Compare education loans

Every study-abroad loan falls into one of two buckets, and which bucket you are in determines your interest rate, your maximum amount and how long sanction takes.

Unsecured (non-collateral) loans

• No property or deposit is pledged. The bank lends against the co-applicant's income, your admission and your future earning potential.
• Under the RBI's instruction, banks must not take collateral for education loans up to ₹4 lakh. Between ₹4 lakh and ₹7.5 lakh the model scheme asks for a suitable third-party guarantee alongside the parents as joint borrowers — which the bank may waive at its discretion if satisfied with the parents' net worth, and which the scheme says is waived outright where the loan is eligible for Credit Guarantee cover under CGFSEL, as most loans in this band are.
• Above ₹7.5 lakh, unsecured lending is a commercial decision by the lender, not a right. Some banks do go much higher for strong profiles: SBI's Global Ed-Vantage scheme publishes a collateral-free limit of up to ₹50 lakh for select premier institutions. Private banks and NBFCs also run unsecured programmes, priced higher.
• Expect the unsecured route to depend heavily on the university's ranking, the course (STEM and management are viewed more favourably than most), and the co-applicant's documented income.

Secured (collateral) loans

• Backed by tangible security. Cheaper, larger and more predictable, but slower — legal and valuation reports on property take time.
• Published ceilings are large. SBI Global Ed-Vantage covers loan amounts above ₹7.50 lakh up to ₹3 crore. Bank of Baroda's Baroda Scholar scheme publishes a maximum of ₹150 lakh for premier institutions and ₹60 lakh for others abroad.
• Practically, the loan is capped by the value of the security, not the headline ceiling.
• Note the gap between the model scheme and the market: the IBA scheme's own indicative ceiling is ₹20 lakh for studies abroad, with express provision for banks to lend more based on the institution's reputation and placement history. Individual banks publish far higher limits under their own product rules — so above the scheme's thresholds you are relying on the bank's product terms, not the model scheme's protections.

A point most families miss: RBI states that the Model Education Loan Scheme, 2022 applies to scheduled commercial banks only, and not to Regional Rural Banks, cooperative banks, NBFCs or fintech lenders — so none of the thresholds above are binding on an NBFC. The detailed terms quoted throughout this guide come from the scheme text IBA itself publishes: the 2015 version as amended in 2016.

Margin is the share of the total cost the bank will not lend. It is not a fee — it is money you bring to the table, and for study abroad it is the biggest cash-flow surprise.

• Under the IBA model scheme: nil margin up to ₹4 lakh; above ₹4 lakh, 5% for studies in India and 15% for studies abroad.
• Scholarships and assistantships count towards your margin. A funded assistantship can substantially reduce the cash you personally need.
• Margin can normally be brought in year by year, pro rata, as disbursements are made — you do not need the whole 15% on day one. Confirm this in writing with your branch.
• Individual banks vary, and often in the borrower's favour. Bank of Baroda publishes nil margin up to ₹4 lakh, 15% between ₹4 lakh and ₹7.50 lakh, and above ₹7.50 lakh — the bracket most study-abroad loans fall in — nil margin for premier institutions and 10% for others. Ask for the specific margin on your sanction, in the sanction letter.

On a ₹40 lakh total cost, a 15% margin would be ₹6 lakh of family money on top of the loan. Your actual figure may be lower — several banks publish reduced or nil margin above ₹7.50 lakh, particularly for premier institutions. Get the number that applies to you in writing before you accept an offer, and plan for it.

The moratorium (also called the repayment holiday) is the period during which you pay no EMI. It is the most misunderstood clause in the whole document.

• The IBA model scheme defines it as course period + 1 year. (An older version of the scheme also cut the moratorium short at 6 months after getting a job; that limb was removed when the scheme was revised to a uniform one-year moratorium.) The scheme also lets banks provide further moratorium of up to 6 months at a time during spells of under-employment or unemployment, and up to 2 years for student borrowers setting up start-ups. Banks implement the base rule differently: Bank of Baroda's Baroda Scholar publishes course duration + 1 year; SBI's Global Ed-Vantage publishes repayment beginning 6 months after course completion.
• Interest does accrue during the moratorium. The model scheme specifies simple interest during the study period and up to commencement of repayment. Servicing that interest is optional for the student — if you do not service it, the accrued interest is added to the principal and the EMI is fixed on the enlarged amount. SBI's Global Ed-Vantage terms state the same: simple interest during course and moratorium, capitalised into principal.
• The model scheme provides for a 1% interest concession if interest is serviced during the study period and the subsequent moratorium period, up to commencement of repayment — servicing only during the course and then stopping does not, on the text, earn it. If the family can afford to pay the monthly interest throughout, it usually saves a large sum twice over: the concession plus the avoided capitalisation.
• The model scheme prescribes repayment in equated monthly instalments over 15 years for all categories. SBI publishes a 15-year maximum under Global Ed-Vantage; Bank of Baroda publishes up to 180 instalments for loans above ₹7.5 lakh and 120 instalments up to ₹7.5 lakh.

