Credit Guarantee Fund Scheme for Education Loans (CGFEL)

Introduction of Credit Guarantee Fund Scheme for Education Loans (CGFEL): A Brief Insight

A student gets admission to a good college, but the family may struggle to arrange property as security for an education loan. Many families do not own a house or plot that they can pledge to the bank. The Credit Guarantee Fund Scheme for Education Loans (CGFEL) helps remove this barrier. Under this scheme, the Government of India provides a guarantee to banks, allowing them to offer eligible education loans of up to ₹7.5 lakh without collateral or a third-party guarantee.

The Government of India notified the scheme on 16 September 2015. It is also known as the PM-USP Credit Guarantee Fund Scheme for Education Loans. It is one of the two components of the Pradhan Mantri Uchchatar Shiksha Protsahan (PM-USP) scheme, the other being the central interest subsidy.

The Department of Higher Education, Ministry of Education, sponsors the scheme. The National Credit Guarantee Trustee Company Limited (NCGTC) manages the fund as its trustee. NCGTC is a Government of India company.

The scheme aims to help banks provide education loans to students who have the ability to pursue higher education but cannot offer property as security. It ensures that a lack of family assets does not become a barrier to higher education. The scheme follows the Model Educational Loan Scheme of the Indian Banks’ Association.

Under CGFEL, the fund covers 75% of the amount in default. The bank pays the annual guarantee fee of 0.50% from its own funds and cannot charge it to the student. The interest rate on a covered loan cannot exceed 2% above the bank’s benchmark rate.

Students can use the loan for eligible courses in India or abroad. No margin is required for loans up to ₹4 lakh. For loans above ₹4 lakh, the margin is 5% for studies in India and 15% for studies abroad. The repayment moratorium covers the course duration plus one year.

An Indian student who meets the conditions of the Indian Banks’ Association scheme can apply for the loan with a parent or guardian as the co-borrower. From the scheme’s launch in 2015 up to 21 July 2026, NCGTC had issued 14,65,880 credit guarantees worth ₹59,843.74 crore.

Students do not need to apply directly to NCGTC. They must apply for an education loan through a bank or the PM Vidyalaxmi portal. The bank then approaches NCGTC for the credit guarantee.

For assistance, students can contact their bank manager or write to the NCGTC helpdesk in Mumbai. The contact address, email and phone numbers are provided in the contact section below.

Students planning to study at selected higher educational institutions can also explore the PM Vidyalaxmi Scheme, which offers collateral-free education loans and interest subvention. Graduates who plan to start their own businesses can learn about the Credit Guarantee Scheme for Startups.

Women and Scheduled Caste and Scheduled Tribe entrepreneurs can explore the Credit Guarantee Scheme for Stand Up India (CGSSI). Small business owners can also check the Credit Guarantee Fund for Micro Units (CGFMU) and the Credit Guarantee Scheme for Micro and Small Enterprises (CGTMSE).

Students, parents, graduates, young entrepreneurs and others looking for education, loan and credit guarantee schemes offered by the Central Government can explore the available programmes on our Central Government Welfare Schemes List page.

Benefits Provided to Eligible Beneficiaries

Many students secure admission to good colleges but struggle to arrange property as security for an education loan. The Credit Guarantee Fund Scheme for Education Loans (CGFEL) addresses this problem by providing guarantee support to banks. It allows eligible banks to offer education loans of up to ₹7.5 lakh without collateral or a third-party guarantee. The benefits below are based on the scheme document and relevant Press Information Bureau releases from the Ministry of Education.

Benefits for Students and Their Families

• Education loans of up to ₹7.5 lakh without collateral or a third-party guarantee, when covered under the scheme
• Loan facility for eligible higher education courses in India and abroad under the Indian Banks’ Association Model Educational Loan Scheme
• Zero margin contribution on loans of up to ₹4 lakh
• Interest rate capped at 2% above the bank’s benchmark rate
• Moratorium period covering the course duration plus one year before repayment begins
• Optional payment of interest during the study period and moratorium
• No guarantee fee charged to the student, as the bank pays the annual fee of 0.50%

Benefits for Banks

• Guarantee coverage of 75% of the amount in default, reducing the lender’s risk
• Coverage remains active for the entire loan tenure, subject to the scheme conditions
• Payment of 75% of an eligible claim within 30 days, with interest payable by the fund for delays beyond this period
• The bank retains its right to recover the outstanding loan amount from the borrower and co-borrower
• Quarterly submission of guarantee applications for loans disbursed during the relevant period

CGFEL Coverage at a Glance

Example of Guarantee Coverage

Suppose a student takes an education loan of ₹5 lakh and later defaults when the outstanding amount, including interest, reaches ₹4 lakh. The scheme provides 75% guarantee coverage on the amount in default, which comes to ₹3 lakh.

