Indian Government Education Loan Schemes to Study Abroad

Updated on: 09 Mar 2023

The Government of India aims to provide financial assistance to students who wish to pursue their further studies in India or abroad. In this pursuit, the government has introduced several interest subsidies such as the Dr. Ambedkar Central Sector scheme, Interest Subsidy Scheme on Education Loan by the Government of Gujarat and the Central Scheme Interest Subsidy for Education Loans.

Moreover, several loan schemes under the National Finance and Development Corporation (NFDC) have also been introduced. Keep on reading this blog where we have explained the leading government subsidy and education loan schemes in detail for you.

Important points to be noted:

• Under the below-mentioned subsidy schemes, a full interest waiver during the moratorium period is provided.
• The Government of India interest subsidy scheme is linked with the Indian Banks Association (IBA) and hence applicable only to those banks that are members of the IBA.
• Loans from NBFCs are not eligible for these schemes.
   

Interest subsidy schemes for education abroad loans by the Government of India

1. Dr. Ambedkar Central Sector Scheme

The Dr. Ambedkar Central Sector Scheme provides interest subsidies on education loans for overseas studies to students who belong to Other Backward Classes (OBCs) or Economically Backward Classes (EBCs). This scheme is available for meritorious students who have secured admission in the approved courses at Masters, M.Phil, or Ph.D. courses abroad. Read more.

Eligibility criteria:

• You should either belong to EBC or OBC.
• For OBC candidates, total family income shall not exceed INR 8 Lakh per annum.
• For EBC candidates, total family income shall not exceed INR 5 Lakh per annum.

Procedure:

• After securing admission to a recognized Indian or foreign university, you are required to file an application asking the bank to avail your loan under this scheme.
• After submission of the required documents, the bank will process the application and forward it to the Ministry of Social Justice and Empowerment.
• The Ministry of Social and Justice Empowerment will either accept or decline your application.

2. Central Sector Interest Subsidy (CSIS)

The Ministry of Human Resources Development and Department of Higher Education has formulated this education loan interest subsidy for the students of economically weaker sections (EWS) for pursuing technical/professional courses in India and abroad. Read more.

Eligibility criteria:

• You should have secured admission to a recognized Indian/foreign university.
• Your total family income shall not exceed INR 4.50 Lakh per annum.

Procedure: 

• The process for CSIS begins from the respective bank from where the loan is to be sanctioned.
• Required documents are to be attached to the form and the process is taken further by the bank.

3. Interest Subsidy Scheme on Education Loan by the Government of Gujarat

The scheme offers a 100% interest subsidy to economically weaker students from Gujarat who wish to pursue higher studies abroad. 

Through this loan scheme, students can get up to INR 15 Lakh for overseas study. This scheme is available for professional courses at graduate, post-graduate, and diploma levels. Read more.

Eligibility criteria:

• You must have secured at least 60% in your 12th grade.
• The total family income should be less than or equal to INR 6 Lakh annually.
• The interest subsidy under this scheme will not be available to the students who have left study in the middle of the curriculum or have been expelled from the institutions.
   

4. Padho Pardesh Scheme

Please note that this scheme has been discontinued by the Government of India.

The objective of this scheme was to award 100% interest subsidies on education abroad loans to meritorious students belonging to economically weaker sections of society and hence enhance their employability.

The students should belong to the notified minority communities (Muslims, Christians, Buddhists, Sikhs, and Parsis) as declared in section 2(c) of the National Commission for Minorities Act, 1992.

Eligibility criteria:

• You should have secured admission into the approved courses at the Master, Ph.D., or M.Phil level.
• You must belong to a minority community as mentioned above.
• You should have availed loan from a scheduled bank under the Educational Loan Scheme of the Indian Bank Association (IBA) for the purpose.
• Total income from all sources of your family must not exceed INR 6 Lakh per annum.

Procedure:

• The loan application process usually begins after a candidate has secured admission to a recognized university/college.
• Along with the admission papers (including the offer letter), you must approach the bank of your choice, which needs to be a member of IBA and request the application to be processed under the Padho Pardesh scheme.
• After filling out the loan application form and attaching the required documents, the form is sent to the respective Department of Minority Affairs for processing.

Read Also

• Education Loan for Abroad Studies
• Education Loans & Schemes for Girl Students in India
• Study Abroad Scholarships (2023) for Indian Students
• Education Loan Interest Rate

Education loan schemes for abroad education by the Government of India

1. Credit Guarantee Fund Scheme for Education Loans (CGFSEL)

In 2015, the Credit Guarantee Fund Scheme for Education Loans (CGFSEL) was introduced by the Government of India. This education loan scheme is primarily for students who wish to study in India or abroad but do not have any collateral or co-applicant to pledge. Under this scheme, you can get up to INR 7.5 Lakh loan without any collateral or co-applicant. Read more.

