Best Education Loan in India 2023 – Compare and Apply for the Best

January 18, 2023

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Education is the first step to empowerment. It is also becoming an expensive affair, making it difficult for Indians to avail of this basic right. This is where the need for education loan arises. The Indian government have introduced various schemes encouraging education, and the banks and Non-Banking Financial Companies support this cause by offering the best education loan in India.

This blog lists the education loan interest rate and compares the top ten lenders of education loans. Study the blog and begin your education journey today!

Best Banks for Education Loan in India 2023

Choosing the best education loan in India is a difficult decision. Each bank or Non-banking Financial Company (NBFC) claims to be the best loan provider by charging affordable education loan interest rates. We have compiled a detailed list of the lenders below.

Bank/NBFC Interest Rate (India) Interest Rate (Abroad) Processing Fee
State Bank of India 8.30% – 11.50% 10.90% NIL to INR 10,000
Bank of Baroda 8.85% – 12.20% 10.25% to 10.90% NIL to 1%
Punjab National Bank 9.25% – 11.75% Up to 11.40% NIL to 1%
Axis Bank 13.70% – 15.25% 13.70% – 15.25% Up to 2%
Canara Bank 9.15% – 11.25% 10.75% – 11.25% Up to INR 20,000
Federal Bank 12.30% onwards 12.30% onwards Not disclosed
ICICI Bank 9.50% onwards 9.50% onwards Not disclosed
IDBI Bank 8.85% – 10.5% 10% to 10.50% NIL to 1.5%
Tata Capital 10.99% onwards 10.99% onwards Not disclosed
Avanse Financial Services Not disclosed Not disclosed Up to 2%

Note: The education loan interest rate used in the table above is dated January 18th, 2023.

State Bank of India

The State Bank of India (SBI) provides a variety of education loans for both domestic and international students with adjustable repayment terms, including a moratorium period following course completion. There are no penalties for paying off the loan early, which can be done at any time during the loan term. Some loans also provide lower education loan interest rate for female students.

You are eligible for financial aid to pursue both professional and vocational studies. There are also takeover loans, which allow you to replace high-interest loans with SBI’s low-interest rate loans. SBI offers the following education loan schemes.

  1. SBI Student Loan Scheme
  2. SBI Scholar Loan Scheme
  3. SBI Skill Loan Scheme
  4. SBI Global Ed-Vantage Scheme
  5. SBI Takeover Education Loans Scheme
  6. Shaurya Education Loan

Pros:

  • Low-interest rate of up to 9.30%
  • No processing costs for amounts up to INR 20 lakhs
  • Various lending programs

Cons:

  • Processing time is high
  • A 15% margin is available to study abroad

Bank of Baroda

The Bank of Baroda provides a variety of education loans with low-interest rates and repayment terms of up to 15 years for loans up to INR 4 lakh, no collateral is required. Interest paid under Section 80E of the Income Tax Act is also tax deductible. A student loan can be used to pay for high school, college, or graduate school. The following schemes are available at the Bank of Baroda.

  1. Baroda Vidya
  2. Baroda Gyan
  3. Baroda Scholar
  4. Baroda Education Loan to Students of Premier Institutions

Pros:

  • Interest rate that is competitive.
  • A good selection of education loan products.
  • There is no processing fee.

Cons:

  • loan application is being processed slowly.

Punjab National Bank

PNB Udaan is an exclusive loan scheme designed to assist deserving students in pursuing higher education at reputable universities abroad. The loan is available for a degree (job-oriented), postgraduate (MCA, MS, and MBA), CIMA, CPA, and diploma courses in aeronautical, pilot training, and shipping. They have a special programme with a reduced interest rate for people with disabilities. People with a salary or a pension account with PNB are preferred. The salary should have been deposited into the account for at least five years. The schemes offered by PNB are:

