Lowest Interest Rate On Education Loan
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Cheapest Education Loan Options in India

Cheapest Education Loan Options in India

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Read this blog by GyanDhan on the cheapest education loan choices in India offered by public banks, complete with government mandates, subsidized interest rates, tax benefits, and lower processing fees.

GyanDhan

Ananya Ghai

Updated on: 29 Sep 2023
 

According to Forbes, tuition fees for several institutions are expected to increase by 4% or more for the academic year 2023-24, further escalating the cost of education. In the face of such mounting expenses, the need for affordable and accessible education financing solutions has never been more critical for Indian students aspiring to study abroad.

  1. list items What makes an education loan cheap for you?
  2. list items List of banks offering lowest interest rate
  3. list items State Bank of India
  4. list items Bank of Baroda
  5. list items Union Bank of India
  6. list items Punjab National Bank
  7. list items How to apply for an education loan?
  8. list items Frequently asked questions
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Which is the cheapest education loan in India?

The cheapest education loan in India can vary depending on several factors, including the lender, the loan amount, the course of study, and the borrower's financial profile. Here are some of the reasons that make an education loan affordable:

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  • list items Government mandate 

Public banks are government-owned or government-supported institutions. Governments have a vested interest in promoting education as it leads to a more skilled and employable workforce, which can ultimately boost the economy. To fulfil this mandate, they offer low-interest education loans. Therefore, education loans from government banks are cheap.

  • list items Subsidized interest rates

Government provides subsidies to public banks to lower the interest rates on education loans. These subsidies are intended to reduce the financial burden on students and their families. The rate of interest of an education loan offered by public sector banks is always lower - by 1% to 2.5% - than that offered by private sector banks and NBFCs. The rate of interest for an education loan by a public sector bank is between 9.5% to 11% while it is between 12% to 14% for a private sector bank. For NBFCs, the rate of interest is again very high and is between 12% to 15%. 

  • list items Tax benefits 

Another aspect why public banks are affordable options for education loans is that they provide tax benefits. Section 80E Chapter vi(a) of the Income Tax Act allows for the total interest paid on education loan EMIs during the financial year. There is no maximum limit on the tax exemption amount on education loans. 

  • list items Processing fees

The processing fee charged by public sector banks is lower than NBFCs and sometimes even lower than private banks. Most public sector banks have a low processing fee and sometimes even have zero processing fee for an education loan. While SBI has a fixed fee of INR 10,0000 (non-refundable) for an education loan of INR 40 lakhs, both Bank of Baroda and Axis Bank have a refundable processing fee of INR 10,000. However, NBFCs would charge a non-refundable processing fee between INR 40,000 and 80000 for the same loan amount. 

Must Read: Student loan application for public banks

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List of banks offering lowest interest rate on education loan

Public banks often provide cheap education loans for several reasons, primarily driven by their mandate to promote education, economic growth, and financial inclusion. Let’s have a look at the banks that provide the cheapest education loan to study abroad.

State Bank of India (SBI)

Abroad education loan scheme: SBI Scholar Loan and SBI Global Ed-Vantage

Eligible countries:  USA, UK, Canada, Australia, Singapore, Japan, Hong Kong, New Zealand, and Europe.

Eligible courses: Regular graduate degree/post-graduate degree/diploma/certificate/doctorate courses.
 

Feature Description

Loan amount

Up to INR 1.5 Cr

Interest rate

Starting from 9.40%

Margin money

10% of the loan


 


 

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Bank of Baroda (BOB)

Abroad education loan scheme: Baroda Scholar Loan scheme

Eligible courses: 

  • list items Job oriented professional/technical graduate courses. MCA, MBA, MS, etc.
  • list items Courses conducted by CIMA-London, CPA in USA, etc.
  • list items Regular degree/diploma courses like aeronautical, pilot training, shipping, etc. Provided these are recognized by local Aviation/Shipping authority and Director General of Civil Aviation/shipping in India or the competent regulatory bodies in India/abroad for the purpose of employment in India/abroad.  
Feature Description

Loan amount

Up to INR 80 Lakh

Interest rate

Starting from 9.9%

Margin money

0 - 10%

Union Bank of India (UBI)

Abroad education loan scheme: Union Bank of India special union education loan scheme for abroad studies

Eligible countries: USA, UK, Canada, Australia, Singapore, Japan, Hong Kong, New Zealand, and Europe.

Eligible courses: 

  • list items Regular graduate degree/post-graduate degree/diploma/certificate/doctorate courses such as bachelor, master, MCA, MBA, MS, etc are covered. 
  • list items Courses conducted by CIMA- London, CPA in the USA.
  • list items Degree or diploma courses like aeronautical, pilot training, and shipping.  
Feature Description

Loan amount

Up to INR 1.5 Cr (Secured loans)

Up to INR 40 Lakh (Unsecured loans)

Interest rate

Starting from 9.8%

Margin money

10% - 15%

Punjab National Bank

broad education loan scheme: PNB Udaan Loan

Eligible courses:

  • list items Only technical or professional graduate courses
  • list items MS, MBA, etc.
  • list items Courses conducted by CPA in the USA or CIMA in London  
Feature Description

Loan amount

Up to INR 40 Lakh

Interest rate

Starting from 8.8%

Margin money

15%


 

Calculate your Education Loan EMI

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How to apply for an abroad education loan through GyanDhan?

The process to apply for an abroad education loan should always start from exploring and comparing different lenders and their products. Borrowers win half the battle as GyanDhan evaluates your profile and selects the best lender for them. To apply for an abroad education loan through GyanDhan, you need to follow five simple steps.

Step 1: Check your loan eligibility.

Step 2: Expert education loan counselor will evaluate your profile.

Step 3: Team GyanDhan will either arrange a doorstep pickup for your documents or provide a customized document checklist.

Step 4: Once the documents are uploaded, GyanDhan will proceed with the rest of the formalities.

Step 5: The bank will disburse the amount as per schedule.

Still, boggled by the various nitty-gritties that come hidden with an education loan scheme? Well, help is at hand in the form of GyanDhan, India’s first education financing platform. We are committed to helping our students get the best education loan scheme and make their higher education dream a reality. We assign a dedicated loan counselor who studies every student’s profile in detail and then advises the best loan scheme for that particular case. We also provide a customized list of documents that need to be submitted and even help with the collection and submission of the loan application and required documents. Get in touch with us now and get help in not only choosing the best education loan but also get help in your loan application and sanction too. 

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<!--td {border: 1px solid #cccccc;}br {mso-data-placement:same-cell;}--> Frequently asked questions

Which banks offer the cheapest education loan in India?

If you are looking for an educational loan with low interest rates, then public banks like the State Bank of India, Punjab National Bank, Bank of Baroda, Union Bank of India, and Punjab National Bank are the best options available.

Can we get a 0% education loan for studying abroad?

No, there is no educational loan available in India with a 0% interest rate.

What is the maximum loan amount that you can secure for abroad studies?

The maximum loan amount that can be availed for abroad studies varies from bank to bank. Usually students can secure up to INR 1.5 Cr. 

What is the present day interest rate for abroad education loans?

The current interest rate for abroad education loans varies from bank to bank but typically ranges from 8.5% to 11%. The interest rate is based on multiple factors such as the loan amount, repayment period, credit score of the borrower, the type of course or program, and various other factors.