Ask the branch for an amortisation schedule that shows the loan balance at the end of the moratorium, not just the sanctioned amount. That is the number you will actually repay.

An Indian education loan is effectively underwritten by the family. There is no realistic path to a domestic education loan without a co-applicant.

• The model scheme says loan documents should be executed by both the student and the parent or guardian as joint borrowers. For loans up to ₹4 lakh banks have discretion to waive even this. In practice, for any loan large enough to fund an overseas degree, expect a joint borrower to be required.
• The co-obligant should normally be the parent(s) or guardian. For a married applicant it can be the spouse, or the parents or parents-in-law.
• Above ₹7.5 lakh, the model scheme adds assignment of the student's future income to the bank alongside the collateral.
• Banks assess the co-applicant's income, existing EMIs and credit history. A weak co-applicant profile is one of the most common reasons an otherwise strong student is declined or offered a smaller amount.
• Understand the consequence plainly: if the loan goes unpaid, the co-applicant's credit record and pledged assets are on the line, not only the student's.

The model scheme's list of acceptable security is wider than most families assume:

• Land or building
• Government securities, public-sector bonds, units of UTI, NSC, KVP
• Life insurance policies (surrender value)
• Gold
• Shares, mutual fund units, debentures
• Bank deposits in the name of the student, parent, guardian or any third party
• Or any other tangible security acceptable to the bank — a catch-all worth knowing about if your family's asset is an unusual one. Everything on this list is taken with suitable margin.

How it is valued and what to expect:

• Property collateral generally needs to cover the loan amount. Bank of Baroda, for instance, publishes tangible collateral of 100% of the loan for loans from ₹7.50 lakh to ₹80 lakh, and 1.25 times cover above ₹80 lakh. Other banks apply their own cover ratios — ask for the exact ratio before you commit to a university deposit.
• Financial security (deposits, bonds, policies) is taken at a discount to face or market value — the suitable margin.
• If a property is already mortgaged, the unencumbered portion can be taken on a second charge, provided it covers the required loan.
• The valuation is done by the bank's empanelled valuer and its empanelled advocate does the title search. Both take time and both carry a fee, usually borne by you.
• Practical constraints vary between lenders: agricultural land is widely refused, some lenders will not accept gold, and clear title plus an approved building plan is non-negotiable for most. Get the collateral checked before the offer deadline, not after.

Processing fees on study-abroad loans are set by each lender, so compare them as part of the total cost:

• SBI Global Ed-Vantage: 0.50% of the loan amount, minimum ₹10,000 and maximum ₹50,000, plus GST.
• Bank of Baroda Baroda Scholar: nil up to ₹7.5 lakh; above that 1% capped at ₹10,000, refunded on availment of first disbursement for premier institutions.
• The IBA model scheme says no processing or upfront charges may be levied on loans sanctioned under the scheme. It does allow banks to charge a processing fee for considering a loan for studies abroad — but it also says that fee is to be refunded once the student takes up the course. Ask your branch, in writing, whether and when the fee will be refunded. Bank of Baroda, for example, publishes exactly such a refund on first disbursement for premier institutions.
• NBFCs typically charge more than banks, and the fee is often non-refundable — but published rates vary widely between lenders and are frequently negotiable. Do not rely on any quoted market range: get the exact figure, and whether it is refundable, in the sanction letter before you pay anything.
• Budget separately for costs outside the fee: legal and valuation charges on collateral, mortgage stamp duty and registration (state-dependent, and on a large loan this can run into lakhs), documentation charges, and any life insurance the bank arranges on the student borrower.

Also ask two questions in writing: is there a prepayment or foreclosure charge, and is the rate fixed or floating. On the first, for a scheduled commercial bank the IBA model scheme states that no prepayment penalty will be levied for prepayment of the loan at any time during the repayment period — cite it if a branch says otherwise. It does not bind NBFCs or foreign lenders, so ask them separately and get the answer in the sanction letter.

India allows a deduction for the interest paid on an education loan — not the principal.

