Short answer: Most medical students in India fund MBBS, BDS or MD/MS fees with an education loan from a bank or NBFC, usually with a parent as co-borrower. Loans up to about ₹7.5 lakh are often collateral-free; larger amounts typically need property or deposits as security. Repayment normally starts after the course plus a moratorium, and interest paid can be deducted under Section 129 of the Income-tax Act, 2025 if you file under the old regime.
Last updated: 13 October 2026.
Medical education is long and, at private and deemed colleges, expensive. This guide explains the loan options for each stage — MBBS, postgraduate residency and study abroad — and how to estimate what you will actually repay.
How much funding do medical students need?
Costs vary widely. Government medical colleges charge relatively low fees, while private and deemed universities can charge many lakhs a year, plus hostel, mess, books and equipment. Postgraduate (MD/MS/DNB) seats at private institutions can also be costly, though residents earn a stipend. Studying abroad adds travel, living costs and exam fees for the licensing test you must pass to practise in India.
Before choosing a loan, write down the full five-and-a-half-year cost (MBBS plus internship) year by year. Lenders disburse in instalments against fee demands, so a year-wise budget also tells you when interest will start building.
Your funding options
| Option | Best for | Watch out for |
|---|---|---|
| Bank education loan | MBBS/BDS/PG fees in India or abroad | Collateral for larger amounts; paperwork; disbursal direct to college |
| NBFC education loan | Faster processing, abroad admissions, gaps in bank funding | Usually higher interest rates; check the Key Facts Statement |
| PM-Vidyalaxmi scheme | Students admitted to listed quality institutions | Applies only to eligible institutions; benefits depend on family income |
| Scholarships and state schemes | Merit and need-based support | Deadlines and renewal conditions |
| Personal loan (short-term) | Small gaps like a laptop or equipment | Much costlier than an education loan; shorter tenure |
| Doctor loan (after qualification) | Clinic set-up, equipment, PG costs once earning | Requires registration and income proof |
Bank and NBFC education loans
Education loans cover tuition, hostel, exam and library fees, books, equipment such as a laptop, and travel for study abroad. The student is the main borrower and a parent, guardian or spouse is the co-borrower. Lenders look at the admission letter, the institution’s standing, the course’s employability and the co-borrower’s income and CIBIL report.
Many banks do not ask for collateral on loans up to ₹7.5 lakh; above that, they usually want property, fixed deposits or other security. Interest rates are typically floating and linked to the lender’s benchmark. Some public sector banks offer a small concession to girl students or when interest is serviced during the course. Our education loan guide explains general eligibility and documents.
PM-Vidyalaxmi
The Union Cabinet approved PM-Vidyalaxmi in November 2024 for students admitted to listed Quality Higher Educational Institutions. Eligible loans are collateral-free and guarantor-free (a parent joins as co-borrower). The government provides a 75% credit guarantee on loans up to ₹7.5 lakh, and an interest subvention of 3% during the moratorium for a limited number of students with family income up to ₹8 lakh a year. Applications go through the unified PM-Vidyalaxmi portal. Our government loan schemes hub lists other schemes.
Loans for studying medicine abroad
Banks and NBFCs fund MBBS abroad, but they check whether the university and course meet National Medical Commission (NMC) requirements for practising in India later. Budget for currency movements, as fees are often in dollars or euros. Loans above the collateral-free limit almost always need security for abroad studies.
Moratorium and repayment: what to expect
Education loans usually come with a moratorium: no EMI during the course and for a period after it (commonly up to a year, or until you get a job, whichever is earlier). Interest still accrues during this period. If it is not paid, it is added to the loan, so your EMI starts on a bigger balance.
Repayment periods are long — often up to 10–15 years — to match early-career earnings. For doctors, the first earning years may be a residency with a stipend, so plan EMIs around realistic income, not the eventual specialist salary.
