NBFC Education Loans: How to Choose the Right Lender

Quick Summary: 

Education financing through NBFCs is becoming an increasingly important option for students planning higher studies in India and abroad. According to the latest CRISIL Ratings report, education-loan assets under management (AUM) of NBFCs grew 21% to ₹78,000 crore in FY2026 and are projected to grow by around 20% in FY2027, reaching nearly ₹94,000 crore.

The market is also evolving beyond US-focused education loans, with the UK, Germany, Ireland, and other destinations gaining a larger share of NBFC education lending. For students, this means NBFCs can offer an alternative to traditional bank education loans, particularly when they need flexible financing or are exploring collateral-free options.

An NBFC education loan can help finance expenses such as tuition fees, accommodation, travel, books, insurance, and other approved education costs. However, interest rates, loan amounts, collateral requirements, and repayment terms vary across lenders. Understanding these differences can help you choose an education loan NBFC that fits your course, university, funding requirement, and repayment capacity.

What are NBFCs?

Non-Banking Financial Corporations or NBFCs provide financial services and lending options as an alternative to traditional banks. The key distinction between banks and NBFCs is that banks primarily use customer deposits to lend money, whereas NBFCs raise funds from investors, financial institutions, and banks to offer loans to customers. 

Due to lighter regulations, education loan NBFCs often offer more flexibility to their customers. This blog is designed to help you answer your various queries related to NBFC education loans like which NBFC is best for education loans or the best NBFC for education loans.

Best NBFC for Education Loan in India

Credila, Avanse, Auxilo, and InCred are the best education loan NBFCs in India. Below is a comparative education loan NBFC list, providing education loans and highlighting the best NBFC in India for education loan without collateral:

*Repayment during studies for all the NBFCs mentioned above is simple interest or partial simple interest

Features of Education Loans NBFCs

Abroad education loans from NBFC are financial aid designed for students who wish to study abroad. These education loan NBFCs are usually unsecured loans and covers various expenses.

Financial Support for Studying Abroad

Education loans provided by NBFCs are specifically designed to help students pursuing higher education overseas. Such loans cover expenses like tuition fees, living expenses, travel, and other study-related costs.

NBFC Education Loan Without Collateral

A major reason students consider an NBFC for education loan is the availability of collateral-free financing. An NBFC education loan without collateral can help students fund higher education without pledging property or other assets.

However, collateral-free financing is not automatically available to every student. Lenders may assess the course, university, loan amount, academic profile, co-applicant's income and credit history, and future repayment prospects before approving an unsecured loan

Flexible Loan Amounts

The loan amount offered by NBFCs varies and depends upon various factors such as the profile of the student, course of study, university of enrollment, etc. Some NBFCs even offer loans up to INR 50-80 lakhs for top-ranked universities.

Higher Interest Rates

Interest rates charged by NBFC are generally higher than those offered by public and private banks. It usually ranges from 8.95% - 14%, depending on various factors like loan amount, repayment capacity, and co-applicants income.

Quick Approval and Disbursement

NBFCs have a faster loan processing time compared to traditional banks. Some lenders approve loans within 7-10 days, making them ideal for students who need funds on an urgent basis

Flexible Repayment Options

Many NBFCs offer flexible repayment options that allow students to start partial repayments during their studies or opt for extended loan tenures.The repayment mode during the study period can include simple interest, partial simple interest, EMI, or a moratorium, depending on the lender. 

Eligibility Criteria of Abroad Education Loans from NBFCs

To be eligible for an education loan NBFC, a student must meet the following criteria:

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  The student must be an Indian citizen
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  The student must be between the ages of 18 and 35 years
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  The student must have a good academic record
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  The student must have secured admission to a recognized university or college abroad
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  The student must have a co-applicant who has a steady source of income and a good credit score
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  The student must have scored decent in pre-requisite exams such as IELTS, TOEFL, and GRE.

