Government Education Loan for Students to Study Abroad

The Government of India has implemented various schemes to provide financial assistance and interest subsidies to students pursuing further studies abroad. These initiatives are designed to support students from economically weaker sections and marginalized communities in their educational pursuits. It is important to note that though it is commonly referred to as government of India education loans for study abroad, these initiatives are not direct loans but rather schemes that offer financial aid and interest subsidies. By availing these schemes and govt education loans students can benefit from reduced interest rates, flexible repayment options, and other forms of support. Let's explore some of the key government of India study loans and government schemes that facilitate affordable education and empower students to achieve their academic goals.

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  Indian Government has launched a PM-Vidya Lakshmi Portal where a student can apply and track their education loan application. 
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  Students with family income up to INR 8 Lakhs, get up to 3% concession on the interest rate on loans up to INR 10 Lakhs. 
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  Repayment of education loans for higher education is deductible under section 80E of the Income Tax Act. The yearly limit for deduction is Rs. 40,000 ( for both the principal and the interest) which will be available for a maximum of eight years starting from the day you start repaying. 

Government data reveals that there has been a 50% increase in the number of students applying for the student visa every year. Still, many students receive a rejection on their student visa applications because they cannot fulfill the fund requirement. To decrease the rejection rate, education loans for abroad studies by the Indian government came into effect.

 

Amendments are regular to these schemes to make them effective. Some are mentioned below:

 

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  There are subsidy schemes and a full interest waiver during the moratorium period is provided. 
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  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.
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  Loans from NBFCs are not eligible for these schemes.

To qualify for a government study loan, applicants generally need to meet the following basic eligibility criteria:

 

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  Academic Performance: Achieved 60% or more in the 12th board examination.

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  Documentation: Must provide valid proof when applying for minority, caste, or EWS-based scholarships.

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  University Admission: An admission letter from the university is mandatory.

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  Nationality: The applicant must be a citizen of the country.

In addition to these requirements, specific schemes may have additional eligibility criteria. It's recommended to check the official website of the respective scholarship or government student loans India for detailed information.

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 govt education loan scheme is available for meritorious students who have secured admission in the approved courses at Masters, M.Phil, or Ph.D. courses abroad.

 

Eligibility criteria:

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

Procedure:

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  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. 
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  After submission of the required documents, the bank will process the application and forward it to the Ministry of Social Justice and Empowerment.
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  The Ministry of Social and Justice Empowerment will either accept or decline your application.

Central Sector Interest Subsidy (CSIS):

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

 

Eligibility criteria:

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  Applicants should have secured admission to a recognized Indian/foreign university.
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  Applicant’s total family income shall not exceed INR 4.50 Lakh per annum.

Procedure: 

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

Interest Subsidy Scheme on Education Loan by the Government of Gujarat:

Education loan for study abroad by the Gujarat government offers a 100% interest subsidy to economically weaker students from Gujarat who wish to pursue higher studies abroad. Through this govt education loan for abroad studies by the Indian government without collateral scheme, students can get up to INR 15 Lakh for overseas study. This govt education loan scheme is available for professional courses at graduate, post-graduate, and diploma levels.

 

Eligibility criteria:

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  Applicants must have secured at least 60% in your 12th grade.
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  The total family income should be less than or equal to INR 6 Lakh annually.
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  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.

Padho Pardesh Scheme:

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

 

The objective of the government study loan 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:

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

Procedure:

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  The education loan government of India application process usually begins after a candidate has secured admission to a recognized university/college. 
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  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.
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  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.

Here is a video highlighting some of the top government scholarships available for Indian students.

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 govt education loan for study abroad is primarily for students who wish to study 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. 

Requirements:

 

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

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.

 

NMDFC has divided the minorities into two subsections:

 

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  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.

