Credit Guarantee Fund Scheme for Education Loans (CGFSEL)
शिक्षा ऋण क्रेडिट गारंटी फंड योजना (सीजीएफएसईएल)
National credit guarantee scheme managed by NCGTC guaranteeing 75% of default risk for collateral-free education loans up to ₹7.5 Lakh.
Max Loan Amount
Up to ₹7.5 Lakh (75% Default Guarantee Cover by NCGTC)
Interest Rate
Standard bank lending rate (capped at 2% over MCLR/EBLR under scheme guidelines)
Moratorium Period
Course duration + 1 year
Repayment Tenure
Up to 15 years
✦ What the Loan Covers (Eligible Expenses)
Tuition, hostel, books, computer, and reasonable course expenses under IBA model scheme.
What is Missing: Honest MITC Policy Gaps, Hidden Clauses & Costs
Eligo disclosure: Bank loan brochures and DSA agents rarely highlight these conditions. Verify before signing your loan agreement.
Parent joint co-borrowership is mandatory; guarantee fee of 0.50% is absorbed or passed to the borrower depending on bank policy; credit guarantee protects the bank against default, but the borrower remains legally liable for recovery.
✦ Collateral & Margin Money Terms
Collateral & Guarantee Requirement:
ZERO collateral and ZERO third-party guarantee. NCGTC provides 75% credit guarantee to the bank in case of NPA default.
Margin Money (Borrower Contribution):
Nil up to ₹4 Lakh; 5% for domestic studies; 15% for overseas studies.
✦ Eligibility Requirements
Indian national enrolled in recognized higher education courses in India or abroad, applying for education loan up to ₹7.50 Lakh under IBA model scheme.
✦ Government Subsidies & Rate Concessions
Banks are prohibited from demanding third-party guarantee or tangible collateral for loans up to ₹7.5 Lakh covered under CGFSEL.
✦ Required Documents Checklist
Standard IBA education loan application, KYC, entrance scorecard, admission letter, fee structure, parent income proof.
✦ How to Apply Step-by-Step
1. Apply for loan up to ₹7.5 Lakh at any member lending bank.
2. Bank automatically registers the sanction under CGFSEL portfolio with NCGTC.
3. Bank cannot ask for collateral or third-party guarantee.
4. Disbursed directly to educational institution.Official Portal
Official Portal / Lender Domain
Apply or verify directly on the official banking portal
✦ Frequently Asked Questions
Can a bank demand property collateral for an education loan of ₹7 Lakh?▼
No. Under RBI and IBA guidelines backed by CGFSEL, banks are strictly prohibited from demanding any tangible collateral or third-party guarantee for education loans up to ₹7.50 Lakh.
Does CGFSEL mean the student does not have to repay if they cannot find a job?▼
No. CGFSEL guarantees the bank against loss, but the borrower and co-borrower remain legally obligated to repay. A default will damage the credit score of both the student and the parent.
Who pays the CGFSEL guarantee fee?▼
The annual guarantee fee of 0.50% of the outstanding loan is paid to NCGTC by the lending bank or shared as per the bank's retail credit policy.