Credit Guarantee Fund Scheme for Education Loans

The government guarantee that lets banks lend up to Rs 7.5 lakh without security, covering study in India and abroad.

National Credit Guarantee Trustee Company, Ministry of Finance · India and overseas

Why this one matters

This is the scheme that makes a collateral-free loan possible at an ordinary bank branch, and unlike PM Vidyalaxmi it does cover overseas study. Many branches do not offer it unless you ask by name.

What it covers

tuition, hostel, examination fees, books, travel. Levels funded: undergraduate, postgraduate.

The terms

• Government guarantee of 75% of the defaulted amount, on loans up to Rs 7.5 lakh
• No collateral and no third-party guarantee required up to Rs 4 lakh
• Between Rs 4 lakh and Rs 7.5 lakh, a third-party guarantee may still be asked for
• No margin money up to Rs 4 lakh; typically 5% above that for study in India and 15% for study abroad
• Repayment up to 15 years, after a moratorium of the course period plus six to twelve months

Who can apply

• You must be a citizen of India

Where applications fail

Most rejected applications are not ineligible students. They are eligible students who missed a step.

• Branches often do not volunteer this scheme. Ask for it by name rather than accepting that collateral is required.
• Margin money is the share you must fund yourself and it is not part of the loan. At 15% for overseas study, a Rs 7.5 lakh sanction still means finding over a lakh of your own.
• Both parents are normally required as co-borrowers, and their credit history is assessed, not only yours.
• A guarantee to the bank is not insurance for you. If the loan defaults the government pays the bank, and the debt remains yours.

Record status: partially_verified. Last checked: 2026-09-13. Scheme exists and is operated by NCGTC. Margin and guarantee percentages are reported consistently across lenders but are not confirmed against the scheme document. Source: https://www.ncgtc.in/en/product-details/CGFEL/Credit-Guarantee-Fund-Scheme-for-Education-Loans-(CGFEL)

Check whether you qualify