Which bank offers the lowest interest rate for education loan in India?
In this fast-paced world, more students are keen to study abroad and it becomes difficult for parents to solely bear all the expenses related to their children’s education. For this reason, students and their guardians apply for education loan in India. It is a way better option than a personal loan as its interest rates are generally low and the terms more relaxed.
The interest rates of education loans in India are linked to MCLR-based rates (marginal cost of funds based lending rate). Some banks also have special interest rates for women borrowers which are slightly lower than the interest rates offered to general customers.
In India, there are plenty of public and private sector banking institutions offering education loans to aspiring students who are keen to pursue their higher studies in a reputed institution within India and abroad. The table below highlights the interest rates offered by several banks in India on education loan.
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Name of the Banks
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Interest Rates charged
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State Bank of India
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8.30% onwards
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United Bank of India
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10.25% onwards
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Central Bank of India
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8.30% onwards
|
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Bank of Baroda
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8.30% onwards + Strategic Premium
|
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Dena Bank
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8.55% onwards
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|
Bank of Maharashtra
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9.65% onwards
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|
Punjab National Bank
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8.15% onwards
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Indian Overseas Bank
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8.60% onwards
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IDBI Bank
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8.40% onwards
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HDFC Bank
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9.33% onwards
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|
Axis Bank
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10.50% onwards
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Most banks also offer a 1% concession for full tenure of the loan, if interest is serviced promptly as and when applied during the moratorium period, including course duration. A few banks such as Punjab National Bank also offer education loans at considerably lower interest rates to persons with disabilities, i.e. as low as 3.5%. Interest rates can also be reduced by clubbing your education loan to a government scheme which is offering subsidy on education.
Education loan has a great significance in a student’s life. It helps them seek a quality education at renowned universities and colleges without worrying about the finances. The usual loan amount sanctioned by banks towards an education loan for education in India is Rs. 10 lakhs and Rs. 20 lakhs for studies abroad. However, SBI even offers Rs. 35 lakhs loan for study in India so there aren’t any specific loan amount limitations. There are usually no security collaterals that the borrower has to provide to the bank on loans applied for an amount less than 4 lakhs but for a loan amount higher than Rs. 4 lakhs, a third-party assurance or guarantee or any other type of security is generally needed.
The sanctioning of loan also depends on the institution and the type of course opted. Education loan offered by banks in India cover specific courses, institutions as well as countries. Most banks sanction the education loan only on approved courses offered by reputed institutions in India and across the world. Likewise, interest and other features such as the pre-payment charges on education loan also vary across banks. While some banks do not charge any pre-closure free, others impose a pre-payment penalty on education loan. Students can also enjoy a tax rebate on their education loan u/s 80E of the income tax act 1961 too.
Education loan usually has these prerequisites: Anyone planning to get an education loan in India shall be an Indian resident. Also, he/she shall have acquired an admission in an institution in the country for their specific types of professional, degree, diploma courses approved by the bank. Note that the applicant shall have got the admission through a common entrance test or on the basis of merit-based selection.