What is an education loan?
An education loan pays for a course of study in India or abroad: tuition, and often hostel, books, a laptop, travel and exam fees. It is usually taken by the student with a parent or guardian as co-applicant, and repayment normally starts only after the course ends and a short grace period, called the moratorium. Interest usually builds up during that time, so the loan you repay can be larger than the amount you borrowed. Understanding that, and who is responsible if repayment gets hard, matters more than the headline rate.
What does an education loan cover?
| Tuition and fees | Paid to the institution as each term or year falls due |
|---|---|
| Living costs | Hostel or accommodation and mess charges, as the lender allows |
| Study costs | Books, equipment, a laptop and exam or library fees, usually within the lender's limits |
| Studying abroad | Travel, and sometimes the deposits and fees needed for the visa |
| Insurance | Some lenders add life cover for the student, which you should ask about |
How does the moratorium work?
Most education loans give a moratorium, the course period plus a short grace period, during which you do not pay EMIs. Interest usually still runs on the amount paid out so far and is added to the loan when repayment begins, so the balance grows. If the family can pay that interest during the course, the loan stays smaller and the EMIs later are lower. Some government schemes pay all or part of this interest for eligible students.
Do you need collateral?
It depends on how much you borrow, where you study and the lender. Smaller loans and loans for students at premier institutions are often given without collateral, sometimes backed by a government guarantee to the lender. Larger loans usually need security such as property or a fixed deposit, and if property is pledged it is at risk if repayments are missed. Under the PM-Vidyalaxmi scheme, students admitted to listed institutions can get loans without collateral or a guarantor.
Government schemes for education loans
PM-Vidyalaxmi offers collateral-free and guarantor-free education loans to students admitted to listed quality institutions, and pays part of the interest during the moratorium for families in a set income range. The Central Sector Interest Subsidy pays the moratorium interest for students from lower-income families on approved technical or professional courses. A credit guarantee fund also covers lenders on many education loans. Students already receiving another government scholarship, interest subsidy or fee reimbursement are usually not eligible for these interest benefits. You apply through the official PM-Vidyalaxmi portal; no agent is needed.
Who is eligible for an education loan?
The student needs confirmed admission to a recognised course, in India or abroad, usually through the institution's admission process. Lenders then look at the course and institution, the co-applicant's income and credit record, and any security offered. A strong institution and a reliable co-applicant make approval more likely and collateral less likely.
What documents do you need?
| Student | KYC and PAN, the admission or offer letter, the fee schedule, and mark sheets of previous studies |
|---|---|
| Co-applicant | KYC and PAN, income proof such as salary slips or income tax returns, and bank statements |
| For studies abroad | Passport, the admission letter, proof of funds or the visa documents the country asks for, and any test scores |
| If collateral is offered | Property papers or fixed deposit details |
Studying abroad: what changes?
Lenders look closely at the university, the course and the country, and the amount is usually larger, so collateral is more often needed. Plan the timing: many lenders can issue a sanction letter before the visa, which some countries accept as proof of funds. Ask how and when money is sent to the university and in which currency, and budget for exchange-rate changes and living costs.
How does Atlanta Group help with an education loan?
- Listening to your planWe start with the course, the institution, the costs and the family's situation.
- Checking the schemesWe check whether PM-Vidyalaxmi or another scheme may apply, and tell you how to apply on the official portal.
- Working out what is neededWe look at the total cost, what the family can contribute, and whether collateral is likely.
- Shortlisting lenders and comparing optionsWhere available, we identify two to three suitable options from our associated banks and NBFCs and compare their rate, moratorium terms, collateral, insurance and total cost.
- Application planning and documentsWe tell you exactly which student, co-applicant and collateral documents are needed and check them before submission.
- Submission and lender coordinationWe submit the application and handle the lender's questions with you.
- Lender assessmentThe lender checks the admission, the institution, the co-applicant and any security. Atlanta Group facilitates the application and provides guidance; the final decision rests with the lending institution.
- Sanction and offer evaluationWe go through the sanction letter and Key Fact Statement with you, including the moratorium and when interest starts.
- DisbursalWe follow up until the first payment reaches the institution and the schedule for later payments is clear.
- Support afterwardsYour dedicated relationship manager stays your point of contact, including when repayment begins.
How long does an education loan take?
It depends on the lender, the admission documents and whether collateral is involved; studies abroad and secured loans take longer. Start soon after you receive the admission letter, well before fees fall due. The timeline below is an indicative planning guide, not a guarantee. The lender decides, and we cannot promise a date.
