Studying abroad is a dream for many Indian students. But the cost of tuition fees, travel, and living expenses can be very high. Don’t worry! The Government of India offers many education loan schemes that help students pay for their studies abroad.
These loans come with low interest, easy repayment, and special support for students from weaker sections, minority groups, or backward categories. In this blog, you will learn about the best government education loan for students to study abroad, how to apply, and even simple examples to understand how much loan you may need.
Also Read: How Much Education Loan Can I Get to Study Abroad?
🏦 What is a Government Education Loan?
A government education loan is a loan that is:
- Given by public sector banks (like SBI, PNB) or financial bodies,
- Supported or subsidized by the government,
- Meant to help students study in foreign countries,
- Available with low interest, no collateral (in some cases), and easy repayment after you finish your course.
🎓 Who Can Apply?
You can apply if:
- You are an Indian citizen,
- You have secured admission in a recognized university/college abroad,
- You have completed your 12th class or bachelor’s degree (depending on course),
- Your family income falls under the required limit (for subsidy schemes),
- You meet the age and academic qualifications.
🧾 What Expenses Are Covered?
Government loans usually cover:
- Tuition fees
- Travel and airfare
- Living expenses
- Exam fees, lab fees
- Books and laptop (if required)
- Insurance
📋 Popular Government Education Loan For Students to Study Abroad
Let’s look at the main government schemes in simple words:
1. Dr. Ambedkar Central Sector Scheme
- For: OBC and EBC students
- Course: Master’s, PhD abroad
- Benefit: Full interest subsidy during the course + 1-year moratorium
- Family Income Limit:
- OBC: ₹8 lakh per year
- EBC: ₹2.5 lakh per year
- Bank: Must take loan from a Scheduled Bank
💡 Example:
If your tuition is ₹25 lakh and you get a loan, the government will pay the interest for up to 2 years of study + 1 year after completion. You start paying EMIs only after that.
2. Credit Guarantee Fund Scheme for Education Loans (CGFSEL)
- For: All students (based on income and eligibility)
- Loan Amount: Up to ₹7.5 lakh (collateral-free)
- Bank: Any IBA-member public bank
- Benefit: No need for security or third-party guarantee
💡 Tip: Combine this scheme with interest subsidy schemes if eligible.
3. Gujarat Interest Subsidy Scheme (For Gujarat Domicile Only)
- For: Students from Gujarat who got admission abroad
- Family Income: ≤ ₹6 lakh/year
- Marks: Minimum 60% in 12th
- Loan Amount: Up to ₹15 lakh
- Benefit: 100% interest subsidy during study period
4. National Backward Classes Finance and Development Corporation (NBCFDC)
- For: OBC candidates
- Family Income: ≤ ₹3 lakh/year
- Course: Degree/diploma courses abroad
- Loan Limit: ₹15–20 lakh
- Interest Rate:
- Boys: ~4%
- Girls: ~3.5%
- Repayment: Within 10–15 years after course
5. National Scheduled Castes Finance and Development Corporation (NSCFDC)
- For: SC students
- Income: ≤ ₹3 lakh/year
- Loan: Up to ₹20 lakh for foreign studies
- Interest: ~4%
- Moratorium: 6 months after course completion
6. National Handicapped Finance and Development Corporation (NHFDC)
- For: Students with 40% or more disability
- Loan Amount: Up to ₹20 lakh
- Interest Rate: ~4%
- Moratorium: Course duration + 1 year
📲 How to Apply for Government Education Loan?
Step 1: Register on Vidya Lakshmi Portal
This is the official government portal to:
- Apply for education loans
- Compare loan offers from different banks
- Track your application
Website: www.vidyalakshmi.co.in
Step 2: Fill Common Loan Application Form
- Choose up to 3 banks
- Upload documents (admission letter, income certificate, ID proof, etc.)
Step 3: Wait for Response from Banks
- You’ll get updates on your dashboard
- Visit the nearest branch for final approval and disbursement
📊 Simple Loan Calculation Example
Let’s say:
- Tuition fee for 2-year MS in USA = ₹30 lakh
- Loan from SBI: ₹30 lakh at 9% interest
- Course duration: 2 years + 1 year grace
During course and grace period:
- Under Dr. Ambedkar scheme, interest is paid by govt
- So, you pay ₹0 for 3 years
After 3 years:
- You repay ₹30 lakh with monthly EMI
Let’s say repayment period = 10 years
👉 Monthly EMI ≈ ₹38,000 per month
(This can vary based on interest and repayment plan)
🏦 List of Public Banks Offering Government Loans
- State Bank of India (SBI)
- Punjab National Bank (PNB)
- Bank of Baroda (BOB)
- Canara Bank
- Union Bank of India
- Indian Bank
- Central Bank of India
📑 Documents Required
- Admission letter from foreign university
- 10th, 12th, and graduation mark sheets
- Passport and visa
- Income certificate
- Identity and address proof
- Caste/Disability certificate (if applying under special schemes)
- Bank account details
✅ Benefits of Government Education Loan
| Benefit | Description |
| Lower interest rates | Starting from 3.5% (with subsidy) |
| No collateral (for some) | Under CGFSEL scheme up to ₹7.5 lakh |
| Moratorium period | No payment needed during course + 1 year |
| Easy repayment | Upto 15 years to repay |
| Interest subsidy | Govt pays interest for certain categories |
| Tax benefits | Under Section 80E on interest paid |
⚠️ Things to Remember
- Always check eligibility criteria before applying
- Maintain a good academic record
- Read the terms of repayment carefully
- Keep track of subsidy deadlines
- Don’t delay repayment to avoid penalties
📌 Final Tips for Students
- Start early: Apply for loans as soon as you get your admission letter.
- Use government portals: Always prefer Vidya Lakshmi for transparency.
- Explore all schemes: Combine subsidy + guarantee schemes.
- Talk to your bank: Visit the branch for better guidance.
- Stay organized: Keep all documents ready and save soft copies.
📝 Conclusion
Government education loans make it possible for Indian students to study abroad without financial stress. With schemes like Dr. Ambedkar, CGFSEL, and state subsidies, even students from middle or low-income families can chase their dreams.
If you plan your loan carefully and apply through the right channel, you can get full support for your foreign education journey. So don’t wait—explore your options and take the first step toward your global future today!