The Indian government has implemented a range of programs and interest subsidies to provide substantial financial assistance to students pursuing education abroad. These initiatives are strategically designed to support individuals from economically weaker sections and marginalized communities in their educational pursuits. It is crucial to note that while commonly referred to as government education loans for studying abroad, these initiatives do not function as direct loans. Instead, they operate as comprehensive programs that offer financial aid and interest subsidies. Through these schemes, students can enjoy advantages such as reduced interest rates, flexible repayment choices, and additional forms of support.
Education loan options
In the realm of education loans for studying abroad by the Indian government, there are essentially four types of lenders. These lenders are:
Public Banks:
- Indian public banks offer education loans for studying abroad with collateral requirements.
- Loan amounts vary from INR 7.5 Lakh to INR 1.5 Cr.
- Government bank loans provide tax benefits under Section 80E and competitive interest rates.
- Notable lenders include State Bank of India and Union Bank of India.
Private Banks:
- Private banks in India provide education loans for overseas studies with varying interest rates, starting at 11% per annum.
- Loan amounts depend on factors such as the chosen country, course, applicant’s profile, and co-signer’s financial status.
- These loans qualify for tax benefits under Section 80E and offer quicker processing times compared to government banks.
- Key players include ICICI Bank, Axis Bank, and IDFC FIRST Bank.
NBFCs (Non-Banking Financial Companies):
- NBFCs offer both secured and unsecured education loans for studying abroad.
- Loan amounts are influenced by factors such as the selected country, course, and applicant’s profile.
- Interest rates range from 11.50% to 13.75% per annum, which is comparatively higher than private and government banks.
- Unlike private bank loans, NBFC loans do not provide tax benefits under Section 80E.
- Prominent NBFCs in this sector include HDFC Credila, Avanse, InCred, and Auxilo, offering quicker processing times compared to government and private banks.
Education Loan Schemes by the Indian Government
A list of government loan for study abroad schemes with details are given below –
Credit Guarantee Fund Scheme for Education Loans (CGFSEL):
- Introduced in 2015, this scheme specifically caters to students aspiring to study abroad without collateral or a co-applicant.
- Eligible students can secure loans up to INR 7.5 Lakh.
- Conditions include belonging to the economically weaker section, having an annual family income below INR 4.5 Lakh, and securing admission to an approved technical or professional course.
National Minorities Development & Finance Corporation (NMDFC):
- NMDFC, a government body, offers loans for professional and job-oriented courses to minorities.
- Categorized under two credit lines based on family income.
- For credit line 1 (income up to INR 1.20 Lakh in urban areas and INR 98,000 in rural areas), education loans for study in India extend up to INR 20 Lakh, and for study abroad, up to INR 30 Lakh at a 3% interest rate.
- Moratorium period: Course duration plus 6 months, Repayment tenure: 5 years.
- For credit line 2 (income up to INR 6 Lakh), the interest rates vary (8% for men and 5% for women).
National Safai Karamcharis Finance & Development Corporation (NSKFDC):
- Dedicated to the economic development of the safai karamcharis/Manual Scavengers community.
- Offers education loans with a maximum limit of INR 10 Lakh for studies in India and up to INR 20 Lakh for studies abroad.
- The interest rate is 4% per annum (with a 0.5% rebate for women in India), a moratorium period of 1 year, and a repayment tenure of 5 years.
National Backward Classes Finance & Development Corporation (NBCFDC):
- A government undertaking that extends education loans for both domestic and international studies.
- Eligible students belong to backward classes with a family income not exceeding INR 3 Lakh per annum.
- Loans can be availed up to INR 15 Lakh for studies in India and up to INR 20 Lakh for studies abroad.
- Interest rates are 4% p.a. for men and 3.5% p.a. for women, Moratorium period: 5 years, Repayment tenure: 15 years.
National Scheduled Castes Finance & Development Corporation (NSCFDS):
- For the welfare of scheduled castes, NSCFDC provides education loans with a quantum of up to INR 20 Lakh for studies in India and up to INR 30 Lakh for studies abroad.
- The interest rate is 4%, with a 0.5% rebate for women beneficiaries.
- Moratorium period: Course duration plus 6 months, Repayment tenure: 10 years for loans below INR 7.5 Lakh and 15 years for loans above INR 7.5 Lakh.
National Handicapped Finance & Development Corporation (NHFDC):
- Formulated by the Ministry of Social Justice and Empowerment, NHFDC provides education loans for professional undergraduate and postgraduate courses to students with disabilities.
- Collateral is required for loans exceeding INR 7.5 Lakh.
- Loan amounts: INR 10 Lakh for studies in India and INR 20 Lakh for studies abroad.
- The interest rate is 4%, with a 0.5% rebate for women beneficiaries, Moratorium period: Course duration plus 1 year, Repayment tenure: 7 years.
National Scheduled Tribes Finance and Development Corporation (NSTFDC):
- Established by the Ministry of Tribal Affairs, NSTFDC offers financial aid for technical and professional courses in India or abroad.
- Loan amounts range up to INR 20 Lakh for studies in India and up to INR 30 Lakh for studies abroad.
- The interest rate is 4%, with a 0.5% rebate for women beneficiaries.
- Moratorium period: 6 months after the course is completed or employment is obtained, Repayment tenure: 10 years for loans below INR 7.5 Lakh and 15 years for loans above INR 7.5 Lakh.
In conclusion, the Indian government has devised a comprehensive framework of diverse education loan options for studying abroad, encompassing public banks, private banks, and NBFCs. Additionally, specific government schemes like CGFSEL and initiatives by NMDFC, NSKFDC, NBCFDC, NSCFDS, NHFDC, and NSTFDC are tailored to specific demographic groups, offering targeted financial support and interest subsidies. These programs collectively aim to empower students from economically disadvantaged backgrounds, promoting the ideals of inclusive education and accessibility to higher studies on an international platform. The multifaceted approach of the Indian government reflects a commitment to fostering educational opportunities and equity across diverse segments of the population.
