Student Loan in India 2025: Interest Rates, Repayment & How to Apply

Higher education is a dream for many Indian students, but the rising cost of college and university—especially for professional courses or overseas studies—can be overwhelming. That’s where student loans come in. These education loans help students pursue their dreams without putting a financial burden on their families.

This detailed guide will help you understand:

• What a student loan is
• Types of student loans
• Student loan interest rates in India
• Eligibility & documents
• How to apply
• Repayment terms & how long it takes to repay
• Loans without collateral
• Loans for studying abroad

Let’s explore each topic in depth with the latest updates for 2025.

What Is a Student Loan?

A student loan or education loan is financial aid provided by banks, Non-Banking Financial Companies (NBFCs), or government institutions to help students pay for their academic expenses. In India, education loans are available for a wide range of courses including engineering, medical, management, arts, science, skill development, and even aviation or pilot training programs.

A typical student loan covers the following:

• Tuition fees
• Hostel accommodation or rent
• Books, study material, laptop, and equipment
• Travel expenses (for abroad studies)
• Examination and library fees
• Insurance premiums (where mandatory)

Loans can be availed either with collateral (secured loan) or without it (unsecured loan), depending on the loan amount and the financial standing of the co-applicant.

In India, the Indian Banks’ Association (IBA) has a Model Education Loan Scheme which governs how banks offer student loans, including terms for interest, moratorium, repayment, etc.

Types of Student Loans in India

1. Domestic Education Loans

These loans are intended for students who want to pursue their education in India. Courses must be from recognized Indian institutions such as:

• IITs, IIMs, NITs, AIIMS, etc.
• UGC/AICTE/NAAC-accredited universities
• State-approved colleges and private institutions

Courses eligible include:

• Undergraduate and postgraduate degrees (B.A., B.Com., B.Sc., M.Tech., MBA, etc.)
• Vocational training programs
• Professional diplomas
• Online and distance learning programs (selected ones)

2. Overseas Education Loans

With the growing desire to study abroad, loans for international education are now highly in demand. Students can get loans for countries like the USA, UK, Canada, Australia, Germany, Ireland, New Zealand, and others.

Loan covers:

• GRE, GMAT, IELTS coaching fees
• Flight tickets
• Visa and insurance charges
• Living expenses in foreign country
• Tuition and other institutional costs

Usually, banks require proof of admission (offer letter) and confirmed visa before processing the disbursal.

3. Collateral-Based vs. Collateral-Free Loans

• Collateral-Based (Secured): Students who need loan amounts above ₹7.5 lakhs or are attending Tier-II institutions may be asked to pledge property, FD, LIC policies, or other security.
• Collateral-Free (Unsecured): Up to ₹7.5 lakhs (and in some cases higher) can be availed without any collateral, under the CGFSEL (Credit Guarantee Fund Scheme for Education Loans).

Interest Rates on Student Loans in India (2025)

Interest rates for education loans vary depending on:

• Lender type (public bank, private bank, NBFC)
• Institute ranking
• Co-applicant’s income and credit score
• Type of loan (domestic or abroad)

Bank/NBFC	Interest Rate (Approx.)	Max Loan Limit
SBI Student Loan	8.50% – 10.15%	₹10L (India), ₹20L (Abroad)
HDFC Credila	9% – 13%	₹20L – ₹50L+
ICICI Bank	10% – 11.5%	₹25L+
Bank of Baroda	8.85% onwards	Based on institution/course
Axis Bank	9.50% – 13.00%	₹40L+
Avanse/InCred/Prodigy Finance	10%+	Up to ₹75L (Abroad)

Rates are subject to revision monthly or quarterly. Use official comparison tools for updates:

🔗 Vidya Lakshmi Portal

Eligibility Criteria for Student Loans

Most Indian banks have similar eligibility rules:

• Indian citizenship
• Age: 16–35 years (varies by lender)
• Confirmed admission to a recognized Indian or international university
• A co-applicant (parent or guardian) with income proof
• Good academic record
• For abroad studies: proof of visa, passport, IELTS/GRE score, etc.

Note: Some top-ranking institutions are in the bank’s pre-approved list, making loan approvals faster.

Documents Required

Documents are required both from the student and the co-applicant:

Student:

• Admission letter from university
• 10th, 12th, graduation marksheets
• Entrance test scores (if applicable)
• Aadhar, PAN, passport (for abroad)
• Fee structure of the course

Co-applicant:

• ID proof, PAN card, Aadhar
• Latest ITR or Form-16
• Salary slips or business income proof
• Bank statements (6 months)
• Property papers (if collateral is pledged)

How to Apply for a Student Loan in India

Step 1: Research and Shortlist Lenders

Compare banks and NBFCs based on:

• Interest rate
• Processing fee
• Margin money required
• Moratorium period
• Prepayment charges

Step 2: Use Government Portals (Optional but recommended)

The Indian government promotes the use of:

• Vidya Lakshmi Portal
• NSDL e-Gov Education Loan Portal

These portals allow applying to multiple banks with one form.

Step 3: Submit the Application

You can apply:

• Online via bank websites
• Offline by visiting branches
• Via education loan aggregators like GyanDhan, Leap Finance, etc.

Step 4: Loan Sanction and Disbursal

After document verification and risk assessment, banks issue a sanction letter. Loan amount is disbursed directly to the university in phases or as lump sum.

Processing time: 5–15 working days (average)

What Is a Student Loan Without Collateral?

Under the CGFSEL scheme, banks can issue education loans up to ₹7.5 lakhs without collateral or third-party guarantee.

Conditions include:

• Course must be approved by UGC/AICTE/IMC
• Co-applicant’s income must justify repayment
• The institution may need to be on the IBA preferred list

NBFCs may provide higher limits without collateral but at higher interest rates.

Student Loans for Studying Abroad (2025 Update)

Abroad education loans usually cover:

• Tuition fees
• Visa processing charges
• Flight tickets and travel insurance
• Living expenses (hostel/rent)
• Exam costs (IELTS, GRE, TOEFL)
• Laptop/books

Top Student Loan Providers for Abroad Studies:

• SBI Global Ed-Vantage
• HDFC Credila (popular for US/UK)
• Avanse (supports over 2000 universities)
• ICICI Education Loan Abroad
• Prodigy Finance (non-Indian NBFC, no collateral)

Repayment begins after completion of course + moratorium period.

Repayment: How Long Does It Take to Pay Off a Student Loan?

Moratorium Period:

Students get a grace period (usually 6–12 months) after the course before EMIs begin. This allows time to find employment.

Loan Tenure:

• Typically ranges from 5 to 15 years
• Shorter tenure = higher EMI but lower total interest
• Longer tenure = lower EMI but more total interest

Example:

Loan: ₹20 lakhs @ 10% interest, 10-year tenure

• EMI = ~₹26,430/month
• Total Repayment = ₹31.7 lakhs approx

Prepayment:

Most lenders allow partial or full prepayment without penalty after 1 year. Early repayment can save lakhs.

Who Should Consider a Student Loan?

• Students from families unable to afford high upfront fees
• Aspirants of top institutions (IIT, IIM, ISB, AIIMS, etc.)
• Students targeting foreign universities with ₹30L+ budgets
• Middle-class students who need structured repayment
• Working professionals upgrading their degrees (MBA, MTech)

Final Tips for Students & Parents

✅ Start early: Research loan options 6–8 months before admission
✅ Check if your course is on the bank’s approved list
✅ Maintain good academic grades for better loan terms
✅ Negotiate interest if co-applicant has high credit score
✅ Use education loan EMI calculators before applying
✅ Consider education loan insurance (covers repayment if something happens to borrower)