Education loans up to ₹7.5 lakh can be covered under the Credit Guarantee Fund Scheme for Education Loans, which lets a bank lend without collateral because the government guarantee sits behind it. Above that threshold, banks want security — and this is precisely where families get pushed to NBFCs at several points more than the rates on our education loan interest rates page.
| CGFSEL collateral-free cover | ₹7.5 lakh |
|---|---|
| What it means | Subject to the scheme terms and the lending bank’s participation. |
as of 2026-08-17 · Credit Guarantee Fund Scheme for Education Loans · verified
What to know
Banks do not always volunteer the guarantee scheme. If you are told collateral is required for a loan under ₹7.5 lakh, ask specifically whether the loan can be covered under CGFSEL — the branch may simply be defaulting to its standard security requirement.
Unsecured NBFC lending above the threshold is genuine and fast, and it is underwritten on the co-applicant’s income rather than on collateral. The rate premium over a secured bank loan — compare the lenders in our best education loans table — is substantial across a long tenure, so it is worth exhausting the secured route — including collateral from an extended family member — before accepting it.
Frequently asked questions
Can I get an education loan without collateral?
Up to ₹7.5 lakh, yes, where the loan is covered under the Credit Guarantee Fund Scheme for Education Loans at a participating bank. Above that, banks generally require security — and if the course is overseas, see education loans for study abroad — while some NBFCs lend unsecured against a co-applicant’s income at a higher rate.
What counts as collateral for an education loan?
Typically residential or commercial property, fixed deposits, LIC policies with surrender value, or government securities. Agricultural land is often excluded. The collateral does not have to belong to the student.
Is a co-applicant mandatory?
Effectively yes for a student loan — a parent, guardian or spouse whose income supports the loan. The co-applicant is jointly liable and the loan appears on their credit report throughout.
Sources
- Ministry of Education / NSDL — Vidya Lakshmi — central education loan portal (primary source)
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