What Are the Types of Education Loan for Indian Students?

With over 1.3 million Indian students studying abroad in 2024, according to the Ministry of External Affairs, the demand for high-quality education is soaring. Pursuing higher education abroad often comes with significant financial challenges. Understanding the types of education loans for Indian students can make this journey more accessible.

This guide explores the types of education loans for Indian students, their features, eligibility criteria, benefits, and how they cater to diverse educational needs. Without further ado, let’s get started.

Types of Education Loans in India for Students

There are two types of primary education loans available for different types of quality educational programs. One is a secured education loan, and the other is an unsecured education loan. Further, these education loans are classified on the basis of loan amount, study location, type of course, and purpose.

Let us first understand one by one what the secured and unsecured education loans available for Indian students are:

Secured Education Loans for Indian Students

Secured education loans require collateral such as property or fixed deposits to guarantee repayment. These loans often offer higher loan amounts and lower interest rates, making them a popular option for funding studies abroad. The key features of these types of education loans are as follows:

• Collateral required: Non-agricultural land, residential property, fixed deposits, or other tangible assets.
• Loan amount: Up to INR 1.5 crore or more, depending on the lender and collateral value.
• Interest rates: Typically range from 8.30% to 12% per annum, lower than unsecured loans.
• Repayment tenure: Up to 15 years, with a moratorium period (course duration plus 6–12 months).
• Example providers: State Bank of India (SBI), Bank of Baroda, Axis Bank.

Why Choose Secured Loans?

• Lower interest rates reduce the overall cost of borrowing.
• Higher loan amounts cover expensive international programs.
• Flexible repayment terms ease financial pressure post-graduation.

Secured loans are suitable for people who have access to assets and are looking for adequate funds to attend prestigious universities abroad.

Unsecured Education Loans for Indian Students

Unsecured education loans are types of education loan without collateral because they do not require any kind of property or fixed deposits, making them accessible even to those who do not have any significant assets. These loans depend on the creditworthiness of the borrower and often involve co-applicants such as parents or guardians. The key features of these types of education loans are as follows:

• No collateral needed: Ideal for those without property or fixed deposits.
• Loan amount: Up to INR 50 lakh for international studies, though some lenders like ICICI Bank offer up to INR 3 crore.
• Interest rates: Higher than secured loans, typically 10% to 16% per annum.
• Repayment tenure: Up to 8–15 years, with a moratorium period of course duration plus 6–12 months.
• Example providers: HDFC Bank, Axis Bank, Punjab National Bank (PNB).

Why Choose Unsecured Loans?

• No need to pledge assets, reducing risk to personal property.
• Faster approval of the education loan process due to minimal documentation.
• Suitable for smaller loan amounts or less expensive courses.

Unsecured loans provide flexibility for those pursuing professional or technical courses abroad without the burden of collateral.

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Course-Specific Education Loans for Indian Students

Various types of education loans for Indian individuals target specific academic programs, such as domestic education, abroad education, undergraduate, postgraduate, or professional courses. These loans cater to the unique financial needs of different study levels and disciplines. Let us look at each type of education loan for Indian students one by one:

Domestic Education Loans for Indians

Domestic education loans are loans that provide assistance to students pursuing courses within the geographical boundaries of India. These loans are ideal for undergraduate, postgraduate, or professional programs at recognized institutions. The details are as follows:

• Eligibility: This type of education loan eligibility criteria requires admission to a UGC/AICTE-approved institution; completion of 10+2 for undergraduate courses or a bachelor’s degree for postgraduate courses.
• Loan Amount: Up to INR 50 lakhs, with some banks offering 100% financing.
• Popular Providers: State Bank of India, Bank of Baroda, HDFC Bank.

Study Abroad Education Loans for Indian Students

Education loans to study abroad are tailored for students pursuing courses outside India. These types of loans cover higher tuition fees, travel, and living expenses, with flexible repayment options. Here are the details:

• Eligibility: Admission to a recognized international university; strong academic background.
• Loan Amount: The maximum education loans for abroad studies is up to INR 1.5 crore, depending on the course and institution.
• Key Features: Preferential exchange rates for overseas disbursements; coverage for student exchange programs and equipment like laptops.
• Popular Providers: SBI Global Ed-Vantage, Bank of Baroda Scholar Loan, HDFC Credila.

Undergraduate Loans for Indian Students

Graduate loans are the types of loans that provide aid to students pursuing 3-4 year degree programs in fields such as engineering, medicine, or liberal arts abroad. Here are the details

• Loan amount: Up to INR 80 lakh (Bank of Baroda) or INR 1 crore (private lenders).
• Eligible courses: Degrees from recognized international universities accredited by bodies like NAAC or NBA.
• Expenses covered: Tuition, accommodation, books, and travel expenses.

