Credit Guarantee Fund Scheme for Education Loans (CGFSEL)


The Credit Guarantee Fund Scheme for Education Loans (CGFSEL) facilitates access to higher education by offering loan guarantees to banks, reducing financial barriers for students, promoting skill development, and supporting educational institutions, thus fostering socioeconomic growth.

Although studying abroad can be exceptionally pocket-friendly in some countries like Germany or Ireland, most desirable study abroad destinations for many aspiring students require a hefty amount of money. Students can opt for education loans but the process of getting approved is a bit of a hassle. As the title suggests, in today’s blog we will discuss everything CGFSEL (Credit Guarantee Fund Scheme for Education Loan) that solves the major problem of many students by providing them with easily accessible loans for education. Keep on reading to know more.


The Credit Guarantee Fund Scheme for Education Loans (CGFSEL) was introduced by the Ministry of Human Resource Development (MHRD) in 2009 and started effectively in 2015. The scheme provides credit guarantee cover on the default of an educational loan taken by students from scheduled banks or financial institutions that are registered under the scheme.

NameCGFSEL (Credit Guarantee Fund Scheme for Education Loan)
Provider Ministry of Human Resource Development
Maximum Loan AmountUp to 7.5 Lakhs without any collateral 
Interest Rate Maximum 2% per annum


Full Form of CGFSEL

The full form of CGFSEL is Credit Guarantee Fund Scheme for Education Loan. The CGFSEL ensures that students from every section of society can access education loans without providing any collateral assets. This has helped many financially disadvantaged students fulfill their aspirations of pursuing higher studies and improving their job prospects.

It is a scheme designed to provide guarantee cover to education loans extended by banks to students for pursuing higher education in India and is administered by the Credit Guarantee Fund Trust for Education Loans (CGFTEL).

Eligibility Criteria for CGFSEL

The eligibility criteria for CGFSEL are pretty simple and straightforward, have a look at them below:

  • You should belong to the Economically Weaker Section (EWS) category.
  • You should be admitted to any of the Universities in India or Abroad 
  • As an applicant, you should be enrolled in a full-time degree
  • The total income of your family per annum should not be more than INR 4.5 lakh. 
  • If the interest rate is above 2%, then that education loan will not fall under the mandate of the CGFSEL scheme.
  • The applicant must be creditworthy.

Documents Required

These are the few documents that will come in handy while opting for a Credit Guarantee Fund Scheme for Education Loan:

  • Documental proof of identity and address like Aadhar or Voter ID Card
  • Proof of income
  • EWS certificate
  • Proof of admission and course details like an offer letter 
  • Mark sheets and certificates of previous academic qualifications
  • Bank account details for KYC 
  • Birth Certificate 

Also Read-  Education Loans by the Government of India

How to get a Credit Guarantee Fund Scheme for Education Loan?

Here is a simple guide that you can follow for getting a CGFSEL approved and make this process a bit hassle-free:

  • You should approach a Member Lending Institution (MLI) that is registered with NCGTC (National Credit Guarantee Trust Company) under CGFSEL. A list of registered MLIs can be found on the NCGTC website.
  • You should fill up the loan application form and submit it along with the required documents to the MLI.
  • The MLI will verify the documents and assess your eligibility and creditworthiness 
  • If approved, the MLI will sanction and disburse the loan amount as per the terms and conditions agreed upon.
  • The MLI will also submit an online application to NCGTC for availing guarantee cover under CGFSEL within 30 days of loan disbursement.
  • NCGTC will issue a guarantee approval letter to the MLI after verifying the details and collecting the guarantee fee from the MLI.

Also Read- Education Loans for Abroad Studies in 2023

Benefits of CGFSEL

Here are some of the key benefits of opting for the Credit Guarantee Fund Scheme for Education Loans (CGFSEL):

  • The Credit Guarantee Fund Scheme for Education Loans (CGFSEL) provides collateral-free loans to students who wish to pursue higher education.
  • This reduces the financial burden by providing loans that cover tuition fees, accommodation fees, travel expenses and other related expenses.
  • CGFSEL encourages banks and financial institutions in India to lend more towards education loans. This is because these institutions are protected against defaults under the scheme’s credit guarantee fund.
  • It offers a low-interest rate of a maximum of 2% 
  • Lastly, the ease of accessibility and getting approved is high when opting for Credit Guarantee Fund Scheme for Education Loans.

FAQs on Credit Guarantee Fund Scheme for Education Loan

What is the maximum loan limit under CGFSEL?

The maximum loan limit under CGFSEL is INR 7,50,000 without any collateral.

What are the repayment period and moratorium period under CGFSEL?

The repayment period under CGFSEL is up to 15 years after the completion of the course or one year after getting a job, whichever is earlier. The moratorium period is the course duration plus one year or six months after getting a job, whichever is earlier.

What are the charges and fees under CGFSEL?

The charges and fees under CGFSEL include a one-time guarantee fee of 0.5 % of the loan amount and an annual service fee of 0.5% of the outstanding loan amount. There are no other hidden charges or fees. 

What is full form of CGFSEL?

Credit Guarantee Fund Scheme for Education Loan is the full form of CGFSEL. The scheme helps students who may not have sufficient collateral or guarantors to secure a loan by providing a guarantee to the lending institutions.

What are the benefits of CGFSEL?

The Credit Guarantee Fund Scheme for Education Loans plays a vital role in promoting inclusive and equitable access to higher education, fostering skill development, and contributing to socioeconomic development.

This was everything related to Credit Guarantee Fund Scheme for Education Loan (CGFSEL). Reach out to Fly Finance for all finance-related concerns to simplify your study abroad experience with zero hindrances.

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