal charges

If property is offered as collateral.

Insurance

Some lenders ask for life cover on the student or co-applicant. Ask whether it is required and what it costs.

For floating-rate loans to individuals for non-business purposes, sanctioned or renewed on or after 1 January 2026, regulated lenders cannot charge for prepayment. Source: RBI (Pre-payment Charges on Loans) Directions, 2 July 2025.

What affects your education loan offer?

  • The course, the institution and the country of study.
  • The co-applicant's income, credit score and existing obligations.
  • Whether collateral is offered, and its value.
  • The loan amount and repayment tenure after the moratorium.
Compare

Education loan: secured vs unsecured

Secured education loan Unsecured education loan
Security Property, a fixed deposit or other accepted collateral No collateral
Lender mainly looks at The collateral, the course and the co-applicant The course, the institution and the co-applicant's profile
Typical use Larger amounts, often for study abroad Amounts within the lender's unsecured limit, or under schemes such as PM-Vidyalaxmi
If dues are not paid Credit score impact, and the lender can act on the collateral Credit score impact for the student and co-applicant, and recovery as per the agreement

Swipe the table sideways to see both options.

Limits, rates and collateral rules differ by lender, so compare actual offers rather than product types alone.

If you were declined

Why education loan applications are declined

Lenders do not always share the exact reason. Common ones include:

  • The course or institution is not on the lender's accepted list.
  • The co-applicant has a low credit score or a high existing EMI burden.
  • The co-applicant's income is irregular or hard to verify.
  • Collateral was required for the amount and was not available or did not meet the lender's policy.
  • Incomplete admission or fee documents, or details that do not match.

Before you reapply, check whether a different co-applicant with a stronger profile can join, ask about schemes such as PM-Vidyalaxmi, consider a smaller amount with a larger family contribution, and make sure the admission and fee documents are complete.

Borrow safely

Education loan fraud often targets students in a hurry to pay fees. Protect yourself:

Borrow only from RBI-regulated banks and NBFCs. If you are unsure about a lender, check that it is a bank or an NBFC registered with the RBI.

Check that the lender's name on the sanction letter and agreement matches the lender you applied to, including when you apply through an app or an agent.

Never pay an upfront fee to "get a loan approved". Genuine fees are disclosed in writing by the lender.

Do not share OTPs, PINs, passwords or card details with anyone who calls or messages you about a loan.

Read the loan agreement fully before you sign, and keep a copy of every document you sign.

Pay fees directly to the institution's official account, and check study-abroad agents and offers carefully.

FAQs

Education Loan – frequently asked questions

What expenses can an education loan cover?

Depending on the lender and course, an education loan can cover tuition fees, hostel or living costs, books, equipment, travel and other expenses the institution or lender accepts.

Is a co-applicant required for an education loan?

Most lenders ask for a parent, guardian or spouse as co-applicant, because the student usually has no income yet. The co-applicant's income and credit history matter for approval.

What is the moratorium period on an education loan?

It is the period, usually the course plus some time after it, during which full EMIs do not start. Interest usually keeps accruing during this period. The length and terms are set by the lender.

Do I have to pay interest during the course?

It depends on the lender. Interest usually accrues during the moratorium. You may be able to pay it as you go, or it may be added to the loan when EMIs start, which increases the amount you repay.

Do all education loans need collateral?

No. Whether collateral is needed depends on the lender, the loan amount, the course and the institution. Under the PM-Vidyalaxmi scheme, students admitted to eligible institutions can get loans without collateral or a guarantor.

What is the PM-Vidyalaxmi scheme?

It is a government scheme approved in November 2024 for students admitted to quality higher education institutions, as defined using NIRF rankings. It offers education loans without collateral or guarantor, a 75% credit guarantee on loans up to ₹7.5 lakh, and 3% interest subvention during the moratorium on loans up to ₹10 lakh for families earning up to ₹8 lakh a year who do not get other government scholarships or interest subvention.

Can I get an education loan to study abroad?

Yes. Many lenders offer loans for study abroad that can cover tuition, living costs and travel. The lender considers the course, the university, the country and the co-applicant's profile, and may ask for collateral for larger amounts.

How is an education loan disbursed?

Usually in instalments paid directly to the institution, term by term or year by year, as per the fee schedule. Living costs may be paid to the student's account if the lender covers them.

Can I repay my education loan early?

Lenders generally allow early repayment. For floating-rate loans to individuals for non-business purposes sanctioned or renewed on or after 1 January 2026, regulated lenders cannot charge for prepayment. Check the terms in your sanction letter.

Why was my education loan application rejected?

Common reasons include a course or institution the lender does not accept, a co-applicant with a low credit score or high EMIs, income that could not be verified, or missing collateral where it was required.

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