Requirements:

• The student should belong to the EWS (Economically Weaker Section) category.
• The annual family income should be less than INR 4.50 Lakh.(source)
• You should have secured admission to a recognized university in India or abroad for an approved technical or professional course.

2. National Minorities Development & Finance Corporation (NMDFC)

The National Minorities Development & Finance Corporation (NMDFC) is a government body that works toward financing the minority sections of society, through State Channelising Agencies (SCAs). NMDFC provides loans to study in India & abroad for professional and job-oriented courses. Read more.

NMDFC has divided the minorities into two subsections:

• Credit Line 1: It refers to the candidate with an annual family income of INR 1.20 Lakh in urban areas & INR 98,000 in rural areas.
• Credit Line 2: It refers to the candidate with an annual family income of INR 6 Lakh.

Eligibility Criteria:

The corporation's objective is to provide subsidized financing for self-employment to underserved minorities, including Muslims, Christians, Sikhs, Buddhists, Parsis, and Jains.

For Credit Line 1

For Credit Line 2

3. National Safai Karamcharis Finance & Development Corporation (NSKFDC)

The NSKFDC actively works toward the economic development of the safai karamcharis/ Manual Scavengers community. Read more.

Through this scheme, you can avail education loans to study in India & abroad for the following courses:

• Graduation courses in all disciplines.
• Post-Graduation courses in Medical, Engineering, Management, IT, Law, and Computers.
• Job-related courses having a minimum of 1-year course duration such as Sanitary Inspector, Diploma in Physiotherapy, Pathology, Nursing, Hotel Management & Tourism, Journalism & Mass Communication, and Geriatric Care.

Eligibility criteria:

• You should be identified under the National Scheme of Liberation & Rehabilitation of Scavengers.
• You should have obtained admission for a specified professional or technical course for the ongoing academic session.
   

4. National Backward Classes Finance & Development Corporation (NBCFDC)

The NBCFDC is a government undertaking that provides education loans for both study in India and abroad. For study in India loans, 90% of total expenses are covered, whereas, loans for abroad education cover 85% of the total expenses. Read more.

Eligibility criteria:

• The applicant should be a member of a backward class (as notified by the Central Government/State Government).
• The per annum income of the family should not exceed INR 3 Lakh.
• The applicant should have secured admission to a professional or technical course through an entrance test/merit-based selection process.
   

5. National Scheduled Castes Finance & Development Corporation (NSCFDS)

The NSCFDC is a government body that works for the welfare of the scheduled castes. A maximum loan amount of INR 30 Lakh or up to 90% of the course fee, whichever is less, will be sanctioned for your abroad education. Read more.

The eligibility criteria are quite strict when it comes to abroad education loans offered by the government. 

• Applicant must be an Indian citizen.
• Applicant must have a valid Scheduled Caste (SC) certificate issued by the competent authority.
• The family income of the loan applicant should be up to INR 3 Lakh per annum.
• Applicant must have secured admission to a recognized university abroad on the basis of merit to be able to take a loan from NSFDC.
   

6. National Handicapped Finance & Development Corporation (NHFDC)

The NHFDC was formulated by the Ministry of Social Justice and Empowerment. Students with disabilities are eligible for availing education loans to study in India or abroad for professional undergraduate & postgraduate courses under this scheme. Read more.

Key points regarding the loan scheme:

• For loans up to INR 4 Lakh, collateral is not required.
• For loans up to INR 7.5 Lakh, tangible collateral of suitable value is required.

Note: In exceptional cases, the collateral requirement can be waived off if the officer granting the loan is satisfied with the net worth of parents who would be executing the documents as ‘joint borrowers’. 
 

7. National Scheduled Tribes Finance and Development Corporation (NSTFDC)

The NSTFDC was set up by the Ministry of Tribal Affairs in 2001. It provides financial aid for technical and professional courses to study in India or abroad. Read more.

Conclusion

In the contemporary world today, education plays a crucial role in one’s growth and development. However, it comes with a heavy price tag. In such a scenario, the Government of India has taken several initiatives to promote education for the underserved sections of society. 

Several education loans & subsidy schemes mentioned in this blog have been introduced by the Government of India to ensure that students can get the required financial aid. Well, if you are looking for an education loan to study abroad, we at GyanDhan can help you find the best lender as per your financial profile. Best of all, we don’t charge any type of fee. 
 

Frequently Asked Questions

• Education loan 
• Study abroad 

First published date: 19 Oct 2017