What lenders check before an education loan
Three questions decide an education loan, and they are easy to mix up. Eligibility is whether the student, course and co-applicant fit the lender's scheme. Approval is the lender's decision after checking your documents. Affordability is whether the EMI fits the household budget after the course. This guide covers the first two; the education loan EMI calculator covers the third.
Most public-sector banks follow the Indian Banks' Association (IBA) model education loan scheme, so the core rules repeat from bank to bank. The table below draws on the scheme pages of Bank of Maharashtra and Canara Bank and the document guide of ICICI Bank. Eligibility still depends on the scheme, the course, the institution and the lender.
| What is checked | Why it matters | Evidence | What varies |
|---|---|---|---|
| Nationality | The schemes are for Indian students | KYC and passport | Canara Bank also covers NRI students with a valid Indian passport |
| Admission | The loan pays for a specific course | Admission or offer letter with the fee schedule; an I-20 for the USA | Some lenders offer a pre-admission sanction |
| Course and institution | Each scheme lists eligible courses and institutes | Admission letter and institute details | Premier-institute schemes have higher limits |
| Academic record | Shows the student can finish the course | Class 10 and 12 mark sheets, degree mark sheets, entrance scores | No single cut-off applies across lenders |
| Co-applicant income | Repayment rests on it until the student earns | ITRs, Form 16, salary slips and bank statements | Documents differ for salaried, self-employed and farming income |
| Security | Larger loans need collateral | Property documents or a deposit pledged as security | The collateral-free limit differs by scheme and lender |
| Margin money | Your share of the cost | A declaration of where it comes from | Nil up to ₹4 lakh; 5% in India or 15% abroad above that |
Co-applicant and collateral requirements
Under the IBA model scheme the loan is granted jointly with the student's parent or guardian (Canara Bank). Bank of Maharashtra accepts a parent or natural guardian, and for a married student the spouse, parents or parents-in-law. ICICI Bank also mentions siblings as co-borrowers. Because the student usually has no income yet, the co-applicant's income documents carry the lender's assessment of repayment capacity.
Collateral depends on the loan amount. Canara Bank's summary of the model scheme sets these slabs:
| Admission | Loan amount | Security asked for |
|---|---|---|
| Merit quota | Up to ₹7.5 lakh | No collateral; the loan is covered under the Credit Guarantee Fund Scheme for Education Loans, subject to its conditions |
| Merit quota | Above ₹7.5 lakh | Tangible collateral covering at least 100% of the loan |
| Management quota | Up to ₹4 lakh | Tangible collateral covering at least 50% of the loan |
| Management quota | Above ₹4 lakh | Tangible collateral covering at least 100% of the loan |
Some lenders go further for selected institutes. Bank of Maharashtra's Maha Scholar scheme has no collateral up to ₹40 lakh for premier institutes, and ICICI Bank offers loans of up to ₹20 lakh without collateral, subject to conditions. Check which institutes a scheme lists before you rely on its limit.
Collateral-free is not co-applicant-free. Under the model scheme the parent or guardian joins the loan at every amount.
Documents to prepare
Collect these before you apply. The list combines what Bank of Maharashtra, Canara Bank and ICICI Bank ask for; your lender may ask for less or more.
| Who | Documents |
|---|---|
| Student | Photo ID and address proof (PAN, Aadhaar, passport, voter ID or driving licence), passport-size photos, Class 10 and 12 mark sheets, degree mark sheets, entrance scores, admission letter with the fee schedule, fee receipts, and a gap certificate if there is a break in studies |
| Co-applicant or guarantor | Photo ID, address proof, PAN and age proof |
| Salaried co-applicant | Salary slips, salary account statements, Form 16 and ITRs. Bank of Maharashtra asks for 3 months of slips, 6 months of statements and 2 years of ITRs and Form 16 |
| Self-employed co-applicant | ITRs, business bank statements and business proof such as GST registration. Bank of Maharashtra asks for 2 years of ITRs with audited balance sheet and P&L, 12 months of statements and Form 26AS |
| Farming income | An income certificate from the Tahsildar (Bank of Maharashtra) |
| Study abroad | Offer or acceptance letter, I-20 for the USA or the equivalent confirmation, and test scores such as GRE or TOEFL |
| Secured loan | Ownership documents of the property offered, or proof of the deposit pledged as security |
| Declarations | Source of the margin money, and whether you will pay interest during the moratorium (Bank of Maharashtra) |
Every lender reserves the right to ask for more. Missing or incorrect paperwork is an avoidable delay: ICICI Bank says it can slow an application down or get it declined.
