The day education loan came into existence, it became the greatest gift for the students who unfortunately were not able to go ahead with the higher studies. But still, there is a lack of awareness among students and their parents that they can avail of Education Loan without collateral.

Yes, you read it absolutely right! Those students who are neither eligible for the scholarship nor having any assets, need not worry about the lack of funds because, in accordance to the guidelines of RBI – the Credit Guarantee Fund for Education Loans (CGFEL) scheme, the banks can facilitate Education Loan without collateral up to INR 7.5 lakhs under the Model Education Loan Scheme of Indian Banks' Association (IBA).

Now the next question arises, what if a student needs an education loan of more than INR 7.5 lakhs? The option is still available! And that is Non-Banking Financial Companies (NBFCs) as well as private banks/lenders. Through NBFCs and private lenders, the students can avail of Education Loan without Collateral up toINR 50 lakhs but remember such loans are being sanctioned with a higher rate of interest compared to education loan with collateral.

Let’s move to the repayment procedure! The Education Loan taken under the CGFEL scheme facilitates a one-year moratorium for repayment to students. This one-year moratorium is a relaxation to re-pay the loan after completion of education.

Last but not least comes the point of the process through which Education Loan without collateral can be availed. The process is quite simple!

The student who’ll be applying for the education loan will be considered as the main borrower whereas the student’s parents/ spouse/ sibling(s) will be considered as the co-applicant.

The student must be an Indian Citizen.
Student’s Class X, XII and graduation mark sheets will be required.
Further, general details of co-applicant including the documents like Aadhar Card, PAN Card, Address Proof, latest salary slip, ITR, etc. need to be submitted to the bank.
Duly signed and stamped the Admission form of the college/university in which the student is going to enrol.
Program Fee Structure for which the student has applied for the education loan.

We hope your all basic queries have been covered in our blog. In case of any doubt, feel free to write in the comment section.

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Author's Bio: 

Through NBFCs and private lenders, the students can avail of education loan without collateralup toINR 50 lakhs but remember such loans are being sanctioned with a higher rate of interest compared to education loan with collateral.