• Historically this was Section 80E of the Income-tax Act, 1961. Under the Income-tax Act, 2025, the same provision is carried forward as Section 129, applying from tax year 2026-27. The conditions are unchanged.
• Only interest qualifies, and no monetary ceiling is stated in the section.
• It is available for the initial tax year and the seven tax years immediately following it — eight years in total — or until the interest is fully paid, whichever is earlier. The clock starts in the year you begin paying the interest.
• Who can claim: an individual assessee, for higher education of himself or a relative — defined as the spouse and children of that individual, or a student for whom the individual is the legal guardian. In practice, whoever is repaying and is named on the loan claims it. The payment must be made out of income chargeable to tax.
• Which lender qualifies: the loan must be from a financial institution — a banking company to which the Banking Regulation Act, 1949 applies, or an institution notified by the Central Government — or from an approved charitable institution. This matters for NBFCs: only those specifically notified qualify. Credila Financial Services was notified as a financial institution for this purpose by Notification No. 79/2010 dated 13 October 2010. Before signing with any NBFC, ask for its gazette notification. A loan from a lender that is not notified — including foreign lenders such as MPOWER or Prodigy — will not give you this deduction.
• Higher education is defined as any course of study pursued after passing the Senior Secondary Examination or its equivalent from a school, board or University recognised by the Central or State Government. On that definition overseas bachelor's and master's programmes are generally covered, but the qualifying condition attaches to your prior schooling — confirm your own position with a chartered accountant.

Confirm your specific position with a chartered accountant — this is a summary of the statutory provision, not tax advice.

Public-sector banks (SBI, Bank of Baroda, Canara, Union Bank and others)

• Lowest interest rates and the largest secured limits. Follow the IBA model scheme, so the terms above are broadly predictable.
• Slowest and most document-heavy. Collateral processing, valuation and legal opinion take weeks.
• The model scheme requires applications to be disposed of within 15 days to one month, with sanction or rejection normally communicated within 15 days of a duly completed application. It also requires that any rejection be made with the concurrence of the controlling authority of the branch concerned, and that the reason for rejection be conveyed to the student. If a branch stalls or refuses informally, cite this, ask for the rejection and its reason in writing, and escalate.
• Best fit when you have clear collateral and time before the deposit deadline.

Private banks (Axis, ICICI, IDFC First and others)

• Faster decisions, more flexible on unsecured amounts for strong universities, rates typically above PSU banks but below NBFCs.
• Terms are set by the bank rather than mandated, so read the sanction letter carefully — particularly the moratorium definition and prepayment clause.

NBFCs (Credila, Avanse, Auxilo, InCred and others)

• Built for exactly the profile the banks struggle with: no collateral, tight timelines, unusual destinations or courses.
• You pay for that with the highest rates of the domestic options. Repayment structure during the course also varies sharply between NBFCs and between products at the same NBFC — some require full EMI from disbursement, some only interest, some defer both. This is where NBFC loans most often differ from bank loans, and it is not something to assume in either direction. Ask for the exact repayment start date and what is payable before it, and check it against the sanction letter.
• The IBA model scheme does not bind them, and the Section 80E/129 deduction only applies if that NBFC is notified.

International lenders (MPOWER, Prodigy Finance)

These lend in USD against your future earning potential, with no collateral and no co-signer — the reason families consider them at all. The trade-offs are real:

• MPOWER Financing: published fixed rates from 9.99% (10.89% APR, including the 0.25% auto-pay discount); US$2,001 to US$100,000 per application, up to US$50,000 per academic term and a US$100,000 total outstanding cap; 10-year repayment; interest-only while enrolled and for six months after graduation, capped at 30 months from disbursement. US and Canadian schools only. At the time of writing MPOWER states it has reached its current funding capacity and is temporarily unable to offer new loans for 2026, and is operating a waitlist — verify current availability before you build a plan around it.
• Prodigy Finance: master's, MBA and professional programmes only, not undergraduate. Rates are variable — a fixed margin over SOFR — with a representative APR published at 13.38% variable. There is an administration fee of 4.2% of the loan added to the balance (so you pay interest on it) plus a USD 500 processing fee before disbursement. Prodigy's published representative example runs to 180 months (15 years). Because the rate is variable and built from a margin over SOFR, both the APR and your instalment can move over the life of the loan — check Prodigy's current published figures rather than any quoted here.

• Two risks to weigh honestly: the debt is in dollars, so you carry the rupee-dollar exchange risk for the whole tenure if you return to India; and interest paid to these lenders does not qualify for the Indian tax deduction.

Exact lists vary by lender, but almost every application needs the following. Assembling them early is the single best thing you can do to avoid missing a fee deadline.

