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  • Education Loan - Compare Interest Rates Online

    Education loan is offered by leading banks in India to help students achieve their academic dreams. Education loan Interest rates start from 8.05% p.a. with loan tenures of up to 15 years. Education loans are offered for higher education in both India and abroad.

    Types of Taxes
    Education Loan

    What courses are eligible for an education loan will be decided by the lender. You can get an education loan for studies starting from Nursery. For higher studies, you can get a loan for full-time as well as part-time courses, and loans for working professionals.

    Here is a general list of courses that are covered under an education loan:

    Education Loan in India

    • Nursery to class 12.
    • Graduation and Post-Graduation courses (technical/professional/diploma) conducted by approved universities or colleges under UGC/IMC/AICTE/government.
    • Regular degree/diploma courses administered by autonomous institutions such as IIM/IIT, etc.
    • Regular degree or diploma courses such as pilot training, aeronautical, shipping, and more approved by the Director General of Civil Aviation/Shipping/other regulatory authority.
    • Job oriented courses (professional/technical) for Graduation/Post Graduation/Diploma such as MBA/MCA/MS offered by reputed educational institutions, courses conducted by the Chartered Institute of Management Accountants (CIMA) – London or Certified Public Accountant (CPA) – USA.
    • Loans for skill development.

    Education Loan Abroad

    • Job oriented courses (professional/technical) for Graduation/Post Graduation/Diploma such as MBA/MCA/MS, etc. offered by reputable institutions.
    • Courses conducted by CIMA and CPA.

    Education Loan Eligibility

    Nationality
    • Indian citizens
    • Non-Indian Residents (NRIs)
    • Overseas Citizens of India (OCI)
    • Persons of Indian Origin (PIOs)
    • Students born to Indian parents abroad and wish to study in India
    Courses eligible
    • Undergraduate programs
    • Postgraduate programs
    • Doctoral courses and PhDs
    • Certificate courses with 6 months or longer duration
    • Job-oriented courses
    • Technical/diploma/professional courses
    Institutes eligible
    • Recognized institutions and government colleges
    • Private institutes aided by government
    • Professional institutions
    • International colleges and universities
    Collateral
    • Collateral-free loans up to Rs.7.5 lakh from leading lenders
    • Collateral-free loans up to Rs.40 lakh for select courses/institutions from select lenders
    Acceptable collateral: Residential or commercial property or plot, fixed deposits, insurance
    Loan amount Up to Rs.1 crore

    Education Loan Interest Rates

    Depending on the bank or financial institution, you could get a fixed interest rate package or a floating interest rate one. Floating rates are most likely based on the Repo Rate, and a spread may be added to it before offering you the final effective interest rate (EIR).

    Bank Interest Rate (p.a.)
    SBI
    • Student Loan Scheme/Part-Time Courses: 10.05%*
    • Scholar Loan Scheme: 7.97%-9.25%
    Axis Bank 13.70% to 15.20%
    Bank of Baroda 8.25% to 10%*
    HDFC Bank For preferential rates contact HDFC
    Punjab National Bank (PNB) 8.05% to 9.95%
    Tata Capital 10.99% onwards

    *0.50% concession for female students

    Tax Benefits on Education Loans

    You will get tax deduction on the interest paid on your education loan under Section 80E of the Income Tax Act, 1961. This benefit is only offered to individual borrowers and for the purpose of higher education. The deduction covers all fields of study in India and overseas. It also includes vocational as well as regular courses.

    Please note that the tax deduction is only applicable on the interest portion of the EMI and not the principal. However, there is no maximum limit to claim this benefit. You will require a certificate from your bank or financial institution segregating the principle and interest portions of your EMIs to claim this benefit.

    You can claim this benefit for 8 years from the year you started repayment or until the interest portion of your loan has been repaid, whichever occurs first.

    Features & Benefits of Education Loan

    • Loan financing up to Rs.1 crore available.
    • Loan repayment tenure up to 15 years.
    • Get Education loans for studies in India and abroad.
    • Some lenders offer loan disbursal before applying for a Visa.
    • Door-step service to collect required documents.
    • Children of the bank’s employees enjoy preferential rates at several banks.
    • Certain banks offer concessional interest rates to female students.
    • Enjoy a moratorium period of up to 1 year after course completion. During this period, you do not have to make payments on the loan.
    • Enjoy tax benefits up to 8 years on the interest paid.