  1. PNB Saraswati
  2. PNB Pratibha
  3. PNB Udaan
  4. PNB Kaushal
  5. PNB Pravasi Shiksha Loan
  6. PNB PM Cares Education Loan Scheme
  7. PNB Honhaar` Education Loan Scheme For Pursuing Higher Education And Skill Development Courses In Delhi
  8. Concessional Education Loan
  9. Padho Pardesh

Pros:

  • Low ROI
  • NIL processing costs for Indian studies
  • Several educational loan programmes

Cons:

  • Difficult paperwork and follow-up

Axis Bank

Axis Bank provides study abroad and study in India loans to students. If you want to study in the country, you can expect a loan of INR 10 lakh. However, you can borrow up to INR 20 lakh from the bank for overseas education. Furthermore, the bank has established a special interest rate for female applicants. All applicants for career-oriented courses such as engineering, medicine, and management are eligible to apply for the Axis Bank loan facility. To obtain a loan from Axis Bank, you must be an Indian citizen and have at least 50% in your class 12th or graduation. The availability of education loan subsidy schemes is available.

Pros:

  • Quick loan application processing
  • Loan amount increased to 75 lakhs
  • There is no processing fee for loans under INR 10 lakh.

Cons:

  • A high rate of return.
  • Margin of up to 15% on loans exceeding 4 lakhs
  • Late payment penalties of 24% p.a.

Canara Bank

Individuals can apply for a Canara Bank educational loan to fund their studies in India or abroad. The loans have low-interest rates and can be paid off in as few as 15 years. An education loan from Canara Bank can be applied online or in person. The schemes offered are:

  • New Education Loan Scheme for Pursuing Master’s Degree from Select Top Ranking Universities of the World
  • IBA Skill Loan Scheme
  • Vidya Turant
  • Vidya Shakti
  • Vidya Sahay
  • IBA Model Education Loan Scheme

Pros:

  • Vocational courses have a low-interest rate.
  • Processing fees are minimal.
  • Female students receive a 0.50% ROI reduction.

Cons:

  • Small loan amount
  • For loan processing, tedious paperwork is required.

Federal Bank

Federal Bank aims to provide educational opportunities to every student in India. The bank provides financial assistance to all students pursuing higher education through various loans. These education loans are available for courses both in India and abroad. The schemes available are:

  • Special Vidya Loan
  • Fed Scholars
  • Career Solutions Loan
  • Vidya Lakshmi Portal

Pros:

  • Loan amount up to 1.5 crores
  • Diploma and skill development courses are covered.
  • Maximum application age of up to 50 years

Cons:

  • A high 25% margin is required.
  • 100% collateral equal to loan amount and interest required
  • The bank reimburses course fees and lodging after one year of proof.

ICICI Bank

ICICI Bank provides education loans of up to INR 50 lakhs for in-country studies and INR 1 crore for out-of-country studies. One of the primary advantages is that no collateral is required for education loans up to INR 20 lakhs (for UG courses) and INR 40 lakhs (for PG courses) (for PG Courses at selective premier institutions). ICICI Bank prefers to provide education loans to parents with high net worth.

Pros:

  • A large loan amount
  • Less paperwork and quick processing
  • There is no margin up to INR 20 lakhs.

Cons:

  • High-interest rate
  • Charges that are not disclosed

IDBI Bank

Loan amount offered up to INR 20 lakhs for studies in India and INR 30 lakhs for studies abroad. IDBI Bank‘s education loan is a good option if you want to get an education loan for AICTE, UGC, ICMR, government-approved courses, job-oriented courses, or technical diploma courses. IDBI Bank also offers education loans to students admitted through the management quota. The schemes available are:

  • Education Loan scheme for Non-Vocational Courses
  • Education Loan scheme for Management Quota
  • Education Loan scheme for Specialised Courses
  • Skill Loan Scheme

Pros:

  • The repayment terms extend up to 15 years, but you need to offer tangible collateral security for an education loan amount of over INR 7.5 Lakhs.
  • Loans with lower interest rates for premier institutes.
  • There are no processing fees for studying in India.
  • No foreclosure fees

Cons:

  • A loan of more than 7.5 lakhs requires 1.33 times the amount of tangible collateral.
  • Loan processing is slow.