Indicative timeline
| Initial discussion | Same day |
|---|---|
| Document collection and preliminary analysis | About 1–2 working days after we receive your documents |
| Lender shortlisting and application preparation | About 1–3 working days, depending on document readiness |
| Lender assessment and verification | Around 3–10 working days or more; longer with collateral or for studies abroad |
| Sanction and acceptance | Depends on the lender |
| Disbursal to the institution | Depends on the lender's conditions and the fee schedule |
What decides the rate and the cost?
The lender sets the rate from the course and institution, the amount, any collateral, the co-applicant's profile and its own policy. Look beyond the rate at the processing fee, any insurance added, how interest is charged during the moratorium, and any charge for paying early. Ask for the Key Fact Statement and compare the total cost, including the interest that builds up before repayment starts.
How is the EMI calculated on an education loan?
Your EMI depends on three things: the amount, the interest rate and the tenure. The standard formula is EMI = P x r x (1+r)^n divided by ((1+r)^n - 1), where P is the amount owed when repayment starts, including any interest added during the moratorium, r is the monthly interest rate and n is the number of monthly instalments. Our EMI Calculator helps you try different amounts and tenures.
Tax on an education loan
Interest paid on an education loan for higher studies can be deducted from taxable income under the old tax regime, for a limited number of years, by the person who took the loan. The principal is not deductible. Rules depend on the regime you choose, so ask a tax adviser.
What if the student cannot find work after the course?
Speak to the lender early, before an EMI is missed. Some lenders may extend the grace period or restructure the loan in genuine cases, but the co-applicant remains responsible for repayment, and missed EMIs affect both credit records. Choosing a course and an amount the family can realistically repay is the best protection.
What mistakes should you avoid?
Borrowing more than the course needs. Ignoring the interest that builds up during the course. Not reading the moratorium and insurance terms. Leaving the application until fees are due. Missing a scheme you are eligible for. Paying anyone who promises a guaranteed loan or a place for a fee.
What our customers say
“Funding higher education was a major concern for our family. We had several questions about the loan process and documentation. Atlanta Group guided us patiently, and the education loan was sanctioned. We are extremely happy and grateful for the assistance we received during such an important time.”
Not sure where you stand?
Tell us your income, existing EMIs and what you need. We will check your profile free of charge and explain which options may be worth exploring before you apply anywhere.
Frequently asked questions
Which bank is best for an education loan?
There is no single best lender. Some favour particular institutions or courses, some lend for studies abroad more readily, and their collateral and moratorium terms differ. Comparing two or three Key Fact Statements for your course tells you more than any ranking.
Can I get a 100% education loan?
Some lenders fund the whole cost for some courses and institutions, but many ask the family to contribute a share, especially for larger amounts. The answer depends on the lender, the course and the amount.
Can I get an education loan without collateral?
Often, yes, for smaller amounts, for students at premier institutions, or under PM-Vidyalaxmi for listed institutions. Larger loans, especially for studies abroad, usually need collateral.
Can I get an education loan without a co-applicant?
It is uncommon, because a student usually has no income yet. Most lenders want a parent, guardian or spouse as co-applicant; some scheme-backed loans for listed institutions do not need a guarantor.
Can I get an education loan for studies abroad?
Yes. Many banks and NBFCs lend for recognised universities abroad. Expect closer checks on the university and course, a larger amount, and more often a need for collateral.
Does an education loan affect the co-applicant's credit?
Yes. The co-applicant is equally responsible, the loan appears on their credit report, and missed EMIs affect them as well as the student. It also counts as an existing obligation if they apply for another loan.
Can I repay an education loan early?
Often, yes, and paying even part of the interest during the course helps. RBI directions limit charges for paying early on many floating-rate loans to individuals, but terms differ, so check your sanction letter before you prepay.
Is Atlanta Group a lender?
No. Atlanta Group is a financial solutions and loan facilitation company, in business since 2010. Loans are provided by our associated banks, NBFCs and private finance providers, who decide on eligibility, approval, rates, fees and terms. We help you understand your options and guide your documents and application. Approval is never guaranteed.
Related options
Written by the Atlanta Group team, which has helped families explore loan options since 2010. Last updated 4 November 2026. We do not quote interest rates, loan amounts or scheme limits here because lender terms and government rules change. Confirm current terms and scheme rules with the lender and the official portal before you decide.