Worked example: ₹20 lakh for MBBS
Assume a loan of ₹20 lakh disbursed year by year at 10% a year, with repayment over 10 years after the moratorium.
| Scenario | Balance when EMIs start | Monthly EMI (10 years) |
|---|---|---|
| Family pays interest during the course | ₹20,00,000 | about ₹26,430 |
| Interest not paid; about ₹4 lakh accrues and is added | ₹24,00,000 | about ₹31,716 |
Paying even simple interest during the course saves about ₹5,300 a month for ten years. Try your own numbers on our EMI calculator; it also shows how interest falls as you repay, explained in why EMIs are front-loaded with interest.
Tax benefit on education loan interest
Under Section 129 of the Income-tax Act, 2025 (previously Section 80E of the 1961 Act), an individual can deduct the entire interest paid on a loan for higher education of self, spouse, children or a student for whom they are legal guardian. There is no rupee cap. The deduction is available in the year interest payments begin and the next seven tax years.
Two conditions matter: the loan must be from a bank, a notified financial institution or an approved charitable institution, and the deduction is available only if you choose the old tax regime. The new regime, which is the default, does not allow it. Only interest qualifies, not principal. The parent who repays as co-borrower can claim it if they pay from taxable income. See our income tax hub for regime choices.
Eligibility and documents
- Indian national with confirmed admission (NEET-based counselling allotment or admission letter).
- Co-borrower with income proof: salary slips and Form 16, or ITRs for the self-employed.
- KYC of student and co-borrower: PAN, Aadhaar, address proof.
- Fee structure from the college, marksheets and NEET scorecard.
- Collateral documents for larger loans (property papers, valuation, FD receipts).
- For abroad: passport, visa, university offer letter and cost estimate.
A co-borrower with a weak credit history can slow approval. Check the report early and fix errors using our CIBIL dispute guide.
After graduation: loans for young doctors
Once registered, doctors can borrow for clinic set-up, equipment or PG expenses through professional loans. See our guides on doctor loans and medical equipment loans. Keep total EMIs within a comfortable share of take-home pay; our FOIR eligibility calculator shows how lenders measure this.
Tips to keep the cost down
- Apply for scholarships and state schemes first, then borrow only the gap.
- Compare at least three lenders using the APR in each Key Facts Statement, not just the headline rate.
- Pay interest during the course if the family can afford it.
- Prepay when stipend or salary allows; floating-rate loans to individuals generally carry no foreclosure charges at banks.
- Buy term insurance for the student-borrower once earning, so a family co-borrower is not left with the debt.
Need a smaller loan for equipment, a laptop or relocation? Compare offers from RBI-regulated lenders on FundsTiger.
Frequently asked questions
Can I get an education loan for MBBS without collateral?
Many banks lend up to about ₹7.5 lakh without collateral, and PM-Vidyalaxmi loans for eligible institutions are collateral-free. Larger amounts usually need security.
When do I start repaying an MBBS education loan?
Usually after the course plus a moratorium period set by the lender. Interest accrues during the moratorium unless you pay it.
Is education loan interest tax-deductible in 2026?
Yes, under Section 129 of the Income-tax Act, 2025 (old Section 80E), for up to eight tax years, but only if you file under the old regime.
Can I get a loan for MBBS abroad?
Yes. Banks and NBFCs fund it if the university meets NMC norms and you meet their criteria. Collateral is usually required above the collateral-free limit.
Is a personal loan a good way to pay medical college fees?
Generally not for full fees, as personal loans cost more and have shorter tenures. They can help for small gaps such as equipment or relocation.
Sources
- Income Tax Department: Section 129, Income-tax Act, 2025
- Bank of Maharashtra: PM-Vidyalaxmi scheme details
Disclosure: FundsTiger (Gatimaan Finance Advisors Pvt. Ltd.) is a loan marketplace and lending service provider for RBI-regulated lenders. Aparampaar Finance Pvt. Ltd. (Omozing), one of those lenders, is a related party of FundsTiger. This article is general information, not financial advice. Read your loan agreement and KFS before you decide.