In today’s competitive world, higher education has become increasingly expensive. Whether you’re planning to study in India or abroad, the financial burden can be overwhelming. That’s where student loans come in. The Government of India, in collaboration with several public and private banks, offers student loans up to ₹20 lakh to help ambitious students achieve their academic dreams without financial constraints.
In this guide, we’ll walk you through the full process of getting a student loan in 2025 — from eligibility to documentation, repayment terms, and tips to ensure approval.
What Is a Student Loan?
A student loan is a type of financial aid that helps students cover the cost of higher education. This can include tuition fees, hostel or accommodation charges, exam fees, lab fees, cost of books and equipment, travel expenses (especially for studying abroad), and more.
These loans are offered by banks and financial institutions with relatively lower interest rates and flexible repayment terms.
Key Features of Student Loans in 2025
- Loan Amount: Up to ₹20 lakh for studies in India and up to ₹40 lakh for studies abroad.
- Interest Rate: Starts from 7% per annum (may vary depending on the bank).
- Repayment Period: Up to 15 years, including a moratorium period.
- Moratorium Period: Course duration + 1 year or 6 months after employment.
- Collateral: Required for loans above ₹7.5 lakh.
- Subsidies: Government interest subsidy available for eligible students.
Who Can Apply? – Eligibility Criteria
To apply for a student loan in 2025, you must meet the following eligibility requirements:
General Criteria
- The applicant must be an Indian citizen.
- Should have secured admission to a recognized course in India or abroad.
- Admission must be through entrance test or merit-based selection process.
- Co-applicant (usually parent/guardian) is mandatory.
Eligible Courses
In India:
- Professional courses like Engineering, Medical, Law, Management, etc.
- Graduation and Post-graduation in recognized universities.
Abroad:
- Graduation and post-graduation (including MBA, MS)
- Doctoral programs
- Professional diploma and certificate courses
Documents Required for Student Loan in 2025
Make sure to have the following documents ready when applying for the loan:
1. Identity Proof
- Aadhaar Card
- PAN Card
- Passport (for studying abroad)
2. Address Proof
- Utility bill
- Voter ID
- Passport
3. Academic Records
- 10th and 12th mark sheets
- Graduation certificates (if applicable)
- Admission letter from university
- Entrance exam scorecard (if applicable)
4. Financial Documents
- Income proof of parents/guardian
- IT returns (last 2 years)
- Bank statements
5. Other Documents
- Passport-size photographs
- Loan application form (duly filled)
- Collateral documents (if applicable)
How Much Can You Borrow?
| Study Location | Maximum Loan Amount | Collateral Requirement |
|---|---|---|
| India | ₹20 lakh | Required above ₹7.5 lakh |
| Abroad | ₹40 lakh | Required above ₹7.5 lakh |
Banks may increase or decrease this limit depending on the course, institution, and student’s profile.
Interest Rates in 2025
Interest rates can vary based on the bank, type of course, and location of study. Here’s a rough estimate:
- Public Sector Banks: 7% – 9% p.a.
- Private Banks: 9% – 13% p.a.
- NBFCs & FinTechs: 11% – 14% p.a.
Some banks offer concessional interest rates for:
- Female students
- SC/ST/OBC category
- Meritorious students
- Those applying under government education loan schemes
Step-by-Step Process to Apply for a Student Loan in 2025
Step 1: Check Your Eligibility
Ensure you fulfill all basic requirements including academic admission, age, and course recognition.
Step 2: Compare Loan Offers
Compare different banks or financial institutions for:
- Interest rates
- Processing fees
- Repayment flexibility
- Prepayment charges
Step 3: Collect Documents
Gather all required documents mentioned earlier.
Step 4: Fill Loan Application
Apply online via bank website or visit the nearest branch. You can also apply through Vidya Lakshmi Portal (www.vidyalakshmi.co.in) — a centralized government platform.
Step 5: Document Verification
The bank will verify documents and assess creditworthiness.
Step 6: Loan Sanction
Once approved, the bank will issue a sanction letter detailing the loan amount, interest, and repayment terms.
Step 7: Disbursement
The sanctioned amount is directly paid to the institution in installments as per the academic session.
Government Schemes You Should Know
1. Credit Guarantee Fund Scheme for Education Loans (CGFSEL)
- Offered for loans up to ₹7.5 lakh without collateral.
- Available through Vidya Lakshmi Portal.
2. Padho Pardesh Scheme (Discontinued after 2022)
3. Dr. Ambedkar Interest Subsidy Scheme
- For OBC and EBC students pursuing studies abroad.
4. Central Sector Interest Subsidy Scheme (CSIS)
- Full interest subsidy during the moratorium period for economically weaker sections (EWS).
Repayment Terms
- Moratorium Period: Course duration + 1 year or 6 months after job placement.
- EMIs Start: After the moratorium ends.
- Repayment Tenure: Up to 15 years (some banks offer flexible repayment options).
- Prepayment: Usually allowed without extra charges.
Pro tip: Start paying interest during the course to reduce your EMI burden later.
Benefits of Taking a Student Loan
- Doesn’t burden parents with upfront education cost.
- Maintains your credit score if repaid on time.
- Tax benefits under Section 80E for interest paid.
- Opportunity to study in reputed institutions without financial stress.
Tips to Increase Chances of Loan Approval
- Secure admission in a recognized university or top-ranked institution.
- Maintain a good academic record.
- Include a co-applicant with a stable income.
- Apply early — banks take 7–15 working days for loan processing.
- Keep your documents clear and organized.
Common Mistakes to Avoid
- Providing incomplete documents
- Ignoring loan terms and conditions
- Waiting until the last minute to apply
- Choosing the first available bank without comparing options
FAQs on Student Loans in 2025
Q1. Can I get a student loan without a co-applicant?
No, most banks require a parent or guardian to act as co-applicant.
Q2. Is collateral mandatory for all education loans?
No, collateral is only required for loans above ₹7.5 lakh.
Q3. What if I fail to complete the course?
You are still liable to repay the loan unless the bank offers any special consideration.
Q4. Can I prepay the loan early?
Yes, most banks allow early repayment without penalties.
Q5. Will my credit score be affected if I miss EMIs?
Yes, missing EMIs will impact both your and your co-applicant’s credit scores.
Final Thoughts
Pursuing higher education shouldn’t be delayed or compromised due to lack of funds. With student loans available up to ₹20 lakh (and even more for studies abroad), students in 2025 have a great opportunity to chase their dreams without worrying about the financial burden.
Make sure to choose the right lender, prepare your documents carefully, and understand your repayment responsibilities. A smart start today can lead to a successful future tomorrow!