The fund initially pays 75% of the eligible claim amount, equal to ₹2.25 lakh, within 30 days of receiving a valid claim. The remaining amount is paid after the bank completes the required recovery process. The bank can still recover the full outstanding amount from the borrower.

CGFEL vs Interest Subsidy vs PM Vidyalaxmi

Coverage and Progress of the Scheme

• Between 2015 and 21 July 2026, NCGTC issued 14,65,880 credit guarantees worth ₹59,843.74 crore, according to the Minister of State for Education’s statement in the Lok Sabha.
• CGFEL is one of the two components of the Pradhan Mantri Uchchatar Shiksha Protsahan scheme under the Department of Higher Education. The other component provides interest subsidy to eligible students.

How the Bank Receives a Guarantee Claim

• The bank can submit a claim after completing the 12-month lock-in period, counted from the end of the moratorium or the start of guarantee coverage, whichever is later.
• The bank must file the claim within 1 year of the loan account becoming non-performing and initiate recovery proceedings under the applicable law.
• The fund initially pays 75% of the eligible claim within 30 days. It releases the remaining 25% after the bank certifies that all recovery options have been exhausted.
• Any amount recovered later is shared between the fund and the bank in the ratio of 75:25.

How CGFEL Helps Students

• Access higher education without pledging family property as security for an eligible loan
• Start loan repayment after completing the course and the applicable moratorium period
• Build a credit history through regular loan repayment
• Avoid margin contribution on education loans of up to ₹4 lakh

Good to Know

• The guarantee protects the bank, not the borrower. The bank still assesses the student’s course, admission and financial documents before approving the loan.
• The scheme covers loans of up to ₹7.5 lakh. For a higher loan amount, the bank may require collateral for the amount beyond the eligible limit.
• The guarantee does not waive the student’s repayment obligation. The bank can recover the full outstanding amount from the student and co-borrower even after receiving a claim payment.
• Interest may continue to accumulate during the moratorium if you do not pay it, increasing the total amount due when repayment begins.
• Never pay an agent to arrange an education loan.

Eligibility Conditions Required to be Fulfilled

The Credit Guarantee Fund Scheme for Education Loans (CGFEL) provides guarantee support for eligible education loans issued by banks. To qualify, the student, loan and lending bank must meet the scheme’s conditions. The following eligibility requirements are based on the CGFEL scheme document, effective from 16 September 2015, and relevant Press Information Bureau releases from the Ministry of Education.

Who Can Borrow

• New or existing borrowers of Indian nationality who meet the Indian Banks’ Association Model Educational Loan Scheme conditions
• Students admitted to a higher education course in India or abroad through an entrance examination or merit-based selection
• Students who sign the education loan documents with the bank along with a co-borrower, generally a parent or guardian. For married students, the spouse, parents or parents-in-law may act as co-borrowers.
• No specific family income limit applies under the scheme.

The Loan That Gets the Guarantee

• Education loans of up to ₹7.5 lakh
• Loans sanctioned without collateral and third-party guarantee
• Loans sanctioned under the Indian Banks’ Association Model Educational Loan Scheme on or after 16 September 2015
• Interest rate not exceeding 2% above the bank’s benchmark rate, such as its repo-linked lending rate, as per the applicable Reserve Bank of India rules
• Guarantee coverage of up to 75% of the amount in default
• Margin contribution of nil for loans up to ₹4 lakh, 5% for courses in India and 15% for courses abroad on loans above ₹4 lakh

Conditions on Your Account

• The loan account must have no overdue amount and must not be classified as a non-performing asset when the guarantee fee becomes due.
• The loan must be used for the approved educational purpose and not to settle an existing bad debt.
• The bank must ensure that the loan is non-dischargeable, meaning the repayment obligation continues even if the borrower is declared insolvent.
• The bank must link the loan with the borrower’s Aadhaar number and register the borrower and co-borrower with a credit information bureau.

