Education Loan for Undergraduate

What is an education loan for undergraduate studies?

An education loan for undergraduate studies helps students finance the cost of bachelor’s degree programs in India and abroad. The expenses usually cover tuition fees, hostel charges, books, laptops, travel, and other academic costs. Students can choose between secured and unsecured loan options based on the loan amount, the institution’s profile, and the co-applicant’s income. Many lenders now offer flexible education loans for undergraduate plans with student-friendly repayment terms.

Courses that qualify for UG education loan

A UG student loan India option is available for a wide range of undergraduate programs approved by recognised authorities. These include professional courses such as engineering, medicine, law, management, and pharmacy, as well as non-professional courses such as arts, commerce, and science. Most lenders prefer institutions approved by AICTE, UGC, NBA, or other recognised bodies. Loan eligibility may also depend on the institute’s ranking, placement record, and course employability.

Difference between UG loan and vocational loan

An education loan for graduation course programs is generally offered for degree-based undergraduate studies with longer course durations and higher tuition fees. Vocational loans, on the other hand, are designed for short-term skill-based or certification courses. UG loans usually offer higher loan amounts, longer repayment periods, and bigger moratorium benefits. Vocational loans generally have lower loan amounts and shorter repayment tenures because students can start earning sooner after completing the course.

Top UG courses funded by education loans in India

An education loan for undergraduate studies is available for many popular degree programs in India. Commonly funded courses include engineering, medicine, management, law, commerce, the arts, and science. UG student loan approvals in India are usually higher for courses with strong placement opportunities and better future earning potential.

Engineering: B.Tech and B.E Loans

Banks and NBFCs offer high-value loans for B.Tech and B.E programs at institutes such as the Indian Institutes of Technology (IITs), National Institutes of Technology (NITs), BITS Pilani, VIT Vellore, and SRM Institute of Science and Technology. Students at top-ranked colleges may also get collateral-free loan options.

Medical: MBBS and BDS Loans

Education loans for MBBS and BDS courses are commonly available for students studying at AIIMS, Maulana Azad Medical College, Christian Medical College (CMC Vellore), Kasturba Medical College, and Manipal Academy of Higher Education. These courses usually require higher loan amounts due to expensive tuition and longer study periods.

Law, commerce, and arts UG loans

Students pursuing BA LLB, B.Com, BA, and related programs at institutions such as National Law Universities (NLUs), Shri Ram College of Commerce (SRCC), Lady Shri Ram College, Loyola College, and Christ University can apply for undergraduate education loans from banks and NBFCs.

Management: BBA and BMS Loans

Education loans are also available for BBA and BMS programs at colleges such as Shaheed Sukhdev College of Business Studies, NMIMS Mumbai, Symbiosis Centre for Management Studies, Christ University, and Amity University. Lenders often prefer institutions with strong placement support and industry exposure.

Best banks and NBFCs for UG education loans

Students seeking a UG student loan in India can choose among public-sector banks, private banks, and NBFCs. PSU banks generally offer lower interest rates and longer repayment tenures, while private lenders and NBFCs focus on faster approvals and flexible eligibility. Comparing education loan interest rates, collateral rules, and processing speed can help students select the right UG student loan provider in India.

Public sector banks: SBI, Canara Bank, Bank of Baroda

Public sector banks are popular for their affordable interest rates, government-backed subsidy schemes, and flexible repayment periods. These lenders are suitable for students seeking stable repayment terms and lower borrowing costs for undergraduate education.

Institution	Starting Interest Rate*	Collateral-Free Loan	Repayment Tenure
SBI	From 8.15% p.a.	Available for eligible institutes	Up to 15 years
Canara Bank	From 8.60% p.a.	Available for select courses	Up to 15 years
Bank of Baroda	From 8.15% p.a.	Available for eligible students	Up to 15 years
Punjab National Bank	From 8.50% p.a.	Available under select schemes	Up to 15 years
Union Bank of India	From 8.30% p.a.	Available for approved institutes	Up to 15 years

Private banks: Axis Bank, IDFC First, ICICI Bank

Private banks are known for faster loan processing, digital documentation, and customised repayment options. They are often preferred by students applying to premium colleges or those requiring quicker sanction approvals.

Institution	Starting Interest Rate*	Collateral-Free Loan	Repayment Tenure
Axis Bank	From 11% p.a.	Available for select institutes	Up to 15 years
IDFC FIRST Bank	From 9.50% p.a.	Available for eligible profiles	Up to 15 years
ICICI Bank	From 10.50% p.a.	Available for top colleges	Up to 12 years
HDFC Bank	From 9.50% p.a.	Available for select institutes	Up to 15 years
Kotak Mahindra Bank	From 10.75% p.a.	Available for eligible applicants	Up to 10 years

NBFCs: Auxilo, Propelld, Avanse for UG courses

NBFCs provide flexible loan options for students who may not meet strict bank eligibility criteria. They usually offer faster sanction letters, customised funding solutions, and easier approval processes for students with lower co-applicant income.

Institution	Starting Interest Rate*	Collateral-Free Loan	Repayment Tenure
Auxilo	From 11.50% p.a.	Available for eligible courses	Up to 15 years
Propelld	Customised rates	Available for select profiles	Flexible
Avanse	From 11% p.a.	Available for approved institutes	Up to 15 years
InCred	From 11% p.a.	Available for eligible students	Up to 15 years
Credila	From 10.50% p.a.	Available for select institutes	Up to 15 years

*Interest rates are indicative and may vary depending on the course, institute, loan amount, and applicant profile.

Education loan eligibility for UG students

To apply for an education loan for undergraduate studies, students must usually be Indian citizens with confirmed admission to a recognised college or university. Most lenders also require a parent, guardian, or spouse to apply as a co-applicant for the loan.

