Education Loan

Credit Guarantee Fund Scheme for Education Loans (CGFSEL)

Credit Guarantee Fund Scheme for Education Loans (CGFSEL)

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Read about (CGFSEL) Credit Guarantee Fund Scheme for Education Loans. Know features and criteria of Credit guarantee fund trust scheme for micro & small enterprises and students.

GyanDhan
Yogender Panchal
Updated on:  22 Feb 2024  | Reviewed By: 
Aman 
| 13.9K | 3  min read

In our previous blogs and YouTube videos, we have emphasized enough how a loan with collateral can save you big in study abroad loans. But what if you are unable to pledge collateral for your education loan?

CGFSEL stands for Credit Guarantee Fund Scheme for Education Loans. Other than unsecured loans from private banks and NBFCs, one of the solutions is the Credit Guarantee Fund Trust Scheme for micro & small enterprises and students. 

Under the CGFSEL, the borrower is eligible to get loans from lenders without pledging any security or providing any third-party guarantee..

 Let’s explore in-depth about the scheme and related terms and conditions.

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What is the Credit Guarantee Fund Scheme for Education Loans?

The Credit Guarantee Fund Scheme for Education Loan(CGFSEL) was launched by the Government of India in 2015. This scheme was launched to guarantee education loans to students from the economically weaker sections under the Model Education Loan Scheme of the Indian Banks’ Association (IBA).

This scheme is meant for student borrowers who are unable to pledge any collateral for their loan and are also unable to provide any third-party guarantee. Under this scheme, a student can get a collateral-free loan, and without a third-party guarantee, of INR 7.5 lakhs. 

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What are the Requirements for the Credit Guarantee Fund Scheme for Education Loans?

Students have to meet a few criteria in order to avail of an education loan under the Credit Guarantee Fund Scheme. These requirements are as follows:

  1. list items The student should belong to the EWS (Economically Weaker Section) category.
  2. list items The annual income of the family should be less than INR 4.50 lakhs. 
  3. list items The student should have got admission to a recognized University in India or abroad. They should have got admission to an approved technical or professional course after Class XII.   

 

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Features of the Credit Guarantee Fund Scheme for Education Loans?

Some prominent features of this scheme are as follows:

  1. list items The scheme provides a guarantee for the education loan to deserving and eligible students. The guarantee is for loan amounts up to INR 7.5 lakhs. 
  2. list items Eligible students to get a subsidy on loan amounts up to INR 7.5 lakhs. Even if the total loan amount exceeds INR 7.5 lakhs, they are still eligible for subsidy up to 7.5 lakhs.
  3. list items The subsidy is valid during the course period and the moratorium period only. 
  4. list items A student will be eligible for the subsidy only once in their lifetime - either for their first Bachelor's degree or for a Postgraduate degree. It should also be remembered that the subsidy is valid only for courses in India. 
  5. list items The student has to submit proof of income. A knowledgeable authority who is appointed by the State Government should be approached for this proof. 
  6. list items The lending institution can charge an interest of 2% per annum above the base rate on education loans under the CGFSEL scheme. 
  7. list items The lender cannot charge any margin money on CGFSEL scheme education loans for amounts up to INR 4 lakhs. For loan amounts higher than INR 4 lakh and up to INR 7.5 lakhs, the lender is allowed to charge 5% as margin money for studying in India. For studying abroad, they can charge a margin of 15%. 

Check Your Education Loan Eligibility

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Which Loans will be Covered Under the Credit Guarantee Fund Scheme for Education Loans?

The following kind of loans are covered under the Credit Guarantee Fund Scheme - 

Read Also:

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Which Loans will not be Covered Under the Credit Guarantee Fund Scheme for Education Loans? 

The following kinds of loans are not covered under the Credit Guarantee Fund Scheme for education loan- 

  1. list items Loans sanctioned by banks with an interest rate of more than 2% above the base rate for the banks. 
  2. list items Loans that do not follow the guidelines, laws, provisions, and instructions laid down by the RBI or the Central Government.
  3. list items A loan where the risk is already covered by the Government or other authority in any manner. 

Now that you know all about the Credit Guarantee Fund Scheme for Education loans, apply for it if you are eligible.

Check Your Education Loan Eligibility


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