Who Is Not Eligible

• Education loans exceeding ₹7.5 lakh, for the amount beyond the scheme limit
• Loans sanctioned against collateral or a third-party guarantee
• Loans carrying an interest rate above 2% over the bank’s benchmark rate
• Loans already covered by the Government, an insurer or another guarantor, to the extent of the existing coverage
• Loans that violate applicable laws or the rules of the Central Government or Reserve Bank of India
• Loans with accounts that are overdue or classified as non-performing when the bank applies for guarantee coverage
• Courses or institutions excluded by the fund from guarantee coverage

Which Banks Can Use the Guarantee

• Public sector banks, private sector banks and foreign banks that are members of the Indian Banks’ Association
• Co-operative banks, other financial institutions and non-banking financial companies may be included by the fund after reviewing their performance, as stated in the scheme document.
• The bank must sign an agreement with the National Credit Guarantee Trustee Company Limited (NCGTC) and obtain its approval for guarantee coverage.
• The bank must follow normal banking practices, monitor the loan account and continue recovery efforts even after receiving a guarantee claim.
• The bank must submit guarantee applications for loans disbursed during a quarter before the end of the following quarter.

If You Study at a PM Vidyalaxmi Institution

• Students admitted on merit to a Quality Higher Educational Institution covered under PM Vidyalaxmi can receive 75% credit guarantee coverage on education loans of up to ₹7.5 lakh. The Press Information Bureau has reported that 1,425 institutions are covered under the scheme.
• Students admitted through the management quota or NRI quota are not eligible for this benefit. Foreign institutions and their Indian campuses are also excluded.
• Credit guarantee coverage and interest subvention under the scheme are available only once for an undergraduate, postgraduate or integrated course.
• Read our guide to the PM Vidyalaxmi Scheme for details about loans exceeding ₹7.5 lakh and interest subvention benefits.

Check Before You Apply

• Confirm that your course is a recognised higher education programme and keep your admission offer letter ready.
• Ensure that your loan amount does not exceed ₹7.5 lakh and arrange the co-borrower’s documents.
• Obtain the interest rate in writing from the bank and check that it does not exceed 2% above its benchmark rate.
• Confirm that the bank has an agreement with NCGTC and will seek guarantee coverage for your loan without requiring collateral.
• Do not pay any agent for an education loan.

Documents Required to be Attached

Under the Credit Guarantee Fund Scheme for Education Loans (CGFEL), also known as the PM-USP Credit Guarantee Fund Scheme for Education Loans, students apply for an education loan through a bank, not directly to the National Credit Guarantee Trustee Company Limited (NCGTC). The following documents may be required from the student and co-borrower, while the bank handles the guarantee-related paperwork.

Identity and KYC Papers of the Student

• Any one of the following: PAN Card, Voter ID Card, Aadhaar Card or driving licence
• Address proof: Voter ID Card, passport or utility bill
• Recent passport-size photographs
• Bank account details

Admission and Course Papers

• Admission or offer letter from the college or university in India or abroad
• Fee structure or course cost details for each year or semester
• Entrance examination result or merit list, wherever applicable
• Proof of recognition of the institution and higher education course

Academic Papers

• Marksheets and certificates of previous classes or degrees, such as Class 10, Class 12 and graduation
• Required entrance examination or English language test scorecards

Papers of the Co-Borrower

A parent or guardian generally acts as the co-borrower. For a married student, the spouse, parents or parents-in-law may act as the co-borrower.

• Aadhaar card and PAN card
• Address proof
• Income proof: Salary slips, Form 16, income tax returns or income certificate
• Bank statements, usually for the last six months
• Relationship proof: Birth certificate, school record or marriage certificate, as applicable

Money Papers and Margin

• For loans up to ₹4 lakh: No margin contribution
• For loans above ₹4 lakh: 5% margin for courses in India and 15% for courses abroad
• Fee payment receipts or scholarship letter, if applicable
• Family bank statements, if required by the bank

Extra Papers for Study Abroad

• Valid passport of the student
• Visa or proof of visa application, if required
• Foreign university offer letter with course fees in foreign currency

What You Do Not Need to Give

• Mortgage or collateral for an education loan of up to ₹7.5 lakh covered under the scheme
• Third-party guarantor, apart from the co-borrower
• Separate application form for NCGTC

What the Bank Files With NCGTC

• Agreement with NCGTC
• Quarterly application for guarantee coverage
• Guarantee fee of 0.50%, paid within 30 days of the demand note
• Annual guarantee fee renewal by 30 April
• Student account details, Aadhaar number and credit bureau information

Papers the Bank Files for a Claim

• Proof of the loan account becoming a non-performing asset (NPA)
• Loan recall notice
• Proof of recovery action initiated under the law
• Certificate confirming completion of recovery proceedings, for the remaining 25% of the claim
• Student and co-borrower repayment records

How Beneficiaries Can Apply to Avail the Benefit of this Scheme

You do not need to apply to the National Credit Guarantee Trustee Company Limited (NCGTC) to get the benefit of the Credit Guarantee Fund Scheme for Education Loans (CGFEL). You only need to apply for an education loan through a bank. If your loan meets the scheme’s conditions, the bank can ask NCGTC to provide a guarantee. Think of it this way: the bank lends you money for your studies, while the Government provides a guarantee to the bank. This assurance can help you get a loan without pledging property or arranging a third-party guarantor. Your job is to approach the bank with your admission details and required documents. You can follow any of the methods explained below. If you want to learn about education loans for students admitted to selected institutions, read our guide to the PM Vidyalaxmi Scheme.

