Education Loan Interest Rate

Last Updated 06th Apr 2020
Interest Rate 8.40% onwards
Minimum Tenure (excluding grace period) 5 years
Moratorium Period (after course completion) 1 years
Minimum Loan amount Rs. 50,000
Maximum Loan without collateral Rs. 4,00,000
Maximum Tenure 15 years
  • Check best offers starting @ 8.40 %*
  • Special discounts in rates for female borrowers.
  • Indian residents can get an education loan to study in India or abroad.
Why Personal Loan is better for Education?

Compare Student Loan Interest Rate

Bank Education Loan Interest Rates in India Education Loan Interest Rates in Abroad
Avanse DHFL Education Loan 11.50% 11.50%
Axis Bank Education Loan 13.70% 13.70%
Bank of Baroda Education Loan 8.40% 9.15%
Bank of India 9.85% 9.85%
Bank of Maharashtra 10.25% 10.25%
Canara Bank 9.95% 9.95%
Central Bank of India 10.10% 10.00%
Corporation Bank 10.90% 10.90%
Federal Bank 10.85% 10.85%
IDBI Bank 9.50% 9.50%
Indian Bank 8.60% 10.60%
Indian Overseas Bank 10.65% 10.65%
Karnataka Bank 10.90% 10.90%
Karur Vysya Bank 11.35% 11.35%
OBC 10.40% 10.40%
PNB 8.45% 10.45%
SBI 8.85% 10.00%
UCO Bank 10.65% 10.65%
Union Bank of India 10.20% 10.20%
United Bank of India 10.50% 10.50%

Education Loan

A loan taken to meet tuition fees, hostel fees, and other related expenses for pursuing a specified educational course in an institution is called Education Loan. Banks offer student loans for pursuing pre-specified courses in India and abroad from certain institutions. Banks release a list of permitted courses and institutions for which it will give education loans. So, the course you want to pursue is within the bank’s list along with the institution you wish to join, then you can apply for an education loan.

Education Loan Eligibility

Determinants of Eligibility for Education Loans

Age of the Applicant
  • Upto 35 years for non-employed personnels
  • Upto 45 years in case of working employees/ executives
Who is eligible
  • An Indian National having secured admission to professional/technical courses in recognized institutions
  • Students seeking admission for higher studies
  • Permanent employees who are employed for not less than three years with any organisation and who intend to acquire higher professional qualifications and have secured admissions in a reputed institute
Maximum Loan Amount
  • Typically upto Rs. 10 lakh for studies in India; with minimum margin money (own contribution by student/ family) of 5% of total cost
  • Typically upto Rs. 20 lakh for studies abroad, some banks offer upto Rs. 30 lakhs with minimum margin money (own contribution by student/ family) of 15% of total cost
  • Upto Rs. 30 lakh for studies at IIT's, IIM's and ISB's with minimum margin money (own contribution by student/ family) of 5% of total cost
Which Cost Heads/ Expenses are Funded by Bank
  • Admission fees including Monthly Fees and Examination Fees
  • Books, Stationery and Equipments
  • Airfare for joining the course abroad
  • Purchase of PC, laptop as essential for the completion of the course. 
  • Boarding & lodging expenses of authorized hostel or boarding house
  • Caution or building deposit/ refundable deposit supported by the bill/receipts from the institution. Subject to the amount not exceeding 10% of the tuition fee.
  • Insurance premium, if opted by the student. 
  • Other required expenses like study tour, project work, thesis, etc.
Co-borrower/ Guarantor/ Security
  • Loans upto Rs 4 lakh: Parents or guardian or husband/in-laws in case of married woman required need to be co-borrower
  • Loans above Rs 4 lakh and upto Rs 7.5 lakh: Parents or guardian or husband/in-laws in case of married woman need to be co-borrower and a third party guarantee needed as collateral
  • Above Rs 7.5 lakh: Parents or guardian or husband/in-laws in case of married woman need to be co-borrower and tangible security equivalent to 100-133% of loan amount as collateral
Repayment Frequency
  • Quarterly or monthly rests
  • Repayment typically starts 1 year after completing the course or six months after getting a job, whichever is earlier
Repayment Period
  • Varies from bank to bank - can range from 7 to 15 years
  • There is no prepayment penalty or charge on early prepayment or foreclosure
Key Appraisal Criteria
  • Good academic record with atleast 50% marks in the qualifying examinations
  • Admission letter from bonafide educational institution
  • Passport/visa/i-20 form for studies abroad
  • Net-worth and credit history (CIBIL) of the guarantors

Student Loan Application Process

  • Attach your admission letter received from the college or institution along with your application.
  • Keep the primary documents like PAN card, age proof, address proof, etc., ready.
  • Compare various education loans based on the interest rate, tenure, loan amount, etc.
  • The mark-sheet of 10th and 12th would come handy. Keep them ready for attesting.