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  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:

National Safai Karamcharis Finance & Development Corporation (NSKFDC):

The NSKFDC actively works toward the economic development of the safai karamcharis/ Manual Scavengers community. Through this government education loan for study abroad, you can avail education loans to study abroad for the following courses:

 

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  Graduation courses in all disciplines.
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  Post-graduation courses in Medical, Engineering, Management, IT, Law, and Computers.
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  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:

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

National Backward Classes Finance & Development Corporation (NBCFDC):

The NBCFDC is a government undertaking that provides education loans for both studies 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.

 

Eligibility criteria:

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

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.

 

Eligibility criteria:

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

National Handicapped Finance & Development Corporation (NHFDC):

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

 

Key points regarding the loan scheme:

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  For loans up to INR 4 Lakh, collateral is not required. 
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  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’. 

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.

 

The government of India education loan initiatives are aimed at helping students pursue higher education. However, many private institutions have also launched their education loan programs that provide financial assistance to students. While the amount and eligibility criteria of these programs may be rigid yet, they can be helpful if you meet the requirements.

Cornell University Tata Scholarship 2025:

Tata Education and Development Trust, a philanthropic arm of the Tata Group, the scholarship covers tuition and other living expenses for undergraduate students from India. The Cornell University Tata Scholarship 2025 sponsors 20 students every year, and helps them pursue their education at Cornell University.

 

Eligibility Criteria:

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  The applicant should be an Indian citizen.
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  He/She should have completed his/her secondary education at an Indian institution. 
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  Must have received an offer letter from Cornell University. 
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  Income proof to showcase their inability to afford their higher education abroad. 

KC Mahindra Scholarships 2025:

Since 1956, K.C. Mahindra Education Trust has been granting interest-free loan scholarships to students pursuing post-graduation studies abroad in various fields. Every year they provide a maximum of INR 10 Lakhs to the top three K.C. Mahindra Fellows and the remaining successful applicants get a maximum of Rs. 5 Lakh per scholar. 

 

Eligibility Criteria:

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  The applicant must have scored a first-class degree or equivalent diploma.
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  Either have an offer letter or have applied to a reputable foreign university. 
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  Applications are accepted for an academic year Aug 2025 but, not later than Feb 2026. 

GyanDhan Scholarships 2025:

In 2021, GyanDhan launched a GyanDhan Scholarship of INR 1 Lakh for students pursuing higher education in India and abroad. The selection process is based on the Statement of Purpose and the academic transcripts you provide during the application submission process. 

 

Eligibility Criteria:

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  The applicant must have completed their graduation from a recognized university.
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  Offer Letter from a recognized university in India or abroad.
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  Applications are accepted for the upcoming academic year, Aug 2025.

Government education loans, available through various state or central government schemes, offer numerous advantages to students. Here are some key benefits:

 

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  Low Interest Rates: Government education loans typically come with minimal interest rates, making them more affordable compared to private loans.

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  Interest Subsidy: Many schemes offer interest subsidies, reducing the overall cost of the loan during the study period.

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  Collateral-Free Loans: Loans up to INR 7.5 Lakhs generally do not require collateral, easing the application process for students and their families.

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  High Loan Amounts: These loans can cover substantial expenses, with loans available up to INR 1.5 crore for higher education.

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  Simplified Approval Process: The application and approval processes for government education loans are designed to be straightforward and student-friendly.

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  Flexible Repayment Options: Borrowers can benefit from flexible repayment terms, accommodating their financial situation after graduation.

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  Generous Moratorium Period: There is typically a moratorium period of one year after course completion before repayment begins, allowing graduates time to secure employment.

The government education loan for study abroad has the objective of helping students belonging to certain sections of society. Thus, ensure that you have the following documents prepared while applying:

 

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  Copy of Aadhar card of applicant (student), co-applicant, and guarantor. 
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  Income Certificate or Form No. 16 issued by the SDM office. 
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  Academic Certificates which you used to get an offer letter from the university.
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  Passport-size photographs of the applicant, co-applicant, and guarantor.
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  Birth Certificate or Age Certificate of the applicant.
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  Caste Certificate (if you are applying from the minority sector).
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  Affidavit stating that you have not availed of any other government scheme before. 
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  Letter of Acceptance from the university.
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  Copy of payment schedule or demand notice from the university.
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  Bank account statement for the last six months.