Applying after Class 12 or for study abroad
After Class 12. The model scheme covers graduation and post-graduation, including technical and professional courses at institutes approved by bodies such as the UGC and AICTE (Canara Bank). ICICI Bank describes eligibility as Class 12 or an equivalent completed with a good academic record. The co-applicant is central here, because an undergraduate usually has no income of their own.
Study abroad. Undergraduate, postgraduate, PhD and postgraduate diploma courses abroad are eligible under the model scheme, and travel costs count as a loan expense (Canara Bank). Two things change. The margin above ₹4 lakh rises to 15%, against 5% for study in India, and a larger loan is more likely to cross the ₹7.5 lakh collateral-free limit. Keep the I-20 or equivalent admission confirmation and your test scores ready (ICICI Bank).
Expenses the model scheme considers include course and hostel fees, exam, library and laboratory fees, travel for study abroad, refundable deposits backed by institute receipts, books and equipment, and a computer if the course needs one (Canara Bank).
How to prepare and apply
- Confirm the admission and get the fee schedule from the institute.
- Work out the amount: fees plus eligible expenses, less the margin you will pay yourself.
- Choose the co-applicant and gather their identity and income documents.
- Decide on security if the amount is above the collateral-free limit of the scheme you are applying under.
- Decide how you will handle moratorium interest. Paying it while you study keeps the EMI lower; the education loan EMI calculator shows the difference.
- Apply through an official route: the lender's own website or branch, or the PM-Vidyalaxmi portal, a single application for education loans from several banks. It was developed with the Department of Higher Education, the Department of Financial Services and the IBA, and is maintained by Canara Bank.
₹6 lakh for a degree in India on merit quota: under the model scheme no collateral is needed below ₹7.5 lakh, but a parent or guardian still joins the loan. A 5% margin applies because the loan is above ₹4 lakh.
₹30 lakh for a master's abroad: above ₹7.5 lakh the model scheme asks for tangible security, unless a lender scheme for your institute has a higher collateral-free limit. The margin is 15%.
Self-employed parent as co-applicant: expect ITRs, business bank statements and business proof instead of salary slips and Form 16.
Check repayment affordability separately
Eligibility says nothing about whether the EMI is comfortable. Under the model scheme repayment starts one year after the course ends or six months after the student finds a job, whichever is earlier, and can run for up to 15 years after the moratorium (Bank of Maharashtra). Interest keeps running throughout the moratorium.
As an illustration, a ₹10 lakh loan at 10% with a 24-month moratorium and a 10-year repayment has an EMI of about ₹13,215 if the interest is paid while studying, and about ₹15,858 if it is added to the loan. These are mathematical illustrations at an example rate, not a lender's quote. Try your own numbers in the education loan EMI calculator.
Sources and related calculators
Scheme rules and document lists were checked on these pages on 5 November 2026. Lenders change their terms, so confirm the current terms with the lender before you apply.
- Bank of Maharashtra, Educational Loans – the IBA model scheme and Maha Scholar terms, co-applicants, margin, repayment and documents.
- Canara Bank, IBA Model Education Loan Scheme – collateral slabs, eligible courses and expenses, and documents.
- ICICI Bank, Documents Required for Education Loan – the document matrix and general eligibility.
- PM-Vidyalaxmi portal – the common application portal for education loans.
Related: the education loan EMI calculator, the loan EMI calculator and the child education calculator for saving towards fees instead of borrowing.