    Expenses Covered by the Loan

    Here’s what the loan amount will cover:

    • Tuition fees
    • Hostel fees
    • Travel expenses passage money for students studying abroad
    • Insurance premium
    • Cost of books/equipment/instruments/uniform
    • Examination/laboratory/library fees
    • Cost of a computer/laptop required for course completion
    • Caution deposit, building fund/refundable deposit supported by institution bills/receipts
    • Any other expense required to complete the course such as study tours/thesis/project work

    Best Student Loan Offers 2020

    Here are the top lenders offering student loans:

    SBI Education Loan

    Key Highlights:

    • Loan amount up to Rs.20 lakh with concessional rates for female students.
    • Moratorium period of 12 months after course completion.
    • Second loan can be availed for completing higher studies.
    Maximum Loan amount Maximum Loan Tenure Collateral Margin
    India: Rs.10 lakh Abroad: Rs.20 lakh 15 years Up to Rs.7.5 lakh: Nil Above Rs.7.5 lakh: Yes Up to Rs.4 lakh: Nil Above Rs.4 lakh: 5% for India; 15% for abroad

    Axis Bank Education Loan

    Key Highlights:

    • Can secure loan before admission based on profile.
    • Loan disbursal within 15 business days from the date the bank receives your complete application.
    • Unsecured loans up to Rs.20 lakh for working professionals.
    Maximum Loan amount Maximum Loan Tenure Collateral Margin
    Rs.1 crore (overseas education) 15 years Yes (based on the case) Up to Rs.4 lakh: Nil Above Rs.4 lakh: 5% for India; 15% for abroad; No margin up to Rs.20 lakh (special overseas cases)

    Bank of Baroda Education Loan

    Key Highlights:

    • Education loan available for education from nursery onwards.
    • Get a free debit card on select education loan schemes.
    • Concessional interest rates for female students.
    Maximum Loan amount Maximum Loan Tenure Collateral Margin
    Rs.80 lakh 10-15 years (based on scheme) 100% tangible security Up to Rs.4 lakh: Nil Above Rs.4 lakh: 5% - 10%

    HDFC Bank Education Loan

    Key Highlights:

    • Preferential rates offered for admission to top ranking colleges and universities.
    • Education loan abroad covers more than 950 courses in 36 countries.
    • Co-borrower can be from a different city.
    Maximum Loan amount Maximum Loan Tenure Collateral Margin
    India: Rs.20 lakh Abroad: Rs.35 lakh without collateral; no limit with collateral 15 years Up to Rs.7.5 lakh: Nil Above Rs.7.5 lakh (India): Yes Above Rs.35 lakh (Abroad) - Yes Contact HDFC

    Punjab National Bank Education Loan

    Key Highlights:

    • Offers loans to Indian residents and OCIs/PIOs/students born abroad to Indian parents and want to pursue studies in India.
    • Security will be 125% of loan amount.
    • Moratorium period of 6 months to 1 year after course completion.
    Maximum Loan amount Maximum Loan Tenure Collateral Margin
    Need based 15 years Up to Rs.7.5 lakh: Nil Above Rs.7.5 lakh: Yes Up to Rs.4 lakh: Nil Above Rs.4 lakh: 5% - 15% Some loans carry flat margin of 20%

    Tata Capital Education Loan

    Key Highlights:

    • Minimum loan amount of Rs.75,000.
    • Choose from 3 EMI plans as per your convenience.
    • Minimal documentation and quick approval of loans.
    Maximum Loan amount Maximum Loan Tenure Collateral Margin
    India: Rs.25 lakh Abroad: Rs.30 lakh 6 years Up to Rs.4 lakh: Nil Above Rs.4 lakh: Yes Contact the lender

    Fees and Charges for Education Loan

    Find below the most common fees that lenders charge on their education loans:

    Bank Processing Fees Penal Interest Rate Pre-Payment Charge
    SBI Loan amount up to Rs.20 lakh: Nil Loan amount above Rs.20 lakh: Rs.10,000 + tax 2% on loan amounts exceeding Rs.4 lakh -
    Axis Bank Nil to Rs.15,000 + tax 2% per month on overdue amount Nil
    Bank of Baroda India: Nil Abroad: 1% of loan amount up to Rs.10,000 2% on loan amounts exceeding Rs.4 lakh -
    HDFC Bank India: 1% of loan amount (min. Rs.1,000) Abroad: Up to 1.5% of loan amount + tax 2% per month + tax India: Up to 4% of prepaid amount if loan closed during moratorium period; otherwise Nil Abroad: Nil
    Punjab National Bank (PNB) India: Nil Abroad: % of loan amount (min. Rs.10,000)   Nil
    Tata Capital Up to 2.75% of loan amount + tax 3% of overdue amount + tax 4.5% of outstanding principal +GST + part pre-payment amount

    Education Loan EMI Calculator

    If you wish to know your monthly payments upon applying for an education loan or what the total cost of the loan will be, you can use the BankBazaar Education Loan EMI Calculator. By entering a few loan-related details such as the loan amount, tenure, interest rate, and processing fees, you will get an estimate of your equated monthly instalment (EMI). You will also get other crucial details such as the total interest payable and a detailed amortisation table breaking down your EMIs into principal and interest amounts on a monthly and yearly basis.

