According to a recent statement by Dr Bhagwat Karad, Minister of State, Finance Ministry, students can avail of education loans of up to Rs. 7.5 lakhs under the Credit Guarantee Fund Scheme for Educational Loan (CGFSEL), covered by the Indian Banks’ Association (IBA), without the need for any collateral security and third-party guarantee for educational loans.
The statement was in response to the questions put up in the Lok Sabha, asking if the government was considering raising the guarantee limit from Rs. 7.5 lakhs to Rs. 10 lakhs for education loans for higher studies in India.
“According to RBI guidelines, all education loans up to Rs 4 lakh are collateral-free. Further, the government has launched a CGFSEL wherein a collateral-free loan is given up to Rs 7.5 lakh. RBI has informed that the Model Education Loan Scheme, 2021 encompasses, inter-alia, broad guidelines regarding eligibility criteria, courses eligible for a loan, the quantum of finance, security and margin, rate of interest, etc., and banks are broadly guided by the above scheme while sanctioning educational loans,” said the statement.
The government has also launched the Vidya Lakshmi Portal (VLP), an online portal designed to provide students with education loans through a hassle-free process enabled through a single window system.