All You Need To Know About Education Loan with Collateral | GyanDhan

In the past, if a student planned to go abroad for studies, then they definitely needed to have a fat bank balance to support their education abroad. However, things changed in 1995 when SBI started providing education loan for studying abroad. From 2001, the Indian banking sector started giving out education loans, and since then, Lakhs of education loans in India for study abroad were taken by students from different financial backgrounds to convert their dreams of attaining higher education into reality.

This is a companion discussion topic for the original entry at

What kind of property can we pledge to get an education loan from PSBs?

Also, why is CIBIL score required if I am taking the loan against property?

There are mainly three types of property that you can pledge -

  1. Immovable property - includes house, flat, apartment, plot with a boundary
  2. Liquid assets - LIC Policy, Fixed Deposits, etc.
  3. Third-party - collateral owned by a relative or a friend, if they are willing to pledge it on your behalf.

Keep in mind that original documents will have to be submitted even if it is third-party collateral.

CIBIL score is basically your credit worthiness. It is a report that shows your credibility, how regular you are with your EMIs and other liabilities. Banks often check this before giving the loan as they don’t want a student loan to turn into an NPA (Non Performing Asset). They want to make sure that you will be regular with your EMIs and will not default.

Can we pledge agricultural land?

No. Agricultural land is not accepted as collateral.

Can we get tax benefits on an unsecured education loan?

So NBFCs provide secured education loans?

Yes, you can get tax benefits on an unsecured education loan provided it is taken from a bank. Non-Banking Financial Companies are not eligible under this scheme. Since public banks only give an unsecured education loan on INR 7.5 lakhs, you can also approach private banks for the same.

NBFCs do provide secured education loans. However, banks have the best schemes when it comes to secured education loans. There are many benefits such as high value loans, lower rate of interest, nil or fixed processing fee. NBFCs are private players and they tend to charge a higher rate of interest. Even the processing fee is 1% or 2% of the loan amount. It is always beneficial to take a secured education loan from a public sector bank.