Most Indian banks follow the same IBA Model Scheme — understanding its structure once means you can compare any bank's offer intelligently.
The Indian Banks' Association Model Education Loan Scheme is the template most public-sector banks follow — knowing its structure lets you evaluate any lender's offer against a common baseline.
| Feature | Standard terms |
|---|---|
| Loan without collateral | Up to ₹10 lakh, based on studies alone |
| Loan above ₹10 lakh | Requires collateral security |
| Interest rate | 8.5–12% p.a., depending on bank, amount, and category |
| Moratorium period | Course duration + 1 year (or 6 months after employment, whichever is earlier) — no repayment during this time |
| Repayment tenure | Up to 15 years after the moratorium ends |
| Interest subsidy | Available for eligible students via central and TN state schemes — see our Interest Subsidy Schemes guide |
| Step | Detail |
|---|---|
| 1. Gather documents | Admission letter, fee structure, co-borrower income proof, academic records |
| 2. Apply via Vidya Lakshmi Portal | One application reaches multiple banks — compare offers before committing to one |
| 3. Collateral (if > ₹10 lakh) | Property or fixed deposit as security — bank will specify acceptable collateral types |
| 4. Disbursement | Typically direct to the institution per semester/year, not as a lump sum to the family |
| 5. Moratorium | No repayment during course + 1 year — interest may still accrue unless subsidised |
At or immediately after admission, in June–July, once you have your admission letter and fee structure in hand. Banks need these documents to process the loan, and starting early avoids delays that could affect your fee-payment deadline.
Repayment typically starts 6 months after you begin working, or at the end of the moratorium (course duration + 1 year), whichever comes first. So a fast job placement can actually shorten your interest-free/deferred period rather than extend it — plan your finances accordingly.
A counsellor can help you sequence it alongside your admission timeline.