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Problems Associated With Getting Student Loans In India

Updated on March 29, 2012

Today I will discuss the queries and problems associated with getting student loans provided by banks for higher studies abroad.


Student loan rule in India says that,

  • For loans up to 4 Lakhs INR, no security and/or collateral is required.
  • For loans up to 7.5 Lakhs INR, security in the form of collateral or third party guarantee is required.
  • For loans above 7.5 Lakhs INR, collateral is a must.


  • Third-party guarantee: Any person (friends, relatives) who has a regular income and capable of paying out the loan interest, if you fail to do.
  • Collateral: Any asset of worth equal to loan amount (house or land or fixed deposit for the loan amount). Document should be provided to the bank. Bank will evaluate the worth of asset before sanctioning the loan.

But the current scenario is: If the education is pursued abroad, banks demand a collateral security for any loan amount even if it is less than 4 lakhs INR.


Typical interest rates will be around 11.75% in nationalized banks. For girls, they give 0.5 % discount in the interest rate, so, it comes to 11.25%.


As per rule for getting a student loan from a bank branch, you don't have to have an account in that branch, but you should have an account in one of its branches anywhere in India, if your bank is nationalized.

There is an option in which you don't have to pay the loan interest during the course period. This is called interest free loan moratorium period. You should demand this option while applying for loan. In that case, you will start paying principal plus interest only getting the job after completing the course or one year after completing the course or whichever is earlier.

But banks demand more requirement, documents and proofs for their safety. So above were some problems associated with getting a student loan in India. If you have a question about student loans in India or would like to discuss your issues, please leave a comment below.


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    • profile image

      WILLIAMS BROWN 4 years ago




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    • Mehuldave14 profile image

      Mehuldave14 4 years ago

      My loan application was rejected. Credit Sudhaar was my choice. Initially they were slow. But their counsellors were able to handle all my queries. I will give Credit Sudhaar a positive review.

    • profile image

      Hari Prasad 4 years ago

      My loan was rejected. Credit Sudhaar was my choice. Initially they were slow. But their counsellors were able to handle all my queries. I will give Credit Sudhaar a positive review

    • profile image

      sai 5 years ago

      sir if father is not salaried employee and he is a self employed/Professional and not having IT RETURNS THEN how can a student get a loan to study in abroad and are there any other methods in getting loan.

    • profile image

      rajni 7 years ago

      sir,i have taken educational loan from cBI bank in 2009 for degree course.but my granter is my brother in father is a farmer and his annual income is less than 4 lakh rupees.

      con i eligible for this criteria ?

    • soni2006 profile image

      Rajinder Soni 7 years ago from New Delhi, India

      Thank you so much PhoenixV. I have written another article on my blog:

    • PhoenixV profile image

      PhoenixV 7 years ago from USA

      Great Hub Soni on what it's like getting student loans in India. Voting up and useful. Thanks