The government student loan for study abroad doesn’t stop at the application. You are required to follow certain steps to take advantage of the schemes. The general process is listed below:

 

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  After applying, you will receive a response on your application. 
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  When the verification is done they will provide approval on your application.
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  You will be provided with an agreement that requires acknowledgment from the applicant and co-applicant. 
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  Review and acknowledge the terms and conditions. 
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  Provide the date when you want the amount to be disbursed. 
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  Provide the details of the bank account where you want the amount to be disbursed. 

Note: Ensure that you confirm this from the lender about the disbursement process. Usually, the foreign education loan by government of India is disbursed directly to the university account. 

Applying for a student loan in India by government can be a straightforward process if you follow the right steps. Government student loans are an excellent option for financing your higher education, whether you're planning to study within the country or abroad. Here’s a comprehensive guide on how to get an education loan from the government.

1. Research and Choose the Right Loan Scheme:

Before applying, it's crucial to research the various government education loan schemes available. Popular schemes include the Central Sector Interest Subsidy Scheme (CSIS) and the PM-Vidya Lakshmi Portal, which offers multiple loan options from different banks. Ensure the chosen scheme covers your educational needs, whether it's for domestic or international studies.

2. Check Eligibility Criteria:

Each loan scheme has specific eligibility criteria. Generally, applicants must:

 

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  Be an Indian citizen
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  Have secured admission to a recognized institution in India or abroad
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  Meet academic requirements (usually a minimum percentage in the previous qualifying exam)
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  Provide a co-applicant (typically a parent or guardian)

3. Gather Required Documents:

Collect all necessary documents before starting the application process for a government education loan for abroad study. Commonly required documents include:

 

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  Proof of admission
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  Academic records
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  Identity and address proof
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  Income certificate of parents/guardians
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  Statement of expenses
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  Bank account statement of the borrower (and co-borrower, if applicable)
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  Passport-size photographs

4. Apply Online or Offline:

You can apply for a government education loan for abroad study through online portals like the PM-Vidya Lakshmi Portal, which streamlines the process and provides access to multiple banks. Alternatively, you can apply directly at the bank's branch.

 

Online Application Process:

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  Register on the PM-Vidya Lakshmi Portal.
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  Fill out the Common Education Loan Application Form (CELAF) with the required details.
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  Search and apply for loans based on your eligibility and preference.
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  Upload the required documents.
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  The application will be sent to selected banks for processing. 
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  The loan status will be updated on the portal, after successful loan approval and disbursement.

Offline Application Process:

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  Visit the nearest bank branch that offers government education loans.
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  Request the application form and fill it out.
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  Submit the form along with the required documents.

5. Loan Approval and Disbursement:

Once your application is reviewed and approved, you will receive a loan sanction letter outlining the loan amount, interest rate, repayment schedule, and other terms and conditions. The loan amount is usually disbursed directly to the educational institution in installments.

The government loan for study abroad does not apply to every lender. Some lenders which are included in these schemes are listed below:

Note: The interest rate is affected by two factors: the repo rate and the category of the loan product.

 

The above schemes offer benefits such as lower interest rates and flexible repayment options, enabling students to pursue higher education while minimizing their overall costs. By availing themselves of these schemes, students can access the necessary financial assistance, aspire for higher education, and achieve their academic goals without being burdened by excessive financial obligations. These government initiatives play a crucial role in empowering students from economically weaker sections and marginalized communities to overcome financial barriers and unlock opportunities for a brighter future. If you are looking for the right education loan to fund your study abroad journey check your education loan eligibility at GyanDhan.