Education Loan Interest Rates
Learn about the most recent student loan interest rates offered by India's biggest banks so you may compare them and choose the one that best fits your needs. Education loans come with interest rates that vary based on the bank, the loan amount, and whether the student has a co-applicant. Education loan interest rates offered by various banks in India range from 4.00% p.a. to 16.00% p.a.
What is an Education Loan Interest Rate?
An educational loan interest is the percentage charged by banks or financial institutions on the amount borrowed to fund education. This rate determines the extra amount a borrower will need to repay along with the principal loan amount.
Compare Education Loan Interest Rates
Given below is the list of interest rates offered by different banks in India:
Banks | Interest Rates | Processing Fees |
7.15 p.a. to 10.15% p.a. | Loans up to Rs.7.5 lakh- Nil | |
4.00% p.a. to 11.85% p.a. |
| |
9.50% p.a. onwards | Up to 1.5% of the Loan Amount or as per any bank-specific scheme | |
Starting from 7.10% p.a. onwards |
| |
10.35% p.a. 11.10% p.a. | Minimum processing fees or Nil | |
7.10% p.a. to 10.30% p.a. | Nil | |
10.50% p.a. onwards |
| |
9.25% p.a. to 10.50% p.a. | Contact the bank | |
10.25% p.a. to 14.00% p.a. | Up to 2% of the loan amount plus GST | |
9.18% p.a. onwards | Contact the bank | |
11.55% p.a. to 11.60% p.a. |
| |
11.00 p.a. to 13.50% p.a. |
| |
3.50% p.a. to 13.00% p.a. | Up to 2% of the loan amount + GST | |
4.00% p.a. to 11.50% p.a. |
| |
7.10% p.a. to 12.35% p.a. | Nil | |
7.85% p.a. to 11.20% p.a. |
| |
11.25% p.a. to 15% p.a. | Contact the bank | |
Maximum up to 16% p.a. | Nil |
* Most of the banks offer zero processing Fee for courses in India. Please contact the bank for more details.
Education Loan Interest Rates by Regional Rural Banks
Regional Rural Banks (RRBs) are scheduled commercial banks in India that are owned by the government. Here is a list of RRBs in India that are offering various education loan schemes at competitive interest rates:
Name of Bank | Interest Rates | Processing Fees |
Assam Gramin Vikash Bank | 9.45% p.a. to 9.95% p.a. |
|
Arunachal Pradesh Rural Bank | 8.5% p.a. | Contact the bank |
Baroda Gujarat Gramin Bank | 10.50% p.a. to 12.00% p.a. | Contact the bank |
Baroda UP Bank | 10.50% p.a. (subject to loan amount) | Contact the bank |
J&K Grameen Bank | 10.95% p.a. to 12.20% p.a. |
|
Karnataka Gramin Bank | 10.50% p.a. to 11.50% p.a. | Contact the bank |
Kerala Gramin Bank | 10.50% p.a. to 13.60% p.a. |
|
Maharashtra Gramin Bank | 11.95% p.a. to 13.45% p.a. | Contact the bank |
NBFC Education Loan Interest Rates
Non-Banking Financial Corporation (NBFC) offer education loans to help students achieve their dreams of pursuing higher education. The education loan interest rates for leading NBFCs in India are listed below:
Name of NBFC | Interest Rates | Processing Fees |
Bajaj Finance | 10.00 % p.a. onwards | Up to 3.93% of the loan amount |
Tata Capital | 11.30% p.a. to 15.25% p.a. | Up to 2% + applicable taxes |
Types of Interest Rates in Education Loans
The type of interest rate that student loans have is set by the bank. Certain banks offer loans with fixed interest rates for the term of the loan.
Some possess interest rates connected to the Lending Rate determined by the Marginal Cost of Funds based Lending Rate (MCLR) for a year. If this were reset on a regular basis, the student loan's interest rate might fluctuate.
Factors that Determine Education Loan EMI
There are many factors that determine how much your Equated Monthly Instalment (EMI) will be on your education loan. These factors would be:
- Interest rate on the loan
- Loan amount repayment tenure
How to Calculate Your EMI on Education Loans
The formula that is used to calculate your education loan Equated Monthly Installment (EMI) would be:
EMI Amount = [P x R x (1+R)^N]/[(1+R)^N-1]
P = Principal amount
R = Rate of Interest
N = Number of years for repayment (this is calculated in months)
You can also use an online EMI calculator for a comprehensive EMI amortisation chart. You might use a free online education EMI calculator for this.
