Can I get an Education Loan without collateral?
Education loans provide significant financial support to students who cannot pursue their education in India or abroad due to financing. It is estimated that without education loans, millions of students would not have attended the universities they wished to attend. However, not everyone will be eligible for an education loan abroad without collateral, as the lenders reject many loan applications.
Indian Banks’ Associations model education loan programme is backed up by the Credit Guarantee Fund for Education Loans (CGFEL). Using this scheme, you can borrow up to Rs 7.5 lakh without any collateral or third-party guarantee.
IBA developed the ‘Model Education Loan Scheme’ to provide financial assistance to deserving students who wish to pursue higher education in India or abroad.
Banks generally follow the IBA guidelines for the CGFSEL educational loan scheme. However, they have the provision of loans under the scheme based on their own internal rules.
What are the documents required for co-applicants?
Students are the primary borrower of a collateral-free education loan, and a parent, spouse or sibling can be a co-applicant. Co-applicant information is usually requested by the bank when you request a collateral-free loan. Before approving an education loan, banks also require the co applicant’s documents, such as salary slips or income-tax returns.
No upper age limit is specified in RBI guidelines, but some banks may impose based on their own internal rules and regulations.
How to apply for an Education Loan without collateral?
Citizenship of India is required for the loan application, as is admission to a certified college or university in India or abroad (including NAAC/NBA accredited institutions and programmes and national importance and centrally funded technical institutions (CFTIs)).
The lender will request an admission letter from the college/university, as well as the fee structure for the course for which you have applied for an education loan. In addition, lenders may require documents such as Class X, XII, and graduation mark sheets.
Lenders disburse funds directly to colleges when they approve your loan application.
To check the interest rates of banks, click here.
FAQs on Education Loan without collateral
✅ Is it possible to obtain a 20 lakh education loan without collateral?
According to the guidelines, loans of up to Rs. 4 lakhs do not require collateral security. If the loan exceeds a certain amount set by the bank then collateral and a third-party guarantee will be required.
✅ Can I get a student loan without my parents’ help?
Most lenders’ education loan policies in India state that only a parent or a close relative can be named as an education loan co-applicant. Very few banks even consider the possibility of providing an education loan without a co-applicant.
Table of Contents
- 1 Can I get an Education Loan without collateral?
- 2 What are the documents required for co-applicants?
- 3 How to apply for an Education Loan without collateral?
- 4 FAQs on Education Loan without collateral