    Most lenders allow you to make part prepayments on your loan every year. If you wish to make such payments, you can enter the details in the calculator and the result will tell you how much you will save on interest payments and by how many years your tenure will reduce.

    Documents Required for Education Loan

    Here is an indicative list of documents that most lenders ask:

    Academic
    • Admission letter from the educational institution
    • Marksheets (previous education – school/college)
    KYC
    • Age proof
    • ID proof
    • Address proof
    • Signature proof
    Income documents (Salaried)
    • Salary slips
    • Recent bank account statements
    Income documents (Self-Employed)
    • ITR with income computation
    • Audited balance sheet
    • Recent bank statements
    • Proof of turnover (service tax return/sales receipt)
    General Documents
    • Completed application form with signature
    • Latest passport size photographs
    • Appropriate Visa for studies abroad

    *Document charges may be levied by the lender.

    How to Apply Education Loan

    There are several ways of applying for a student loan:

    Apply Online

    This is the easiest and the most convenient way of applying. There are two ways of applying online. The first is a straightforward application form that you will fill online, attach the necessary documents, and submit the form.

    The second is where you apply through providing all the requested details and the lender will then get in touch with you to discuss the terms of the loan before proceeding with the application.

    Visit a Branch

    You can apply for a loan by visiting your nearest branch with the necessary documents, discuss the terms of the loan with a representative, fill the form, and apply in person.

    Call the Lender

    You can either call the lender or request a call back by expressing your interest. You can then discuss the loan terms and proceed to apply.

    Virtual Assistant

    Banks and other financial institutions are now adopting digital methods to better serve their customers. One such method is using a Virtual Assistant to clear your doubts and request assistance with the application procedure.

    Loan repayment

    The loan repayment period usually starts 6-12 months after completing your course or when you get a job, whichever occurs first. Different lenders provide different moratorium periods to applicants to repay the loan. You will have to repay your loan through EMIs.

    Here are the different modes of repayments usually available:

    • Internet Banking - Pay online through the lender’s website or mobile app.
    • Cheque – Drop a cheque at any of the branches.
    • Direct debit – Set up recurring payments for your EMI to be directly debited from your bank account on the payment due date.
    • Demand Draft – Pay through a DD.

    The preferred method of repayment varies between lenders. Therefore, it is advisable to check with your lender when taking the loan.

    If money is the only obstacle in your way from achieving your professional goals, then consider taking an education or student loan to fulfil your goals. You can get collateral-free goals wherein you need not provide any security to the lender and your repayments will not start immediately after graduation.

    FAQs On Education Loan

    1. What is the age limit for education loan?
    2. Generally, the age limit for getting an education loan is 30 years.

    3. What do the lenders consider to approve the loan?
    4. Lenders consider the following factors when approving a loan:

      • The course and institute you choose
      • The amount you need
      • Your academic performance
      • Repayment capacity of your family
      • Family assets
      • Annual income
    5. What are the courses eligible for education loan?
    6. Some of the courses eligible for education loan are mentioned below:

      • School education
      • Graduation courses
      • Post-graduation courses
      • Professional courses
      • Diploma/degree courses conducted by recognised institutions
    7. When does the loan repayment period begin?
    8. The repayment period begins after you complete the course. The tenure may vary from one lender to another.

    9. What happens if I discontinue the course and get an employment within the grace period?
    10. In case you choose to discontinue the course mid-way, you must start repaying the loan immediately after getting a job.

    11. Can I avail tax benefit on education loan?
    12. Yes, education loans are eligible for tax benefits. You can avail deductions under sections 80C and 80E of the Income Tax Act of 1961.

    13. Can I port my education loan to another bank with lower interest rates?
    14. Yes, you can move your education loan from one bank to another. However, your current bank might charge a refinance fees. Therefore, it is important to consider all factors of the existing bank and the new bank before moving the loan.

    15. What should I do if my loan application is rejected?
    16. While rejecting a loan application, banks usually provide a reason why it has been rejected. You can rectify the error and re-apply. However, if the bank did not provide any valid reason for the rejection, you can file RTI petition.

    17. Do all education loans cover 100% of the education expenses?
    18. Yes, education loans cover 100% of the education expenses. However, full coverage may only be provided for expenses under a certain limit. Lenders have a margin if the expenses go above the limit.

    19. What are the other expenses covered by education loans?
    20. Some of the additional expenses covered by education loans are:

      • Hostel fees
      • Exam fees, laboratory and library fees
      • Cost of books, uniforms, projects, etc.
      • Travel expenses for overseas education
      • Deposits required by the educational institute

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