Student

• Admission/offer letter and the institution's official cost-of-attendance or fee schedule
• Mark sheets and certificates: Class 10, Class 12, degree and semester-wise transcripts
• Entrance and language test scorecards (IELTS/TOEFL/PTE/Duolingo, GRE/GMAT where applicable)
• Passport, visa (or proof of application), photographs, KYC and PAN
• Scholarship or assistantship letter, if any — this counts towards margin
• Gap justification, if there is a break in education or employment

Co-applicant

• KYC, PAN, photographs
• Income proof: salaried — Form 16 and salary slips for the last 3 to 6 months; self-employed — income tax returns with computation for the last 2 to 3 years, plus business proof
• Bank statements, usually the last 6 to 12 months
• Existing loan statements and a list of assets and liabilities

Collateral (secured loans only)

• Title deed and the full chain of prior deeds
• Approved building plan, encumbrance certificate, latest property tax receipt
• Valuation report and legal opinion from the bank's empanelled valuer and advocate
• For financial security: deposit receipts, policy documents or demat holding statements

Two useful extras banks can provide: a capability certificate, which the model scheme allows banks to issue for students going abroad and which some foreign universities require as proof that the sponsor can meet expenses until completion of studies, and a sanction letter, which many families submit as part of the funds evidence for the visa application — check what your destination's rules actually require.

Vidya Lakshmi portal

The government runs a single-window portal, Vidya Lakshmi, for education loan applications, where a common application form can be submitted to more than one bank. It is useful for comparing responses; it does not guarantee a sanction. Check the portal directly for the current form, the current list of participating banks and how many you may apply to at once.

Credit Guarantee Fund Scheme for Education Loans (CGFSEL)

A Government of India trust fund managed by NCGTC guarantees education loans of up to ₹7.5 lakh extended without any collateral security or third-party guarantee, by covering part of any default. It is what makes the sub-₹7.5 lakh collateral-free bracket work in practice. Eligible lenders are public sector, private sector and foreign banks that are members of IBA. NBFCs are not currently covered, so a collateral-free NBFC loan carries no such guarantee behind it. Eligibility conditions apply and the amount is small relative to overseas costs — treat it as a floor, not a plan.

Dr. Ambedkar interest subsidy for OBC/EBC students (ACSIS)

A Central Sector Scheme under which the Government of India bears the interest payable during the moratorium period on an IBA-scheme education loan for approved Masters, M.Phil and PhD courses abroad, for eligible OBC and Economically Backward Class students. The subsidy is available only once, either at Masters or PhD level. Canara Bank administers the scheme portal. Note the current status: Canara Bank's scheme page states that banks are not to consider or accept fresh applications under ACSIS until further orders. Confirm the position with Canara Bank before counting on it. Income ceilings apply and were revised after the original guidelines, so verify the current figure directly rather than relying on secondary sources.

TCS when you remit fees abroad

• Remittances abroad under the RBI's Liberalised Remittance Scheme attract Tax Collected at Source above a threshold of ₹10 lakh in a financial year.
• Education remittances funded out of a loan from a financial institution as defined in section 80E(3)(b) are exempt from TCS entirely, whatever the amount — ask your bank to record the remittance against the education loan so the exemption is applied.
• For self-funded education remittances, TCS is nil up to ₹10 lakh and 2% above that with effect from 1 April 2026, reduced from the earlier 5%. Rates in this area have changed in successive Budgets, so confirm the applicable rate with your authorised dealer bank at the time of remitting.
• TCS is not an extra tax — it is credited against your income tax liability and can be claimed in your return. But it does tie up cash for months, which matters when you are paying tuition.

• What is the exact rate, and is it fixed or floating? If floating, what is the spread over the benchmark, and how often does it reset?
• Exactly when does the moratorium end — course completion plus how many months, and what happens if the course is extended?
• Is interest during the moratorium simple or compounded, and is it capitalised into the principal?
• What concession applies if we service the interest through the study period and the moratorium?
• What is the total upfront cost: processing fee, legal, valuation, stamp duty, insurance? If it is a bank, will the processing fee be refunded when the student takes up the course, as the model scheme provides?
• Is there any prepayment or foreclosure charge, and after how long? For a scheduled commercial bank, the IBA model scheme states that no prepayment penalty will be levied for prepayment of the loan at any time during the repayment period — cite it if a branch says otherwise. It does not bind NBFCs or foreign lenders, so ask them separately and get the answer in the sanction letter.
• What is the disbursement schedule, and can the bank remit directly to the university in the required currency? What are the forex conversion charges?
• Will the bank issue a sanction letter suitable for the visa application, and how quickly?
• For an NBFC: is it notified as a financial institution for the education-loan interest deduction — and can we see the notification?

Get the answers in the sanction letter. A verbal assurance from a branch officer is not enforceable, and staff change.