Before You Start

Step 1: Get your admission letter from the college or university and make sure your course falls under higher education.

Step 2: Collect the fee structure for each year of your course to calculate how much money you need.

Step 3: Decide the loan amount you need, up to ₹7.5 lakh for the credit guarantee cover. Also, identify your co-borrower. This is usually a parent or guardian. For married students, the spouse, parents or parents-in-law may act as co-borrowers.

Step 4: Keep your documents and your co-borrower’s documents ready. These may include Aadhaar, PAN, marksheets, income proof and bank statements. You can check the documents section of this guide for the full list.

Method 1: Go to a Bank Branch

Step 1: Choose a branch of a public sector, private or foreign bank that is a member of the Indian Banks’ Association.

Step 2: Meet the education loan officer and explain that you want a loan to pay for your course.

Step 3: Get the bank’s education loan application form and fill in your details along with your co-borrower’s information.

Step 4: Submit the required documents and collect an acknowledgement or receipt from the bank.

Step 5: Ask the bank in writing whether it will cover your loan under the credit guarantee scheme, so you do not have to provide collateral or a third-party guarantor.

Step 6: Ask about the interest rate and check that it does not exceed 2% above the bank’s benchmark rate.

Step 7: Answer the bank’s questions and provide any additional information it needs to check your course, admission and documents.

Method 2: Use the PM Vidyalaxmi Portal

Step 1: Visit the PM Vidyalaxmi Portal using your phone or computer. The portal allows students to apply to banks for education loans through a common application process.

Step 2: Register on the portal using your Aadhaar details, as required.

Step 3: Fill in the common application form with your personal details, course information and required loan amount.

Step 4: Select the banks where you want to send your application. You can choose more than one bank through the same form.

Step 5: Upload the required documents and submit your application.

Step 6: Save your application number. You can use it to check the progress of your application on the portal.

Step 7: If a bank contacts you, visit its branch with your original documents and co-borrower. The bank will verify your details before making a decision.

Method 3: Use a Rural or Co-operative Bank on the Portal

Step 1: Read the Press Information Bureau release dated 27 July 2026, which provides information about public sector banks, private banks, regional rural banks and co-operative banks available on the portal.

Step 2: Check the bank list while filling out your application and select a bank near your home.

Step 3: Before proceeding, ask the bank whether it has signed an agreement with NCGTC to provide the credit guarantee. A bank can use the scheme’s guarantee only after completing the required agreement.

Method 4: If You Are Admitted to a PM Vidyalaxmi Institution

Step 1: Check whether your college or university appears on the list of Quality Higher Educational Institutions. According to the Press Information Bureau, 1,425 institutions are currently covered.

Step 2: Make sure you secured admission through merit. Students admitted under the management or NRI quota cannot get this benefit.

Step 3: Apply through the PM Vidyalaxmi Portal, following the steps explained in Method 2, and select the PM Vidyalaxmi loan.

Step 4: Remember that eligible loans of up to ₹7.5 lakh under this scheme also receive a 75% credit guarantee. You can use this benefit only once for an undergraduate, postgraduate or integrated course.

Method 5: If You Plan to Study Abroad

Step 1: Get your admission letter from the foreign university. It should also mention the course fees.

Step 2: Keep your passport ready. If the bank asks, also provide your visa or proof that you have applied for it.

Step 3: Visit a bank branch and follow the steps explained in Method 1. Clearly tell the bank that you need an education loan for studying abroad.

Step 4: Arrange the required margin money. For loans above ₹4 lakh, the margin is 15% for studies abroad. No margin is required for loans up to ₹4 lakh.

Method 6: Ask for the Interest Subsidy on the Same Portal

Step 1: Check whether your family’s annual income is up to ₹4.5 lakh and whether you are pursuing a technical or professional course. If you meet the conditions, you may receive a full interest subsidy during the moratorium period.

Step 2: Check whether your family’s annual income is up to ₹8 lakh and whether your institution comes under PM Vidyalaxmi. If you meet the conditions, you may receive a 3% interest subvention.

