A collateral-free education loan is a loan where students do not need to pledge any security (property, FD, or assets). Instead, the loan is sanctioned based on the applicant’s academic record, university ranking, and co-applicant’s financial profile.
- ₹7.5 lakh for most public sector banks (as per RBI guidelines).
- Some private banks & NBFCs offer up to ₹50 lakh (for top universities & courses).
- For studying abroad, some banks offer up to ₹40-50 lakh without collateral.
- Must be an Indian citizen.
- Should have secured admission in a recognized university in India or abroad.
- The co-applicant (parent/guardian) should have a stable income.
- Public Sector Banks (up to ₹7.5 lakh): SBI, Bank of Baroda, PNB, Canara Bank, etc.
- Private Banks & NBFCs (higher amounts possible): HDFC Credila, Axis Bank, ICICI Bank, Avanse, InCred, Auxilo, etc.
- Interest rates are typically 9% – 14%, depending on the lender and applicant profile.
- Government schemes like CGFSEL (Credit Guarantee Fund Scheme for Education Loans) allow lower interest rates for eligible students.
Usually 5 to 15 years, with a moratorium period (repayment starts 6-12 months after course
completion).
Yes, a co-applicant (parent/guardian) with a stable income is mandatory. Some lenders may require a third-party guarantor for higher amounts.
- Yes, but eligibility depends on university ranking, course, and co-applicant’s income.
- Top universities (Ivy League, top 100 global universities) are preferred for high-value unsecured loans.
- Admission letter from university
- KYC documents (Aadhaar, PAN, passport)
- Academic records (10th, 12th, graduation certificates)
- Income proof of co-applicant (ITR, salary slips, bank statements)
- Apply through Vidya Lakshmi Portal for government-backed loans.
- Visit banks or NBFCs directly.
- Compare loan offers from different lenders before applying.
Collateral is a security (asset) pledged to the bank to secure a loan. If the borrower fails to repay, the bank can recover the amount by selling the collateral.
Banks generally accept the following as collateral:
Immovable property – Residential or commercial property, land (with clear title).
Fixed deposits (FDs) – Must be pledged to the bank.
Government bonds – Approved financial instruments.
Life insurance policies – Must have a surrender value equal to or greater than the loan amount.
- Loans above ₹7.5 lakh usually require collateral.
- Loans up to ₹7.5 lakh are generally collateral-free (covered under the Credit Guarantee Fund
Scheme for Education Loans – CGFSEL). - Some government-backed schemes offer collateral-free loans even for higher amounts based on
eligibility
The minimum collateral value should be 1.25 to 1.5 times the loan amount.
Example: For a ₹20 lakh loan, the collateral value should be at least ₹25-30 lakh.
Yes, most banks require a co-applicant or guarantor (usually a parent or guardian) along with collateral.
- Property Collateral: Title deed, valuation report, encumbrance certificate.
- Fixed Deposit (FD) Collateral: FD receipt, lien marking documents.
- Life Insurance Policy: Policy document, assignment papers.
The bank conducts a valuation process through an approved valuer.
Factors considered: Market value, legal status, and ownership clarity.
- The bank may sell the collateral to recover the outstanding loan amount.
- The co-applicant or guarantor will also be held responsible for repayment.
Bank of Baroda – Baroda Scholar Scheme
State Bank of India (SBI) – Global Ed-Vantage Scheme
Punjab National Bank (PNB) – Udaan Scheme
HDFC Credila
ICICI Bank
It is a subsidized education loan offered by the Gujarat Government at a low-interest rate of 4% per annum to help students pursue higher education in India or abroad
- The student must be a resident of Gujarat.
- Must have secured admission in a recognized university in India or abroad.
- Family income criteria may apply (varies by scheme).
- A co-applicant (parent/guardian) is required.
The loan amount varies based on the course and institution, but up to ₹15-20 lakh may be sanctioned
for higher education.
Yes, collateral is required, typically in the form of property with a minimum valuation of ₹22.50 lakh.
- Tuition fees
- Hostel & accommodation charges
- Books, study materials, and laptops
- Travel expenses (for international studies)
- Other academic-related expenses
The repayment tenure is typically 5-7 years, and repayment starts after completing the course
(moratorium period may apply).
Most banks require an admission letter before approving the loan. However, some banks may offer preapproval based on academic performance.
- Visit the District Industries Center (DIC) or the designated bank handling this scheme.
- Submit required documents (Aadhaar, PAN, admission letter, income proof, property documents, etc.).
- The bank will process and approve the loan based on eligibility.
- The bank may recover the amount from the co-applicant (guarantor).
- In case of non-repayment, the collateral (property) may be seized by the bank.
Yes, students can also explore:
- Vidya Lakshmi Portal (Central Government Education Loan Scheme).
- NSP (National Scholarship Portal) Scholarships.
- Other state-specific education loan subsidies.