Postgraduate Loans for Indian Students

Postgraduate loans are the types of loans for indian students that fund advanced degrees like MBA, MS, or MCA, often offered by premier institutions abroad. Here are the details of Postgraduate loans for Indian Students:

• Loan amount: Up to INR 150 lakh for professional courses (e.g., Bank of Baroda’s scheme for MBA/MS).
• Eligibility: Admission to reputed universities through merit or entrance exams.
• Additional benefits: Covers laptops, study tours, and project work (up to 20% of the loan amount).

Professional and Skill-Based Loans for Indian Students

Professional and Skill-Based types of loans target job-oriented courses, such as aviation, shipping, or skill-based training programs. Here are the details of Professional and Skill-Based Loans for Indian students:

• Loan amount: Up to INR 7.5 lakh for skill loans; higher for professional courses like CIMA or CPA.
• Eligible institutions: Approved by regulatory bodies like the DGCA or the AICTE.
• Repayment: Starts 6–12 months after course completion or upon employment.

These specialized loans ensure tailored financial support for diverse academic paths, from traditional degrees to vocational training.

Government-Backed Education Loans for Indian Students

Government-backed education loans, supported by schemes like PM-Vidyalaxmi and the Credit Guarantee Fund Scheme for Education Loans (CGFSEL), provide affordable financing with added benefits like interest subsidies. Here are the key features of this type of loan:

• Collateral-Free: Up to INR 7.5 lakh under CGFSEL, with 75% guarantee cover by NCGTC.
• Interest Subsidy: Available under Central Sector Interest Subsidy (CSIS) for families with annual income up to INR 4.5 lakh.
• Loan Amount: Up to INR 10 lakh with 3% interest subvention under PM-Vidyalaxmi for top 860 institutions.
• Application Process: Apply via the Vidya lakshmi portal or directly through banks like Canara Bank.
• Repayment: Up to 15 years, with a moratorium period of the course duration plus one year.

Notable Government Schemes:

• PM-Vidyalaxmi: Collateral-free loans for meritorious students admitted to top institutions.
• CSIS: Interest subsidy during moratorium for economically weaker sections.
• Dr. Ambedkar Interest Subsidy Scheme: Supports OBC/EBC students studying abroad.

Government-backed loans reduce financial barriers, especially for meritorious students from lower-income backgrounds.

Loans from Non-Banking Financial Companies (NBFCs)

NBFCs like Avanse Financial Services offer flexible education loans for studying abroad, often with competitive interest rates and customized repayment options. Here are the key features of these loans:

• Loan amount: Up to INR 1 crore for international studies.
• Interest rates: Starting at 14.55% (Avanse Base Rate + Spread, as of December 2024).
• Expenses covered: Tuition, living expenses, insurance, and equipment like laptops.
• Repayment: Flexible tenure up to 15 years; option to pay simple interest during moratorium.
• Eligibility: Admission to recognized institutions; no collateral for smaller loans.

Advantages of NBFCs Loans:

• Streamlined application process with digital options.
• Customized loan structures based on course and institution.
• Faster disbursal compared to traditional banks.

NBFCs provide an alternative for those seeking quick approvals and tailored financing solutions.

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Top Education Loan Providers with Interest Rates in 2025

Choosing the right lender with competitive interest rates for education loans for Indian students is crucial to reducing the burden of repayment. Below is a table of education loan interest rates of top Indian banks, updated till July 2025 and taken from bank websites and financial platforms.

Bank Name	Interest Rate (% p.a.)	Loan Amount
Bank of Baroda	6.75–8.70	Up to INR 40 lakhs (domestic), INR 1.5 crore (abroad)
Union Bank of India	6.80–10.80	Up to INR 40 lakhs
Central Bank of India	6.85–9.50	Up to INR 20 lakhs
Bank of India	6.85–9.85	Up to INR 40 lakhs
State Bank of India	6.85–10.90	Up to INR 1.5 crore
Punjab National Bank	6.90–9.80	Up to INR 50 lakhs
IDBI Bank	6.90–9.50	Up to INR 20 lakhs
Canara Bank	6.90–9.70	Up to INR 40 lakhs
Bank of Maharashtra	7.05–8.60	Up to INR 20 lakhs
Indian Bank	7.15–9.85	Up to INR 40 lakhs
Indian Overseas Bank	7.25–10.80	Up to INR 30 lakhs
UCO Bank	7.30–10.50	Up to INR 20 lakhs
HDFC Bank	9.55–13.25	Up to INR 50 lakhs (domestic), INR 1 crore (abroad)
Axis Bank	9.70–13.50	Up to INR 75 lakhs
Federal Bank	10.05–12.50	Up to INR 50 lakhs
ICICI Bank	10.50–15.85	Up to INR 1 crore (domestic), INR 2 crore (abroad)
Karur Vysya Bank	10.75–13.65	Up to INR 20 lakhs
Karnataka Bank	12.19–13.70	Up to INR 20 lakhs

Note: Rates vary based on course, institute, and applicant profile. Female students and those studying at premier institutes may receive concessions of 0.5%–1%. For the most updated rates, check the bank’s website.

