How to Get a Student Loan for College in India: A Step-by-Step Guide
Higher education in India can be expensive, but student loans make it accessible to millions. Whether you’re aiming for an engineering degree, medical studies, or an MBA, understanding how to get a student loan in India, the loan amounts, repayment rules, and interest rates is crucial. This guide explains everything in simple terms.
What is a Student Loan in India?
A student loan is funds borrowed to cover college fees, accommodation, books, and other education-related expenses. In India, these loans are offered by:
- Public Sector Banks: SBI, Canara Bank, Bank of Baroda, etc.
- Private Banks: HDFC, Axis Bank, ICICI Bank, etc.
- Government Schemes: Vidya Lakshmi Portal, Central Sector Interest Subsidy (CSIS), etc.
Loans must be repaid with interest, usually after completing your course.
How to Get a Student Loan in India: 6 Simple Steps
Follow these steps to secure a student loan:
- Research Lenders: Compare interest rates, processing fees, and eligibility criteria across banks and NBFCs.
- Check Eligibility: Most banks require:
- Admission to a recognized Indian or foreign university.
- Indian citizenship.
- A co-applicant (parent/guardian) with a stable income.
- Apply Online or Offline: Use the Vidya Lakshmi Portal (government platform) to apply to multiple banks at once or visit a bank branch.
- Submit Documents: Commonly required papers include:
- Admission letter
- Academic mark sheets
- Co-applicant’s income proof
- Cost of attendance breakdown
- Await Loan Approval: Banks verify documents and may ask for collateral (like property) for large loans.
- Loan Disbursement: The bank transfers funds directly to your college or your account, as per the agreement.
Minimum and Maximum Student Loan Amounts in India
Loan limits vary by lender and course:
- Public Sector Banks:
- Minimum: ₹10,000 to ₹50,000 (varies by bank).
- Maximum: Up to ₹1.5 crore for studies abroad (e.g., SBI’s Global Ed-Vantage Scheme).
- Private Banks/NBFCs:
- Minimum: ₹50,000 (e.g., HDFC Credila).
- Maximum: No upper limit for top-tier institutions (subject to collateral).
- Collateral Requirements: Loans above ₹7.5 lakh usually require collateral (property, fixed deposits, etc.).
Note: Banks typically cover 80-100% of tuition fees and 50-70% of living costs.
When to Repay Your Student Loan in India
Repayment starts after the moratorium period (also called the course period + 6–12 months):
- During Studies: Most banks charge simple interest during the moratorium. Some let you pay interest monthly to reduce the final burden.
- After Moratorium: Repayment of principal + interest begins. For example, if your course ends in July 2025, repayment starts from January 2026.
Exception: Loans under the Central Sector Interest Subsidy (CSIS) scheme for economically weaker sections (EWS) have full interest waivers during the moratorium.
Student Loan Interest Rates in India (2024)
Interest rates depend on the lender and collateral:
- Public Banks: 8.15% to 11.25% per annum (floating rate linked to RBI’s repo rate).
- Private Banks/NBFCs: 10% to 15% per annum.
- Government Subsidies: Schemes like Padho Pardesh (for minority students) offer lower rates or interest subsidies.
Tip: Female students often get 0.5% lower interest rates in public banks.
Repayment Tenure: How Long Do You Have to Repay?
Most banks in India allow:
- 5–15 Years: Standard repayment period after the moratorium ends.
- Extendable Tenure: Some lenders allow up to 20 years for large loans (e.g., ₹50 lakh+).
Factors Affecting Tenure: Loan amount, interest rate, and your income after graduation.
Top Tips to Manage Student Loan Repayment
- Opt for Government Schemes First: CSIS, Vidya Lakshmi, and state-level subsidies reduce interest burdens.
- Compare Lenders: Use the Vidya Lakshmi Portal to view multiple loan offers in one place.
- Understand the Fine Print: Check processing fees, prepayment penalties, and insurance clauses.
- Start Partial Payments Early: Paying interest during college reduces your total debt.
- Use Tax Benefits: Under Section 80E, you can claim tax deductions on interest paid for up to 8 years.
Frequently Asked Questions (FAQs)
Q: Can I get a student loan without collateral in India?
A: Yes! Loans up to ₹7.5 lakh from public banks don’t require collateral. For higher amounts, collateral is mandatory.
Q: Is a student loan available for studying abroad?
A: Absolutely. Banks like SBI and Axis Bank offer loans up to ₹1.5 crore for international courses, but collateral is usually required.
Q: What happens if I can’t repay the loan?
A: Inform your bank immediately. They may restructure your loan or offer a temporary moratorium. Defaulting affects your CIBIL score and may lead to legal action.
Q: Are loans discharged if the student passes away?
A: Most banks have insurance policies to waive off the loan in case of the borrower’s death or permanent disability.
Q: How long does loan approval take?
A: 7–15 working days if documents are complete. For loans above ₹50 lakh, it may take longer due to collateral checks.
Government Initiatives to Support Students
India has several schemes to make loans affordable:
- Vidya Lakshmi Portal: A one-stop platform to apply for loans from 40+ banks.
- Central Sector Interest Subsidy (CSIS): Full interest waiver during moratorium for EWS families (annual income less than ₹4.5 lakh).
- Padho Pardesh Scheme: Interest subsidies for minority students pursuing Masters/PhD abroad.
Final Thoughts
Getting a student loan in India is easier than you think if you follow the right steps. Always prioritize public sector banks and government schemes for lower interest rates. Borrow only what you need, and use part-time jobs or scholarships to reduce reliance on loans. With proper planning, you can focus on your studies without stressing about finances. Remember, education is an investment—manage it wisely!