Rs 1,050 crore allocated for education loan schemes in FY 27, SBI top lender

The Centre has allocated Rs 1,050 crore in the current financial year (2026-27) for multiple education loan support schemes aimed at making higher education more accessible, Finance Minister Nirmala Sitharaman informed the Rajya Sabha on Tuesday. The allocation covers the Pradhan Mantri Vidyalaxmi Scheme (PMVLS), the PM-USP Central Sector Interest Subsidy Scheme (CSIS) and the PM-USP Credit Guarantee Fund Scheme for Education Loans (CGFSEL).

Replying to a starred question by MP Neeraj Shekhar, the minister also shared details of the government's education loan schemes and released bank-wise data on education loan disbursals by Scheduled Commercial Banks (SCBs) and private banks for FY2024-25 and FY2025-26. The ministry said RBI does not yet have data for FY2026-27.

EDUCATION LOAN SCHEMES: WHAT STUDENTS GET

The government said all Scheduled Commercial Banks have adopted the Model Education Loan Scheme (MELS) formulated by the Indian Banks' Association. The scheme provides need-based education loans, with no collateral security or third-party guarantee required for loans up to Rs 7.5 lakh for students eligible under CSIS or CGFSEL.

Under MELS:

• Loans up to Rs 4 lakh do not require any margin
• Borrowers get a moratorium covering the course period plus one year
• Repayment tenure extends up to 15 years
• RBI has also advised banks not to mandatorily seek collateral for education loans up to Rs 4 lakh

PM VIDYALAXMI SCHEME (PMVLS)

The Pradhan Mantri Vidyalaxmi Scheme (PMVLS), launched on November 6, 2024, enables meritorious students admitted to top Quality Higher Educational Institutions (QHEIs) to access collateral-free and guarantor-free education loans.

Under the scheme:

• Students from families with an annual income of up to Rs 8 lakh are eligible for a 3 per cent interest subvention on education loans of up to Rs 10 lakh
• Up to one lakh fresh students not receiving any other scholarship or education loan interest subsidy can avail the benefit
• The interest subsidy is available during the moratorium period (course duration plus one year)
• Loans up to Rs 7.5 lakh receive a 75 per cent government credit guarantee to encourage banks to expand lending
• The total outlay for interest subvention under PM Vidyalaxmi between 2024-25 and 2030-31 is Rs 3,600 crore

PM-USP CENTRAL SECTOR INTEREST SUBSIDY SCHEME (CSIS)

The Finance Ministry also highlighted the PM-USP Central Sector Interest Subsidy Scheme (CSIS), launched in 2009.

Under the scheme:

• Students from families with an annual income of up to Rs 4.5 lakh are eligible
• Provides full interest subvention during the moratorium period (course duration plus one year)
• Applicable to students who have taken education loans under MELS or PMVLS
• Covers education loans of up to Rs 10 lakh
• Available for students enrolled in eligible professional and technical courses in:
  • NAAC-accredited institutions
  • NBA-accredited programmes
  • Institutions of National Importance
  • Centrally Funded Technical Institutions

PM-USP CREDIT GUARANTEE FUND SCHEME (CGFSEL)

The PM-USP Credit Guarantee Fund Scheme for Education Loans (CGFSEL) was launched in 2015.

Under the scheme:

• The Centre provides a 75 per cent credit guarantee through the National Credit Guarantee Trustee Company (NCGTC)
• Applicable to education loans of up to Rs 7.5 lakh
• Covers loans taken without collateral or third-party guarantee
• The benefit is available irrespective of family income

SBI REMAINS LARGEST EDUCATION LOAN LENDER

According to RBI data shared by the Finance Ministry, Scheduled Commercial Banks disbursed Rs 40,253 crore in education loans during FY 2024-25, while provisional disbursals for FY 2025-26 stood at Rs 38,934 crore. The ministry clarified that data for the current financial year (2026-27) is not yet available.

Among public sector banks, State Bank of India (SBI) remained the largest education loan lender, with disbursals increasing from Rs 11,072 crore in FY 2024 - 25 to Rs 13,370 crore in FY 2025-26 (provisional).

It was followed by Union Bank of India (Rs 4,778 crore; Rs 4,274 crore), Canara Bank (Rs 4,332 crore; Rs 4,306 crore), Bank of Baroda (Rs 2,860 crore; Rs 2,871 crore), Punjab National Bank (Rs 1,756 crore; Rs 1,761 crore) and Central Bank of India (Rs 1,634 crore; Rs 1,662 crore).

Among private sector banks, ICICI Bank disbursed Rs 4,621 crore in FY 2024-25 and Rs 3,775 crore in FY 2025-26, followed by IDFC First Bank (Rs 3,216 crore; Rs 961 crore) and Axis Bank (Rs 1,888 crore; Rs 1,795 crore).

HDFC Bank's education loan disbursals stood at Rs 161 crore and Rs 198 crore, while City Union Bank reported a sharp increase from Rs 34 crore to Rs 139 crore over the two years.

Among other lenders, Shinhan Bank disbursed Rs 103 crore in FY 2024-25 and Rs 269 crore in FY 2025-26. Small finance banks together accounted for a negligible share of education loans, with only a handful reporting disbursals during the two years.