Eligibility requirements are lender-specific. Factors such as the university, course, country, loan amount, co-applicant income, and credit profile can influence the final decision. 

Documents Required for NBFC Education Loan 

The documentation required for an education loan NBFC without collateral varies depending on the lender. However, some common documents that are usually required include -

Applicants Documents:

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  Identity proof: PAN/ Passport/ Driver’s License/ Voter ID card or government-issued identification document
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  Education loan application form
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  Address proof: recent copy of telephone bill/ electricity bill/water bill/ piped gas bill/ Driving license/ Aadhaar card
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  Past academic record
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  10th standard mark sheet
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  12th standard mark sheet
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  Undergraduate result (semester-wise)
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  Entrance exam results (e.g. GMAT, GRE, TOEFL, etc.)
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  Proof of admission: admission letter (A conditional admission letter is also applicable).
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  Statement of expenses
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  2 passport-size photographs
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  Loan A/C statement of one year (if applicable)
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  Bank account statement of the student (if applicable)

Co-applicant’s Documents:

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  Identity proof: PAN/ Passport/ Driver’s license/ Voter ID card or government-issued identification document
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  Address proof: recent copy of telephone bill/ electricity, water, piped gas bill or copy of Driving license/ Aadhaar card
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  2 passport-size photographs
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  Co-borrowers bank account statement for the last 6 months
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  In case of another ongoing loan, then the loan A/C statement of 1 year

Income Proof for Salaried Co-applicant/Guarantor:

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  Salary slips for the last 3 months
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  Copy of Form 16 of the last 2 years or copy
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  Bank account statement for the last 6 months (Salary account)
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  A brief statement of assets & liabilities of parent/ guardian/ other co-borrower

Income Proof for Self-employed Co-applicant/Guarantor:

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  Business address proof
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  Last 2 years IT returns ( If IT Payee)
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  TDS certificate (Form 16A, if applicable)
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  Certificate of qualification (for C.A./ doctor and other professionals)
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  Brief statement of assets & liabilities of parent/ guardian/ other co-borrower
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  Bank account statement for the last 6 months

Factors to Consider While Taking NBFC Education Loans

There are various factors that you should consider before finally applying for an education loan from NBFCs. These factors will help you to get the best loan terms that align with your financial needs. Below are some of the factors that you should consider.

Loan Amount

This is one of the major factors that the borrower should take into account as it will help you to finance your various educational expenses ranging from tuition fees to living expenses and many more. The loan amount further depends on the profile of the student, course, country, and university of enrollment, as well as the NBFC from which you are taking an education loan. You must ensure that the sanctioned loan amount covers all the cost of your education. 

Interest Rates 

This is another crucial factor that depends on the course and university of enrollment, your credit score, and the loan amount. Interest rates from NBFCs are usually high ranging somewhere between 8.95% to 14%. You must compare all the loan options and interest rates since this factor majorly affects the cost of an education loan.

Repayment Terms 

This factor allows you to choose from various repayment options since NBFCs provide options such as part payments, step-up EMIs, or one-time repayment. 

Collateral Requirements

If you are willing to secure a loan above a certain limit, then certain NBFCs require the collateral to be pledged such as property, FD, etc. NBFCs also offer collateral-free loans that are solely based on the profile of the student and the financial strength of the co-applicant to mitigate the risk of default. 

Expenses Covered

It is crucial on your part to consider what are the expenses that are being covered by the loan amount. You should ensure that your loan amount covers the essential expenses of your education loan so that you do not have to stress about the funds during your course of study.

Processing Fee

NBFCs generally charge a processing fee that ranges from 0.5% to 2% of the loan amount. Compare various options to get the best loan terms.

Processing Time

NBFCs are known for their quick processing times compared to traditional banks.

Prepayment and Foreclosure Policies

Many NBFCs allow early repayment but may impose prepayment penalties or foreclosure charges. Ensure that you read all the terms related to the loan and compare prepayment policies to reduce the overall burden of interest costs in the future. 

