Education Loan Restructure: Check All Major Details Here

education loan restructure
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A financial crunch or crisis can hit you uninvited at any point in time. Unprecedented situations like job loss, economic recession, pandemic etc usually create financial crisis and mismanagement. In such situations, Loan restructuring helps you manage your loan repayment without harming your credit score.

Education Loan Restructuring is a method used by lenders and borrowers to avoid payment default on ongoing loans by negotiating low-interest rates. Loan restructuring helps both borrowers and banks/lenders to run a smooth repayment process and avoid declaring NPA or any legal obligations. Let’s understand the process of loan restructuring and how it is beneficial for study abroad education loans. 

Also Read: Facing financial distress due to high-interest rates? Check all the information on Education Loan Refinancing and get a balance transfer for the loan.

What is Education Loan Restructure?

Education loan restructuring is a process through which you can avoid payment defaults in a financial crisis by negotiating with the bank for low-interest rates or a moratorium period. If you have made your payments timely towards your loan and there is no record of any delay of more than 30 days then you can apply for loan restructuring. Always try to pay your loan on time as the Education Loan Default can create trouble for you.

  • Loan Restructuring is a good alternative to insolvency as your credit history will also be clean and the loan will be closed properly on time.
  • As per the loan restructuring guidelines provided by the RBI, the borrowers have the option to ask for a moratorium period from the bank or EMI suspension for a few months. 
  • You can also ask the bank to reduce the EMI amount by increasing the repayment period so that you can make timely payments every month. 
  • Any borrower who has maintained regular EMI payments against their education loan can apply for the Loan Restructuring Scheme as per RBI’s guidelines.

Benefits of Loan Restructuring

Education loan restructuring is very helpful, especially in case of financial emergencies. One of the most relevant examples of this is the Covid-19 pandemic. A lot of people lost their jobs and the expenses increased due to the cost of medicines and hospitalisation expenses. At the time, the RBI directed the banks to provide moratorium options for loans and credit card bills to the customers. Check some of the major benefits of education loan restructuring below:

  • Loan restructuring is a Win-Win situation for both the lender and borrower as it saves the account from being declared as SSA or NPA and helps to avoid insolvency. Also, it won’t hamper the credit history of the borrower.
  • You will not be defaulting on payments due to loan restructuring and this will prevent your credit record from any kind of negative impact.
  • You will get sufficient time to recover from financial burdens as through loan restructuring you can get a moratorium on your loan for a few months. 
  • The bank will offer a longer repayment period that will help you get your monthly EMI amount reduced so that you can continue making timely repayments.  

Also Read: Planning to foreclose your education loan? Check all details regarding Early Repayment Charges on Education Loan here.

How to Apply Online for Loan Restructuring?

The online application process for education loan restructuring depends on the bank. Some of the private banks like IDFC First Bank, ICICI Bank, Axis Bank etc provide the facility to apply for education loan restructuring through online mode. It is suggested that you should first visit the branch and communicate with the nodal officer/manager so that you can explain or situation properly. This will help you get quick approval for loan restructuring. In case your bank provides an online application facility, then apply for the same and follow the instructions mentioned below:

  • Visit the official website of your bank.
  • Go to the loan section and click on the ‘apply now’ button after checking all the terms and conditions.
  • Fill out the application form and submit the supporting documents.
  • Wait for the approval by the bank.

Note: Please be informed that the application process mentioned above is the general application process for loan-related applications. Contact your bank if you have any queries or issues regarding the loan restructuring. 

Important Guidelines for Education Loan Restructuring

It is very important to understand the terms and conditions while availing any kind of financial services. Education Loan Restructuring is an important and useful tool for managing loan repayment, especially in case of financial distress. However, loan structuring will only be provided if you have made payments without delay and the gap between payments is not exceeding 30 days. 

  • Loan restructuring may impact the credit score depending on factors like the time when you are applying for restructuring, delayed repayment period etc. 
  • Try to negotiate for a longer repayment period through which you will be able to reduce monthly EMI amounts.
  • Don’t make any payment delay because it may become a reason for rejection for loan restructuring.
  • You can apply and avail loan restructuring only once. So make sure that you need a loan restructuring and decide on a genuine point in time. 


What is loan restructuring?

Loan restructuring is a method used by borrowers to restructure their loans if they are unable to repay properly. The borrower can negotiate with the bank on reducing the interest rate or increasing the repayment period so that the monthly EMI amount can be reduced. 

Can I restructure my education loan?

Yes. You can apply for education loan restructuring from the bank if you have not defaulted on your payments and there is no delay of more than 30 days. 

Does loan restructuring impact credit score?

Loan restructuring may impact credit score but not in every case. If you have made any delay in EMI payments then it will affect your credit score. However, if you plan properly at which phase you shall apply for loan restructuring then it may not affect the credit score.

How to apply for education loan restructuring?

You can contact your bank whether they can restructure your loan. Some banks like ICICI Bank, IDFC First Bank etc provide the facility of applying through online mode. 

What are the guidelines of RBI on loan restructuring?

As per the guidelines provided by the Reserve Bank of India, the borrowers can opt for either a moratorium period or request to hold their EMI payments for a few months. The borrower can also request to increase the repayment period so that the monthly EMI amount can be reduced.

Education loan restructuring can help you during a time of financial crisis. Please note that you can apply for education loan restructuring only once. Always do proper research, understand the terms and conditions and then proceed with the application. 

To know more about the loan restructure, the best bank accounts for students, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience. a

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About Shekhar Suman

Shekhar is a versatile writer with a passion for sharing knowledge and creativity. With expertise in crafting informative blogs on study abroad and finance, Shekhar helps readers navigate the complexities of education and financial planning. Most of his writings blend the practicality of finance and the beauty of language, making a meaningful impact in both spheres. Beyond his professional pursuits, he finds solace in the writing Shayari.

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