Written By : Abhishek Kumar Ranjan (An alumnus of IIM)

Major reforms announced by the state government in September 2025 have made interest-free education loans available to Bihar students who pass their Class 12 exams.  Everything students and families need to know about the new interest-free education loan program is covered in this in-depth article, including eligibility, benefits, repayment terms, and the effect on aspirations for higher education.

What Is an Interest-free Education Loan?

A financial product known as an interest-free education loan allows students to borrow funds for further education without having to pay interest, significantly lowering their future financial burden.  To encourage aspirations for higher education, the Bihar government has made student credit card loans entirely interest-free for all applicants who have completed Class 12.

Why Did Bihar Make Education Loans Interest-Free?

Why did the Bihar government declare student education loans to be interest-free?  The goal of this reform is to remove financial barriers for thousands of students who aspire to attend college or university, in direct response to calls for more affordable higher education.  In the past, the interest rate on education loans was 1% for women, people with disabilities, and transgender applicants, and 4% for general male applicants.  The goal of switching to interest-free loans is to empower all qualified students, irrespective of their circumstances.

Who Is Eligible for Interest-free Education Loans?

Are you unsure if you are eligible for the interest-free education loan offered by Bihar?  Any student in Bihar who has passed the Class 12 board exams is eligible to apply under the Student Credit Card Scheme, provided by the state government’s Saat Nischay Yojana.  With this facility, applicants can pursue higher education at reputable universities inside and outside of Bihar.

How Much Can Students Borrow Under the Scheme?

What is the student loan cap?  Students can borrow up to ₹4 lakh under the interest-free education loan program to pay for tuition and other associated educational costs.  Undergraduate, graduate, technical, vocational, and even professional courses are all subject to this cap, which makes the program flexible and available for a range of educational pathways.

What Are the New Repayment Rules?

What changes have been made to the interest-free education loan repayment periods?  To make repayments easier for all students, the Bihar government has changed the repayment periods:

•  The repayment period for loans up to ₹2 lakh has been extended from 60 monthly installments over five years to 84 monthly installments over seven years.
•  Repayment terms for loans over ₹2 lakh have been extended from 84 monthly installments over 7 years to a maximum of 120 monthly installments over 10 years.

What Is the Application Process for Bihar’s Interest-free Education Loan?

How does the interest-free education loan application process work?  The official Bihar Student Credit Card Scheme portal is used to submit the application.  Students must present documentation attesting to their identity, Class 12 qualification, and acceptance into an accredited college or university.

Required Documents Include:

• Class 12 marksheet and certificate
• Aadhaar card or other valid ID
• Proof of admission to a recognised institution
• Residential proof (domicile of Bihar)

What Educational Courses Are Covered?

Which courses are available to students who are eligible for interest-free education loans?  The program includes courses in India and overseas, if approved by accredited institutions, as well as the majority of recognized degree and diploma programs, such as engineering, medicine, management, vocational, and general studies.

How Does the Scheme Benefit Students and Families?

What makes interest-free student loans so revolutionary?  The program promotes inclusive access to higher education by relieving families of the burden of high-interest debts and providing equal support to boys and girls.  After graduation, the financial strain is further reduced by the longer repayment period.

Has the Scheme Covered All Categories of Applicants?

Does “interest free education loan” apply to everyone?  Yes, the new policy eliminated previous interest rate distinctions, so applicants who are general, female, disabled, or transgender now enjoy equal benefits.

What Is the History of Bihar’s Student Credit Card Scheme?

When did Bihar begin offering interest-free student loans?  Under the “Saat Nischay Yojana” (Seven Resolves Mission), the Student Credit Card Scheme got underway in October 2016.  The policy became more inclusive and ambitious as it progressed from concessional interest rates to full interest waiver in September 2025.

What Impact Could This Reform Have on Higher Education in Bihar?

Will more people enroll in college if they have interest-free education loans?  By eliminating a significant obstacle—interest costs—the action is anticipated to significantly increase the number of students pursuing higher education.  For Bihar, more college graduates translate into more skilled workers, better job opportunities, and higher living standards.

Are Interest-free Education Loans Available in Other States?

What is the difference between the schemes in Bihar and other regions?  While many Indian states provide benefits for student loans, Bihar is unique in that it offers interest-free education loans and significantly longer repayment terms.

What Are the Steps After Getting an Interest-free Education Loan?

What occurs when students get their loans?  Students can use the interest-free education loan for travel, books, tuition, housing, and other associated costs after it is disbursed.  Repayment starts on the extended and student-friendly schedule after they finish their studies.

Are There Any Risks or Cautions Associated With Interest-free Education Loans?

What should families be aware of?  Students should only borrow what they need and make sure they comprehend the repayment schedule, even though interest-free education loans eliminate interest costs.  Future credit scores may be impacted by late repayments.

How Can Parents Support Students With the Loan Application?

Does parental participation affect one’s eligibility for interest-free student loans?  Of course.  In order to prevent delays or rejection, parents should assist students in organizing their documentation in advance, mentor them on loan responsibility, and make sure that all application information is correct.

Are Scholarships Available Alongside Interest-free Education Loans?

Is it possible to combine the loan with scholarships?  Yes, even if a student takes out an interest-free education loan, they are still encouraged to apply for grants and scholarships from state or federal programs.  This lessens the total financial burden and the amount borrowed.

How Has Public Response Been to The Interest-free Education Loan Scheme?

What are the opinions of educators and students regarding the plan?  The Bihar educational community has responded very favorably to the new opportunity, with teachers and families applauding it.  Many think the policy will encourage more students to pursue higher education and improve the state’s educational standing.

What Future Changes Could Students Expect in The Scheme?

Is it likely that the interest-free education loan program will grow?  The program is anticipated to expand its course offerings, raise financial caps, and potentially offer comparable benefits to other states in the future due to its widespread use and influence.

Why Is This Reform Creating Curiosity and Aspirations?

How can an interest-free education loan spark creativity and aspirations?  The program embodies empowerment and hope by enabling everyone, particularly those from low-income families, to pursue higher education.  With interest-free financial aid, thousands of Class 12 students now view college as a reality rather than just a pipe dream.

Major Strengths of the Scheme – Feedback From IIM Alumnus

• Families can save thousands of rupees by making education loans interest-free, which will encourage more students to pursue higher education beyond Class 12 without worrying about accruing unmanageable debt.
•  Social inclusivity and widespread empowerment are promoted by the policy, which grants equal treatment to all groups of students, including general, female, differently-abled, and transgender students.
•  Extended Repayment Window: Graduates have enough time to manage their finances and find employment before loan repayments become a burden thanks to the longer repayment period, which is up to ten years.
•  Potential to Increase Enrollment Ratio: The program is expected to increase Bihar’s currently low Gross Enrollment Ratio (GER) in higher education and assist the state in meeting national educational goals by reducing entry barriers.