Embarking on an international academic journey is a dream for many students, and the Indian government has taken significant strides to transform this dream into reality. Through a spectrum of programs and interest subsidies, the government has established a robust framework to provide substantial financial assistance to students pursuing education abroad. In this comprehensive guide, we delve into the various education loan options offered by the Indian government, exploring lenders, schemes, and initiatives aimed at fostering inclusive education for diverse segments of the population.
Education Loan Landscape
The education loan landscape for studying abroad in India is multifaceted, with four primary types of lenders playing a crucial role:
1. Public Banks:
Indian public banks stand as stalwarts in offering education loans for international studies. These loans, backed by collateral requirements, cater to a wide range of students. Loan amounts vary from INR 7.5 Lakh to INR 1.5 Cr, providing substantial financial support. Notable lenders in this category include State Bank of India and Union Bank of India. Government bank loans also present added advantages, such as tax benefits under Section 80E and competitive interest rates.
2. Private Banks:
Private banks in India emerge as dynamic players in the education loan landscape, offering flexibility and varying interest rates starting at 11% per annum. Loan amounts are contingent on factors like the chosen country, course, applicant’s profile, and co-signer’s financial status. Private bank loans qualify for tax benefits under Section 80E and boast quicker processing times compared to their government counterparts. Key players in this category include ICICI Bank, Axis Bank, and IDFC FIRST Bank.
3. NBFCs (Non-Banking Financial Companies):
NBFCs play a pivotal role by offering 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. While interest rates range from 11.50% to 13.75% per annum, slightly higher than those offered by public and private banks, NBFCs provide expedited processing times. It’s important to note that 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.
Government Schemes for Study Abroad
The Indian government has instituted several impactful schemes to make education abroad more accessible for specific demographics. Click here to know more.
1. Credit Guarantee Fund Scheme for Education Loans (CGFSEL):
Introduced in 2015, CGFSEL 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, provided they belong to the economically weaker section, have an annual family income below INR 4.5 Lakh, and have secured admission to an approved technical or professional course.
2. National Minorities Development & Finance Corporation (NMDFC):
NMDFC, a government body, extends loans for professional and job-oriented courses to minorities. Categorized under two credit lines based on family income, credit line 1 offers education loans for study in India up to INR 20 Lakh and for study abroad up to INR 30 Lakh at a 3% interest rate. For credit line 2, the interest rates vary (8% for men and 5% for women).
3. National Safai Karamcharis Finance & Development Corporation (NSKFDC):
Dedicated to the economic development of the safai karamcharis/Manual Scavengers community, NSKFDC provides 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).
4. National Backward Classes Finance & Development Corporation (NBCFDC):
A government undertaking, NBCFDC extends education loans for both domestic and international studies. Eligible students, belonging to backward classes with a family income not exceeding INR 3 Lakh per annum, can avail loans up to INR 15 Lakh for studies in India and up to INR 20 Lakh for studies abroad. The interest rates are 4% p.a. for men and 3.5% p.a. for women.
5. 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.
6. 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, with loan amounts of INR 10 Lakh for studies in India and INR 20 Lakh for studies abroad.
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.
In conclusion, the Indian government’s commitment to fostering inclusive education for students aspiring to study abroad is evident through a myriad of programs and initiatives. By collaborating with public banks, private banks, and NBFCs, the government ensures that a diverse range of students can access financial support tailored to their needs. Additionally, targeted schemes for specific demographics underscore the government’s dedication to promoting equal opportunities in education