Quality Education is an essential ingredient for a complete and successful life. Education is the process of acquiring knowledge, skills, values and insights. For many, it is equivalent to graduating from a top institution. The cost of education is, however, increasing rapidly these days. In fact, the cost of studying at reputed institutions is already quite high. Therefore, it is obvious that students should get proper financial support from the system to make their dream come true and the support is very much available in the form of education loan which is quite easy and convenient to avail specially in today’s context where Vidyalakshmi Portal kind of facilitation has been extended by government of India.

In India, all scheduled commercial banks provide education loans to students. IBA (Indian Banks Association) has formulated and circulated to all member banks a ‘Model Education Loan Scheme’ for providing financial support to meritorious students for pursuing higher education in India and abroad.

Salient Features:

  1. Collateral free loans upto Rs. 7.5 Lakhs under Credit Guarantee Fund Scheme for Education Loan (CGFSEL)
  2. No Margin/Nominal Margin for loan upto Rs. 7.50 Lakhs
  3. Repayment period upto 15 years
  4. One Year moratorium period for repayment after completion of studies 
  5. Moratorium can be given two or three times during the life cycle of loan considering unemployment and under employment
  6. Simple interest for loan is calculated from the date of disbursement of loan upto the end of moratorium period i. e course period plus one year.
  7. Students belonging to economically weaker sections, an interest subsidy scheme on education loans is in place. Under the scheme full interest subsidy is available during the period of moratorium on education loans upto Rs. 7.50 Lakhs disbursed on or after 1st April 2009
  8. Further, the model educational loan scheme of IBA provides for certain concession on educational loans which inter-alia includes
  9. 1 % interest concession if interest is serviced during the study period and subsequent moratorium period prior to the commencement of the repayment
  10.  0.5 % concession in the interest rate to the girl students
  11.  Rebate in income tax to the extent of interest paid on education loan

Eligibility Criteria:

The Student should be an Indian National and should have secured admission to a higher education course in recognised institutions in India or abroad through Entrance test/merit based selection process after completion of HSC (10 plus 2 or equivalent). However, entrance test or selection purely based on marks obtained in qualifying examination may not be the criterion for admission to some of the courses or programmes.

Expenses Considered for Loan:

Generally it includes: 

  • Fees payable to the college, school and hostel
  • Fee for laboratory, library and examination as well
  • Expenses on purchase of books, equipment, uniform, laptop and other expenses which are required to complete the course with certain restrictions.
  • Expenses on travel in India and abroad also
  • Insurance premium for student borrower, if applicable


Credit Guarantee Fund Scheme for Education Loan (CGFSEL) has been launched by the Government of India to provide a guarantee for education loans up to Rs. 7.5 Lakhs without any collateral and a third-party guarantee with following terms and conditions:

  • Credit Guarantee will be available for educational loans upto Rs. 7.50 Lakhs
  • Such Loans should conform to the “IBA Model Education Loan Scheme for pursuing Higher Education in India and abroad”
  • Annual Guarantee fee of 0.50 % p.a. of the outstanding loan amount will be borne by the borrower/s.
  • Maximum interest rate to be charged by a Member Lending Institution should not exceed MCLR 1 year plus 2.00%
  • Guarantee cover would be available for 75% of the amount in default.

How to avail Education Loan:

Education loan applications can be filed via various channels. Applicants should always compare the best offers and benefits while choosing these channels.

  1. Education loan application offline (At Bank Branch/Office)
  2. Online application (At Bank Official Website)
  3. Online application through Vidyalakshmi Portal (https://www.vidyalakshmi.co.in) 

Vidyalakshmi Portal:

Vidyalakshmi Portal is a first of its kind portal for students seeking Education Loan. This portal has been developed under the guidance of the Department of Financial Services (Ministry of Finance) , Department of Higher Education (Ministry of Human Resource Development) and Indian Banks Association (IBA).The portal has been developed and being maintained by NSDL e-Governance Infrastructure Limited . Students can view, apply and track the education loan applications to banks anytime, anywhere by accessing the portal. The portal also provides linkages to the National Scholarship Portal.