How to Choose the Best NBFC for Education Loan in India?

The best NBFC for education loan in India is not necessarily the lender with the lowest interest rate. The right choice depends on the combination of loan amount, interest rate, collateral requirement, fees, repayment structure, and your overall financial profile.

Before selecting an NBFC, compare:

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  Interest rate offered
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  Maximum eligible loan amount
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  Collateral requirement
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  Co-applicant requirements
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  Processing fee and other charges
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  Repayment mode during the study period
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  Moratorium period
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  Prepayment and foreclosure terms
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  Eligible universities and courses
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  Expenses covered

For example, a student seeking a large collateral-free loan should prioritise lenders offering higher unsecured limits, while a student with suitable collateral may benefit from comparing secured-loan rates as well.

Why Does the Same Student Get Different Offers From Different NBFCs?

An education loan offer is based on how a lender assesses risk, not just whether a student meets the basic eligibility criteria. Each NBFC has its own credit policy, risk appetite, and preferred student and university profiles. As a result, the same application can receive different loan amounts, interest rates, and collateral requirements from different lenders.

For example, consider a student admitted to a well-ranked university with an INR 60 lakh funding requirement. One NBFC could approve the full INR 60 lakh without collateral because the university and course fit its lending policy. Another NBFC could sanction INR 50 lakh or ask for collateral because its internal assessment places a different weight on the loan amount, co-applicant profile, or repayment risk.

This is why comparing lenders is important. The best NBFC education loan is not simply the one advertising the lowest rate or highest loan amount. It is the offer that matches the student's funding requirement, profile, and ability to repay while keeping the overall cost of borrowing manageable.

Advantages of Abroad Education Loan NBFC

Explore how education loan NBFC provide abroad education loans without collateral by watching our detailed video.

Abroad Education Loans From NBFCs | No Collateral Education Loan Lenders Explained

Disadvantages of Abroad Education Loan NBFCs

Pro Tip: Situations where NBFCs are a perfect option for an education loan

NBFC education loans offer an alternative financing option for students pursuing higher education. These loans cater to the needs of individuals who may not qualify for traditional bank loans or government-sponsored educational funding. While exploring education loan options, it is essential to consider the terms and conditions associated with education loan NBFC.

This includes being aware of additional charges such as processing fees, prepayment charges, and penalty fees. Properly understanding and comparing these factors will empower borrowers to make informed decisions and choose the loan that best suits their needs.

What Should You Check Before Accepting an NBFC Education Loan?

Do not compare an NBFC education loan only on its advertised interest rate. Review the lender's Key Facts Statement and loan agreement and check the interest rate, annualised cost, processing and other charges, repayment schedule, moratorium, prepayment terms, and applicable penal charges.

You should also calculate the total repayment amount over the full tenure. A loan with a lower advertised rate may not necessarily be the most cost-effective option once fees and repayment terms are considered.

Sources

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  Business Standard – NBFC education loans may grow 20% in FY27 despite US slowdown: Crisil — FY26 education-loan AUM, FY27 growth projection, and changing study-destination mix. 

Takeaway - Education Loan from NBFCs via GyanDhan

When considering education loan NBFC, GyanDhan offers a seamless and transparent process, making the entire loan application and disbursement journey hassle-free. The expert education loan counselors at GyanDhan compare the loan products of different lenders to identify the most suitable loan option for your needs. This involves comparing the interest rates, loan amounts, repayment terms, processing fees, and other features of different lenders.

GyanDhan helps students compare education-loan options across lenders based on their profile and funding requirement, making it easier to identify a suitable lender and loan structure.

We bring the best NBFC for education loans for you. Best of all? We do not charge any kind of fees or commissions from the applicants at all. To start your education loan journey today, check your loan eligibility now!

Frequently Asked Questions