Lesson 1 of 3 · 5 min
What the bank can ask for
Below ₹7.5 lakh the model scheme asks for no collateral; above it, the family home enters the conversation — and a parent signs alongside you either way.
An education loan is the one loan banks give mostly on a promise — your future income. How much security a bank asks for depends on the amount, and most public-sector banks follow the Indian Banks' Association model scheme, so the thresholds below are worth knowing before any branch conversation.
| Loan amount | What the bank asks for |
|---|---|
| Up to ₹4 lakh | No collateral and no margin — the bank funds the full cost, with a parent joining as co-borrower |
| ₹4 lakh to ₹7.5 lakh | Still no collateral where the government's credit guarantee scheme covers the loan; a margin applies above ₹4 lakh — 5% for study in India, 15% for study abroad |
| Above ₹7.5 lakh | Tangible collateral — typically property or deposits — plus the margin |
Match them up
Five words the branch conversation uses
Pick a term, then pick what it actually means.
Pick a term on the left.
Quick check
A bank asks for the family home as collateral against a ₹6 lakh education loan. Is that standard under the model scheme?
Check yourself
1 / 3
Kabir asks
Under the IBA model scheme, above what loan amount does a bank start asking for tangible collateral?
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