Academic score requirements

Banks and NBFCs consider Class 10 and 12 academic performance during loan evaluation. Many lenders prefer students with consistent scores and may expect a minimum percentage, especially for professional courses and reputed colleges with strong placement records.

Entrance exam scores: JEE, NEET, CLAT

Competitive exam scores, such as JEE, NEET, and CLAT, can improve the chances of education loan approval. Admission to top institutes through national-level entrance exams often increases eligibility for higher loan amounts, better interest rates, and collateral-free education loan options.

Co-applicant income criteria for UG loans

Most lenders assess the income and repayment capacity of the parent or guardian applying as a co-applicant. Salaried applicants usually need salary slips and bank statements, while self-employed co-applicants may have to submit income tax returns and business proof documents.

How much education loan can a UG student get?

Under the UG student loan scheme in India, students can generally get education loans ranging from ₹4 lakh to ₹1.5 crore. The exact amount approved depends on the institute, course, and co-applicant profile. Unsecured loans usually have lower limits, while secured loans can offer higher funding amounts with collateral.

Maximum loan for IIT, NIT, and top government colleges

Students studying at IITs, NITs, AIIMS, IIM-integrated programs, and top NLUs may be eligible for unsecured education loans of up to ₹40 lakh or more from select lenders. These institutes are considered low-risk because of strong placement records, which improve loan eligibility and repayment confidence.

Maximum loan for private universities

For private universities such as VIT, Manipal, SRM, Amity, and NMIMS, lenders may offer loans ranging from ₹10 lakh to ₹75 lakh, depending on the course fees and the co-applicant’s income. Collateral may be required for higher loan amounts, especially when the total education cost is significant.

Documents required for UG education loan

Students applying for an education loan for graduation course programs must submit academic, financial, and KYC documents. The list of documents may vary before and after admission confirmation.

Before sanction

Before approving the loan, lenders usually ask for the following documents:

• Aadhaar card, PAN card, passport, or voter ID
• Passport-size photographs of the student and the co-applicant
• Class 10 and 12 marksheets and certificates
• Entrance exam scorecards such as JEE, NEET, or CLAT
• Address proof of the student and the co-applicant
• Salary slips or income proof of the co-applicant
• Bank statements of the co-applicant
• Income Tax Returns (ITRs) for self-employed co-applicants

After admission

Once admission is confirmed, students may need to submit additional documents such as:

• College admission letter or offer letter
• Detailed fee structure issued by the institute
• Hostel or accommodation expense details
• Scholarship letter, if applicable
• Receipts for initial fee payment
• Collateral documents, if required by the lender
• Guarantor documents for select loan cases

Education loan EMI for UG: What to expect after graduation

Repayment for an education loan for undergraduate studies usually starts after the moratorium period ends. Interest may continue to accrue during the study period, depending on the lender. Most banks and NBFCs also offer flexible repayment tenures to make EMIs more manageable after graduation. Using an Education Loan EMI Calculator can help students understand their future repayment obligations based on loan amount, tenure, and applicable interest rates.

Moratorium period for UG students

Most lenders provide a moratorium period covering the entire course duration plus 6 to 12 months after graduation. During this period, students may not need to pay full EMIs. Some lenders also allow simple interest payments to reduce the overall repayment burden later.

Repayment timeline after course completion

Education loan repayment tenures generally range from 5 to 15 years, depending on the loan amount and lender policies. Many banks and NBFCs also allow part-prepayment or foreclosure without heavy charges, helping students repay the loan faster when their income increases.

Tax benefit on UG education loan

Students and co-applicants can claim tax benefits on an education loan for undergraduate studies under Section 80E of the Income Tax Act. This deduction applies only to interest paid on the education loan and not to the principal repayment amount. The benefit can be claimed by the individual who is repaying the loan, usually the parent or the student, after employment. There is no maximum limit on the amount of interest that can be claimed as a deduction. Tax benefits are available for up to 8 consecutive years or until the entire interest component is repaid, whichever comes first.

Government schemes for UG education loans

The government offers several subsidy schemes under the UG student loan India programs to support students from economically weaker backgrounds. These schemes mainly provide interest subsidies and financial assistance for higher education in recognised institutions.

Central Government interest subsidy for EWS students

Under the Central Sector Interest Subsidy (CSIS) Scheme, eligible students from economically weaker sections can get interest subsidy benefits during the moratorium period of the education loan. The scheme is generally available to students with an annual family income of up to ₹4.5 lakh who are pursuing approved professional or technical courses in India.

State Government education loan schemes

Several state governments also run education loan support schemes for undergraduate students. Popular examples include the West Bengal Student Credit Card Scheme, Bihar Student Credit Card Scheme, Kerala’s Vidya Lakshmi initiatives, and the Dr Ambedkar Interest Subsidy Scheme in Telangana. These schemes may offer interest subsidies, partial reimbursement, or easier access to loans for eligible students from economically weaker sections and reserved categories.

Conclusion

An education loan for undergraduate studies can help students cover tuition, hostel expenses, books, and other academic costs without immediate financial pressure. Before applying for an education loan for graduation course programs, students should compare lenders based on interest rates, repayment terms, eligibility, and processing speed. Government subsidy schemes can further reduce the repayment burden for eligible students. Proper repayment planning and choosing the right loan structure can make higher education more affordable and manageable in the long run.

Pick the Right Lender and Apply for Your Education Loan

Axis Bank Education Loan	IDFC FIRST Bank Education Loan
ICICI Bank Education Loan	Credila Education Loan
Tata Capital Education Loan	Yes Bank Education Loan
Avanse Financial Education Loan	Propelld Education Loan