TATA Capital

Tata Capital provides several education loans to students to cover tuition and living expenses for higher education in India and abroad. Tata Capital Education Loan promises candidates that the highest quality education should be available to all, regardless of their financial situation. They are leveling up the game to fulfill their potential by offering quick approval rates, minimal documentation, competitive interest rates, and student loan accessibility to many students. We have included all of the information about the Tata Capital Education Loan in this article to help you fund your dream of studying abroad.

Pros:

  • Lower interest rates
  • Quick processing
  • Drawbacks

Cons:

  • 1% loan processing fee
  • Prepayment charges of up to 4% (during the moratorium period)
  • Less loan for study in India

Avanse Financial Services

Avanse Financial Services is an RBI-regulated NBFC that specialises in providing low-interest education loans to students in India. Warburg Pincus, a global private equity firm, owns 80% of Avanse. Avanse offers up to 100% financing, quick processing, and door-to-door service. The schemes offered are:

  • Study in India Loans
  • Study Abroad Loans
  • Executive Education Loans
  • Student Loan Refinancing

Pros:

  • Up to 100% of the loan amount
  • Less paperwork and quick processing
  • E-learning education loans are also available.

Cons:

  • High-interest rate
  • 1% – 2% processing fee
  • Prepayment is not permitted during the first six months.

Eligibility Criteria for Education Loan

Applicants must meet the following eligibility requirements to avail of the education loan.

Nationality

  • Indian citizen
  • Non-Indian Resident (NRI)
  • Overseas Citizens of India (OCI)
  • Persons of Indian Origin (PIOs)
  • Students born to Indian parents in foreign countries wish to study in India

Institutes

  • Recognized institutions and government colleges
  • Private institutes helped by government
  • Professional institutions
  • International colleges and universities

Courses

  • Undergraduate programs
  • Postgraduate programs
  • Doctoral courses and PhDs
  • Certificate courses with 6 months or longer duration
  • Technical/diploma/professional courses

Documents Needed for Loan Approval Process

The following documents are required for loan approval

  • Admission letter from the educational institution
  • Marksheets
  • Age proof
  • ID proof
  • Address proof
  • Signature proof
  • Recent bank account statements
  • Salary slips
  • ITR with the Income calculation
  • Audited Balance Sheet
  • Proof of turnover
  • Completed application form with signature
  • Latest passport-size photographs
  • Recent bank statements
  • Appropriate Visa for studies abroad

Educational Expenses Covered by Loan

The following expenses are covered in education loan.

  • Tuition Fees
  • Travel expenses for students studying abroad
  • Hostel fees
  • Insurance premium
  • Cost of books, uniform, equipment
  • Examination, laboratory, and library fees
  • Cost of a computer, and laptop required for course completion
  • Any other expense required to complete the course such as study tour, project work etc
  • Caution deposit, building fund, institution bills

FAQs

Which bank has the best education loan options available?

The State Bank of India offers the best education loan in India. For more detailed information, read the guide above.

Which bank offers the best education loan options for studying abroad?

State Bank of India, Bank of Baroda, and ICICI Bank are among the few banks providing the best education loan for studying abroad. Kindly go through our guide above for more information.

Can I pay off the education loan in full all at once

Yes, there is a chance to repay the education loan at once. However, you may be charged pre-payment fees. It is advised to check the same with your lender.

What is the method to apply for the Modi education loan?

You can apply for the Modi education loan scheme through the Vidya Lakshmi portal launched by the Government of India.

Shweta Agarwal lets her pen dance to its own tunes. Torn between work and play, she finds solace in sleep. Having done her studies in Finance, she loves to research and write about her niche. She is also the proud author of her poetry book ‘ Hues of Pink ’and loves musical instruments.

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