Step 3: After the bank sanctions and disburses your loan, apply for the eligible interest subsidy through the PM Vidyalaxmi portal.

Step 4: If you receive a message to install the Digital Rupee app, follow the instructions and set up your wallet. The Government sends the subsidy to this wallet through the app.

What Happens at the Bank

Step 1: The bank checks your admission, course details and documents, along with the papers of your co-borrower.

Step 2: If your application meets the bank’s requirements, it sanctions your education loan.

Step 3: If the bank covers your loan under the scheme, it can provide the loan without asking you to pledge property or arrange a third-party guarantor.

Step 4: Read all loan documents carefully before signing. Keep copies of every document signed by you and your co-borrower.

Step 5: The bank generally transfers the loan amount directly to your college or university to pay your course fees.

What the Bank Does With NCGTC

You do not need to complete these steps yourself. The bank handles the process with NCGTC, but knowing how it works can help you understand the guarantee.

Step 1: The bank must sign an agreement with NCGTC before it can claim the credit guarantee.

Step 2: The bank submits applications for cover for the loans it disbursed during a quarter, within the prescribed period for the following quarter.

Step 3: The bank pays the 0.50% guarantee fee from its own funds within 30 days of receiving the demand note. The cover then begins as per the scheme rules.

Step 4: The bank also pays the annual renewal fee by 30 April each year, based on the outstanding loan amount.

After You Get the Loan

Step 1: Use the loan amount only for education-related expenses, such as college fees, books and hostel charges.

Step 2: You get a moratorium period covering your course duration plus one year. You can also pay the interest during this period if you want to reduce the amount you owe later.

Step 3: Start repaying the loan when the moratorium period ends. Remember, the credit guarantee protects the bank against a part of the default; it does not cancel your loan.

Step 4: If you face any difficulty in making repayments, contact your bank early instead of waiting for your account to become overdue.

If the Bank Says No

Step 1: Ask the bank to explain its decision in writing. It may reject your application if your course, admission or documents do not meet its requirements.

Step 2: Correct the problem, such as submitting a missing document or providing the required information, and apply again.

Step 3: You can also approach another bank. The portal allows you to send your application to more than one bank.

Step 4: If you believe the bank has treated you unfairly, use the grievance facility on the portal to raise your complaint and track its progress.

If You Need Help

Step 1: Contact your bank manager or education loan officer first. They can explain the loan process and the documents you need to submit.

Step 2: Visit the NCGTC website’s CGFEL scheme page for scheme details. If you need further clarification about the guarantee, contact NCGTC through the email address provided on its official contact page.

Important: You cannot apply directly to NCGTC for the credit guarantee, and no agent can arrange it for you. You must apply for an education loan through a bank, which decides whether to approve your application. The guarantee is an arrangement between the bank and NCGTC. The bank also pays the guarantee fee from its own funds, so you should not pay anyone to obtain this benefit.

Important Links Available of the Scheme

• CGFEL Official Guidelines, ₹7.5 Lakh Collateral-Free Education Loan and 75% Credit Guarantee Cover, NCGTC
• PM Vidyalaxmi Portal and Education Loan Credit Guarantee Updates, Ministry of Education, Press Information Bureau
• Cabinet Approval of PM Vidyalaxmi and 75% Credit Guarantee for Education Loans up to ₹7.5 Lakh, Press Information Bureau
• PM Vidyalaxmi Scheme Backgrounder, Interest Benefits, Eligible Institutions and Application Process, Press Information Bureau
• PM Vidyalaxmi Portal, Apply Online for Education Loans and Interest Benefits
• NCGTC Contact Details for CGFEL Queries and Assistance

Contact Details in Case of Help Needed

• Office: National Credit Guarantee Trustee Company Limited (NCGTC), 1410, 14th Floor, Parinee Crescenzo, Plot No. C-38 and C-39, G-Block, Bandra Kurla Complex, Bandra East, Mumbai, Maharashtra – 400051
• CGFEL Helpdesk Email: cgfel@ncgtc.in
• CGFEL Helpdesk Phone: 022-69035614 and 022-69035606
• Board Number: 022-69035600
• General Email: info@ncgtc.in
• Grievance Email: grievance@ncgtc.in
• Your Bank: The manager of the bank branch, or the education loan officer, where you apply, who decides on your loan and who asks NCGTC for the guarantee

Frequently Asked Questions (FAQs)

Tabassum

Tabassum is a government schemes researcher and writer with 5 years of experience tracking Central and State welfare scheme programmes across India. She has covered 500+ schemes spanning agriculture, women welfare, education, and housing, helping lakhs of beneficiaries understand their entitlements in simple language.