Student Loans in India 2025: In India, education is not just an aspiration, it’s a powerful investment in one’s future. But with rising tuition costs, accommodation expenses, and other associated fees, financing higher education has become increasingly challenging. For many, student loans (or education loans) present the most viable solution to achieve academic goals without financial hardship. As the demand for skilled graduates grows, educational loans in India are evolving with better accessibility, flexible repayment terms, and competitive interest rates.
What Is a Student Loans in India 2025?
A student loan, also called an education loan, is a financial aid product offered by banks and non-banking financial institutions (NBFCs) to help students pursue higher studies in India or abroad. These loans typically cover:
- Tuition fees
- Accommodation, hostel expenses
- Exam, library, and lab fees
- Travel expenses (for overseas studies)
- Study tour and project costs
The loan amount varies depending on the course, college, and institution category, with most lenders offering up to ₹10 lakh for domestic studies and ₹20–30 lakh for international education.
Eligibility Criteria for Student Loans in India
To avail of an education loan in India, you must meet criteria set by the Reserve Bank of India (RBI) and respective lenders:
- Nationality: Must be an Indian citizen.
- Admission Confirmation: Applicants must have secured confirmed admission to a recognized institution in India or abroad.
- Age: Typically between 16 and 35 years.
- Co-applicant requirement: A parent, guardian, or spouse must act as a co-borrower to assure loan repayment.
- Academic performance: A strong track record helps secure favorable loan terms and interest rates.
How to Apply for a Student Loan 2025?
1. Research and Compare Lenders
Public and private banks, along with NBFCs, offer education loans. Compare loan terms, interest rates, processing time, and customer feedback before applying. Popular options include SBI, HDFC, ICICI, Axis, Canara, and Union Bank of India.
2. Gather Required Documents
Common documents include:
- Admission letter and course fee structure
- 10th and 12th mark sheets, graduation certificates (if applicable)
- Proof of permanent residence and identity (Aadhaar, PAN, Passport)
- Co-applicant’s income proof (salary slips, ITR, or bank statements)
3. Fill Out the Application Form
You can apply online via the respective bank’s portal or visit the nearest branch for in-person submission.
4. Application Review and Processing
The bank evaluates your:
- Admission offer
- Co-applicant credit history
- Institutional accreditation
- Future employability and repayment potential
5. Loan Sanction and Disbursement
Upon approval, the bank issues a sanction letter detailing the loan amount, interest rate, and repayment schedule. The funds are usually sent directly to the college or university.
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Interest Rates on Education Loans in 2025
Education loan interest rates in India vary across banks depending on whether the course is domestic or international and whether the loan is secured or unsecured. Here’s a glimpse of leading banks’ rates as of October 2025:
| Bank | Interest Rate Range (p.a.) | Remarks |
|---|---|---|
| SBI Global Ed-Vantage Loan | 9.15% – 10.50% | Collateral required for loans above ₹7.5 lakh |
| ICICI Bank iSmart Scheme | 10.25% – 14.00% | Variable; linked to credit profile |
| Axis Bank Study Power Loan | 9.00% – 11.75% | Flexible repayment, covers full study expenses |
| HDFC Bank Education Loan | Starting at 10.50% | For both Indian and foreign universities |
| PNB Pratibha & Udaan | 8.55% – 12.00% | Lower rates for recognized institutions |
| Union Bank of India | 8.25% – 10.35% | Lowest rates for IIT/IIM/NIT students |
| Bank of Baroda Vidya Scheme | 11.05% – 11.15% | No collateral up to ₹7.5 lakh |
Loan Amount and Collateral Requirement
The Reserve Bank of India (RBI) mandates simplified security norms for student loans:
| Loan Amount (INR) | Collateral Requirement |
|---|---|
| Up to ₹4 lakh | No collateral or guarantor needed |
| ₹4 lakh – ₹7.5 lakh | Third-party guarantee required |
| Above ₹7.5 lakh | Tangible collateral like property or deposit |
Repayment Terms and Moratorium Period
Repayment typically begins 6 to 12 months after course completion or upon securing employment. The standard repayment tenure ranges from 5 to 15 years, giving borrowers ample flexibility.
Most public sector banks offer a moratorium period (holiday period) during which students are not required to make principal payments, although interest continues to accrue.
Example:
If you borrow ₹10 lakh at a 9% annual interest rate with a repayment tenure of 10 years (after one-year moratorium), your monthly EMI could be approximately ₹12,700, calculated using an online education loan EMI calculator.
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Government Education Loan Schemes in India
Several government-backed programs aim to make student loans more inclusive and affordable:
- Credit Guarantee Fund Scheme for Education Loans (CGFSEL):
Offers collateral-free loans up to ₹7.5 lakh with government guarantee. - Padho Pardesh Scheme (Now closed):
Provided interest subsidies for minority community students pursuing studies abroad. - Dr. Ambedkar Central Sector Scheme:
Offers interest subsidies to OBC and EWS category students for overseas education. - Pradhan Mantri Vidya Lakshmi Portal (PMVL):
A single-window digital platform for students to apply to multiple loan providers. - CSIS (Central Sector Interest Subsidy) Scheme:
Provides full interest subsidy during the moratorium period for EWS category students studying in recognized institutions.
FAQs
Q1. How much can I borrow as a student loan in India?
Students can borrow up to ₹10 lakh for domestic and ₹30 lakh for overseas education, depending on the institution and course.
Q2. Can I get a student loan without collateral in India?
Yes, up to ₹7.5 lakh can be borrowed without collateral under RBI regulations.
Q3. Which bank gives the lowest education loan interest rate in 2025?
Currently, Bank of India’s Star Vidya Loan offers the lowest interest rate starting at 8.25% p.a..
Q4. What expenses are covered by student loans?
Loans generally cover tuition, exams, accommodation, travel (for abroad students), and study-related materials.
Q5. What repayment options are available?
Borrowers can choose tenures of 5–15 years, with a moratorium period extending up to one year after course completion.
Q6. Are student loans eligible for tax benefits?
Yes, Section 80E allows tax deductions on education loan interest payments.
Q7. What happens if I default on my repayment?
Defaulting affects your credit score, triggers penalties, and may lead to loss of collateral for secured loans.
Q8. Can students apply jointly with their parents?
Yes, a co-applicant (parent or guardian) is mandatory for approval.
Q9. Are international universities covered under Indian education loans?
Yes, recognized universities across the USA, UK, Canada, Australia, and others are eligible.
Q10. How can I improve my chances of loan approval?
Maintain a steady academic record, apply with a financially sound co-applicant, and ensure accurate documentation.