CGFSEL Education Loan Scheme

CGFSEL Education Loan Scheme

Offered by the National Credit Guarantee Trustee Company Ltd. (NCGTC), Ministry of Finance, Government of India

About the Program:

• The Credit Guarantee Fund Scheme for Education Loans (CGFSEL) provides educational loans up to ₹7,50,000 to help students pursue higher education in India and abroad.
• The scheme is designed for students without collateral or a third-party guarantee for their loans.
• The maximum interest rate charged under this scheme is 2% above the base rate.
• The base rate is the minimum interest rate a bank can charge, set by the Reserve Bank of India (RBI). The final loan interest rate is determined by adding a margin to this base rate.

Eligibility Criteria:

• Indian citizens who have completed Higher Secondary Education (HSC) or equivalent.
• Must have secured admission to a higher education course in a recognized institution in India or abroad.
• Admission must be through an entrance test or merit-based selection process after Class 12.
• For postgraduate courses or research programs, selection may be based on entrance tests or other selection processes, not just qualifying exam marks.

Quantitative Eligibility Criteria:

• The borrower’s loan account must have no overdue payments on the material date (the date of loan disbursement).
• No margin is required for loans up to ₹4,00,000.
• For loans above ₹4,00,000:
  • 5% margin for studies in India.
  • 15% margin for studies abroad.

Eligible Courses:

For Studies in India:

• Graduate/postgraduate degrees and PG diplomas recognized by UGC, AICTE, AIBMS, ICMR, and Government institutions.
• Professional courses like ICWA, CA, CFA, etc.
• Courses from IIMs, IITs, IISc, XLRI, NIFT, NID, etc.
• Degree/diploma programs in Aeronautics, Pilot Training, Shipping, Nursing, and other disciplines approved by relevant authorities.
• Courses offered by reputed foreign universities in India.

For Studies Abroad:

• Graduation: Job-oriented professional/technical courses at reputed universities.
• Postgraduation: MCA, MBA, MS, and equivalent degrees.
• Programs by CIMA (London), CPA (USA), and other professional bodies.
• Degree/diploma courses recognized by Indian/foreign regulatory bodies for employment in India or abroad.
• Other job-oriented courses approved by banks based on employability.

Scholarship Benefits:

• The National Credit Guarantee Trustee Company Ltd. (NCGTC) will cover 75% of the defaulted loan amount in case of non-repayment.
• Loans up to ₹4,00,000 require no margin.
• Interest rates are capped at 2% above the base rate to keep financial costs low.

Covered Expenses:

• Tuition, hostel, examination, library, and laboratory fees.
• Travel expenses for studying abroad.
• Insurance premiums (if applicable).
• Caution deposits, building funds, and refundable deposits.
• Books, equipment, instruments, and uniforms.
• Computers (if essential for the course).
• Study tours, project work, and thesis expenses.
• Management quota fees (if approved by the State Government or regulatory bodies).
• Off-campus lodging and boarding expenses may be considered.

Security Requirements:

• Collateral security can include land, buildings, government securities, UTI units, NSC, KVP, life insurance policies, gold, shares, mutual funds, bank deposits, and other approved assets.

Repayment Guidelines:

• Moratorium period: Course duration + one year or six months after employment, whichever is earlier.
• Course extension: Loan repayment extension of up to two years if the student cannot complete the course on time.
• Course discontinuation: The bank will decide a repayment plan with the borrower.
• Interest concession: 1% reduction in interest for borrowers who pay during the study and moratorium period.
• Repayment period:
  • Loans up to ₹7,50,000: Maximum 10 years.
  • Loans above ₹7,50,000: Maximum 15 years.
• Repayment mode: Equal Monthly Installments (EMIs). No prepayment penalty.

Documents Required:

• Completed application form with supporting documents specified by the bank.
• The scheme partners with regional, private, and public sector banks. A full list of participating banks is available in the FAQs section.

Further Information:

For full details, visit the Indian Banks’ Association (IBA) official notification