Tax benefit on Educational Loan

  • Interest paid on education loan can be claimed as deduction from income of borrower (student) as per Section 80E of the Income Tax Act, 1961
  • Rebate can be claimed without any upper ceiling or cap
  • Rebate is available for full time courses, part time courses and vocational courses pursued in India and abroad
  • Rebate can be claimed within eight (8) years post moratorium period subject to actual payment of interest
  • Rebate is available for interest paid on loans for education of self, spouse, children or for the student of whom he/she is the legal guardian
  • No rebate is available for principal repayment

Documents Required for Education Loan

  • Duly filled the application form along with two passport size photographs of the applicant and co-applicant.
  • Admission Letter from the Institute. It should have the institute name and address on the letterhead.
  • The detailed cost breakup of the course from the Institute, which specifies the tuition fee, the term of the course, year-wise charges, and expenses.
  • The academic record of the applicant/student, which should include 12th Marksheet, certificate of any subsequent education like graduation or post-graduation, mark sheet of the entrance exam (if any), and any scholarship document.
  • An affidavit or a declaration that no loan has been availed from any other bank or financial institution.
  • Any ID proof like PAN card, Aadhar card, Driving License, passport, etc.
  • Any address proof like Ration Card, Driving License, Passport, Aadhaar Card, etc
  • For age proof Birth Certificate or 10th Class certificate.

FAQs on Education Loan

What courses are eligible for education loans?

Some examples of the courses eligible for education loan are:

  • Graduation and Post-graduation courses
  • Professional courses
  • Diploma/degree courses by recognized institutions.
Can I avail tax benefits on education loan?

Yes, you can avail tax benefits under section 80C and 80E of the Income-tax Act, 1961 for education loan’s interest and payment.

What is the age limit for availing education loan?

For availing student loan/education loan, usually, the age of 30 is the limit. However, in some cases, it may be higher.

What can I do if my loan application is rejected?

Usually, banks provide a reason when they reject an education loan application. In case you were not informed by the bank about the reason, you can file an RTI petition.

Can I transfer my education loan to another bank with a lower rate of interest?

Yes, you can transfer your education loan to another bank. But in such a case, your current bank will charge a certain fee and also the new bank will charge a processing fee. Thus, consider all the factors and expenses before making a decision.

What are the factors that lenders consider for approving an education loan?

Some of the factors that lenders consider while assessing an education loan application are:

  • The Institute and the course
  • The Loan amount
  • Repayment capacity of the family
  • Academic Performance
  • Estimated income after completion of the course and securing the job.
What can I do if an education loan is not available for me or loan application is rejected?

In case you want to finance your education, but the course or the institution you wish to join is not in the bank’s list, then you can consider the option of availing a personal loan.

Also, if you or your parents own a property, then loan against property is also an excellent option to finance your education.

Why MyLoanCare???

Nowadays, almost all banks offer attractive schemes on Education Loan at competitive rates with many customer friendly features. You can do rates comparison, check your eligibility, calculate EMI, apply online and get the best Education Loan rates. MyLoanCare helps you throughout the loan process from the day you apply to the time you get disbursement. You can register with us, track your loan status on a regular basis and get an option to earn attractive cashbacks and refer and earn benefits.

×
Education Loan News - Apr 2020
  • 2019-12-30 : BOB cuts interest rates on education loan
    Bank of Baroda will reduce its interest rate on education loans. Interest rates on education loans are available from 8.10%and 8.60%. The Bank also has on-going offers for education loans at waived /minimal processing fees till March 31, 2020. This revised strategy will help the students to avail loans at cheaper rates.
  • 2019-10-01 : Customer outreach loan initiative to begin from October 3
    In a bid to provide affordable and accessible loans to retail and MSME loan borrowers, various public and private sector banks planned to launch a one-stop loan destination for customers. The first phase of the event is likely, to begin with, October 3 and would cover about 250 districts. During the four-day event loan products like business, agricultural, auto, education, home, and personal loans will be available to customers. The second phase of the event will cover about 150 districts and conducted on 21-25 October.
  • 2019-09-17 : Easy Education loan with NBFCs
    NBFCs are an easy go-to option when it comes to education loans. This is because the eligibility criteria of NBFCs for study loans are more flexible than that of Banks. NBFCs do not restrict them from providing loans for a well-acknowledged or known college. Also, students can opt for unconventional courses as well, under NBFCs loan policies. Further NBFCs are more liberal in terms of lending funds and with the collateral policies.
  • 2019-08-27 : Bank of Baroda co-originates retail loans with NBFCs
    Bank of Baroda plans to co-originate retail loans with NBFCs. As per the co-origination, the second-largest state-owned bank plans to lend around Rs 1000 crore in association with micro-financing sectors and NBFCs. This will benefit the bank to get new customers to engage in their other retail loan products. Also, it would help customers to earn retail loans like housing, business, mortgage, and education loans at lower interest rates.
  • 2019-08-05 : SBI launches education loan scheme to help economically weaker sections
    In a bid to help the economically weaker sections (EWS), State Bank of India (SBI) has launched an education loan scheme under the Central Scheme for Interest Subsidy (CSIS) announced by Union Ministry of Human Resource Development (HRD). Under the scheme, EWS students with an annual gross family income of up to Rs. 4.50 lakh per annum can avail education loans. Also, they will be eligible for interest subsidy as well after the course completion or after 6 months after getting the job.
*Terms and conditions apply. Credit at sole discretion of lender subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and from collected from public sources. Read More
Get Free Credit Report ☺