Repayment of Education Loans

Education loans cover both academic (tuition, books) and non-academic (living expenses, travel) costs. Repayment begins after a moratorium period (course duration + 6–12 months) and is made through Equated Monthly Installments (EMIs). Key points include:

• Tenure: Up to 15 years, with banks like Bank of Baroda offering extended terms for premier institutes.
• Negotiation: Discuss EMI plans with bank officials based on your income.
• Prepayment: Many banks allow penalty-free prepayments to reduce interest costs.
• Example: For a INR 20 lakh loan at 6.9% p.a. over 7 years, the EMI is approximately INR 30,234 (Propelld, 2025).

Students can consult bank personnel to customize EMIs or explore government subsidy schemes to reduce repayment burdens.

Top Education Loan Schemes for Girl Students in India

Several banks provide specialized schemes with concessions for female students to promote women’s education. The following are the top education loans for girl students in India:

• Central Bank of India Cent Vidyarthi: 0.5% interest rate concession; up to INR 20 lakhs.
• Indian Overseas Bank Vidhya Jyoti: Lower rates for girls; up to INR 30 lakhs.
• Bank of Baroda Baroda Scholar Loan: 0.5% concession for female students at premier institutes.
• Axis Bank Education Loan: Flexible terms with rate benefits for girls.
• HDFC Credila Education Loan: Up to INR 1 crore with fast disbursals and concessions for female applicants.
• Punjab National Bank Udaan/Pratibha: 0.5% discount for girls and students with disabilities.

Tax Benefits on Education Loans

There is a common misconception that taking an education loan attracts tax. However, it is not the case. If you are pursuing a full-time or part-time course at a recognised institute and taking an education loan to fund your study, then you can claim income tax benefits on the principal paid under Section 80E of the Income Tax Act. Here are the key details:.

• Eligibility: Loans taken from recognized banks or NBFCs for full-time, part-time, or vocational courses at recognized institutions.
• Dedication: Only the interest component is deductible, not the principal.
• Duration: Available for up to 8 years from the start of repayment.
• Claim Process: Submit the interest certificate/loan repayment statement issued by your lender.

Example: For a loan with 11% interest, if you pay INR 50,000 in interest annually, the entire amount is deductible, reducing your taxable income.

Eligibility Criteria for Education Loans in India

You must satisfy the criteria for the loan before you can apply for it. The criteria may vary, depending on the type of education loan you choose. Here is the Eligibility criteria:

• Admission to a UGC/AICTE-approved institute (domestic) or a recognized foreign university (abroad).
• Completion of 10+2 for undergraduate loans or a bachelor’s degree for postgraduate loans.
• Co-applicant (parent/guardian) with stable income for loans above INR 7.5 lakhs.
• Valid entrance exam scores (e.g., JEE, NEET, GRE).

Documents Required for Types of Education Loans in India

Apart from the eligibility criteria, certain documents are also required to get an education loan from banks. Below are the documents required to apply for an education loan:

• KYC: Aadhaar, PAN, passport, or voter ID.
• Academic: 10th, 12th, and undergraduate mark sheets; entrance exam scores.
• Admission: Offer letter, fee structure.
• Financial: Co-applicant’s income proof (salary slips, ITR), bank statements.

Also Read: 15 Best Countries for International Students

Why Choose Leverage Finance for Education Loans?

To save you from paying high rates and running around banks, Leverage Finance offers the best exchange rates in the market, complete transparency, and instant payments without any tedious paperwork. All you need to do is log on to Leverage Finance, create an account, add your payee, and transfer money anywhere in the world using popular payment gateways like UPI, Netbanking, and Debit Cards.

Choosing the right type of education loan for indian students can transform their dream of studying abroad into reality. From secured and unsecured loans to government-backed and NBFC options, the types of education loans for Indian individuals cater to diverse needs and financial situations. Assess your requirements, compare loan features, and leverage government schemes to minimize costs.

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We hope this article has provided you with all of the necessary information on the types of education loans for Indian Students. Get in touch with the experts at Leverage Edu to make the entire application process a breeze!