All you need to do is enter the required loan amount, the current interest rate, and the desired repayment time in the relevant boxes. Depending on the calculator, you may either type the numbers into the fields or use the slider to alter the figures.
Once you have supplied the necessary information, a complete breakdown of your principal and interest rate as well as an amortisation table will be displayed immediately.
Factors to Consider When Taking an Education Loan
There are many factors to look out for when choosing an education loan. These would be:
- Eligibility criteria
- Courses for which the loan is applicable
- Collateral required, if any
- Guarantor required
- Margin amount
- Interest rate
- Loan amount
- Repayment tenure
Eligibility Criteria for Education Loan Interest Rates
The eligibility criteria may differ from one lender to the other, but these are the common criteria that you have to meet to be approved for an education loan:
- Indian national
- Age: Up to 35 years for non-employed individuals and up to 45 years for employed individuals
- Proof of admission into the educational institution
- Valid educational certificates showing a good academic record (of more than 50% marks)
- Guarantor's income proof or credit history
- Passport / i20 form/ visa in case of studies abroad
Documents Required for Education Loan Application
These are some of the documents required to complete your loan application:
- Fully filled in application form with passport-size photographs affixed as required
- Bank Statements and proof of income
- In some cases, Statement of purpose (SOP)
- Admission letter on letterhead of the educational institute
- Academic certificates of the applicant
- Marksheets of entrance examination, if any
- Scholarship document, if any
- Declaration that no loan has been availed from another lender
- Proof of identity such as Aadhaar card / passport / driving license / Permanent Account Number (PAN) card, etc.
- Proof of address or residence such as utility bills / ration card / Aadhaar card / passport , etc.
- Proof of age such as birth certificate or 10th standard certificate.
Top Banks Offering Education Loans in India
Punjab National Bank Education Loan
FAQs on Education Loan Interest Rates
- Do education loan interest rates vary for different courses?
No, interest will be levied by lenders on all education loans.
- What courses are eligible for education loan interest rates?
For accredited vocational courses, diplomas, undergraduate, graduate, doctoral, and professional programs, you are eligible to apply for an education loan.
- How do education loan interest rates affect loan approval?
As per the guidelines of the RBI, education loans are priority products. Therefore, education loans can be easily availed and almost all lenders offer them. However, the eligibility criteria must be met and the relevant documents must be submitted to avail an education loan.
- Are there any tax benefits that can be availed on an education loan?
Yes, you can avail tax benefits on the interest payments of your education loan. This will come under Section 80C and Section 80E of the Income Tax Act, 1961.
- When do I start repaying my loan?
This will depend on the lender, but for most lenders, the repayment tenure will start either at the end of your course or a few months after you get a job. This is a moratorium period after your course ends.
- Is any collateral required?
According to RBI guidelines, banks cannot obtain collateral security for education loans of up to Rs.4 lakh.
- Can I add a co-applicant to my loan?
For many banks, a co-applicant is mandatory for an educational loan. This can be a parent, guardian, spouse, or a parent-in-law.
- Who can be my co-borrowers?
Parents, guardians, and spouses can be co-borrowers. The applicant's chances of getting a successful loan application are high if the co-borrower possesses a regular source of income and a good credit history.
- What is the tenure offered on an education loan?
In most cases, the average tenure for an education loan is between 5-7 years. However, for larger loan sums, certain lenders may provide a longer term of up to 15 years.
- Do banks impose a prepayment penalty on education loans?
The majority of banks do not impose a prepayment penalty on education loans. However, you must confirm with your bank/lender about the same.
- Can I take a second education loan if my first loan is still active?
Yes, you can get a second education loan in India even if your first loan is active. To get another loan, banks will look at your academic performance, credit score, and repayment history before approving it.
- What does employment verification in an education loan mean?
Some banks carry out independent verification of the cosigner's employment history, which usually consists of the student's parent or guardian or spouse (if they are married). The prospective lender can reject the loan application if the provided information cannot be verified.
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