Public Sector Banks Education Loan Products: A Detailed Comparison

Every public sector bank in India offers an education loan to study in India. Though, not every bank has a loan product for education abroad. Some of the top banks that offer education loans to study in India and abroad are as follows - 

• Axis Bank 
• Bank of Baroda 
• Bank of Maharashtra 
• Canara Bank 
• Central Bank of India 
• Federal Bank 
• HDFC Bank 
• ICICI Bank 
• IDBI Bank 
• Indian Overseas Bank 
• Karur Vysya Bank 
• Kotak Mahindra Bank 
• Punjab National Bank 
• RBL Bank 
• State Bank of India 
• UCO Bank 
• Union Bank of India 
• United Bank of India

We will be comparing the education loan products of some of the top public banks from the above-mentioned list to find the best bank with the best loan product. 

To find the best bank, one must compare the features and aspects of an education loan. This table below would make the comparison easier - 

Every aspect of an education loan should be considered while comparing different loan products. Each factor has its significance. 

• Loan amount - the product should cover your loan requirement. Applying for a second loan, in case the first one doesn’t cover the expenses, would be another long and cumbersome process. 
• Interest rate - goes without saying, one of the most important factors is the interest rate as it decides the total amount you will repay to the bank. A low interest rate would lead to low EMIs and a reduced financial burden. 
• Collateral - Under the Indian Banks’ Association guidelines, banks ask for collateral equivalent to or more than the required loan amount, if the loan amount is above INR 7.5 lakhs. So, regardless of the loan product and lender, if the applied loan amount is more than INR 7.5 lakhs, students will have to pledge collateral to support the amount. 
• Loan tenure - This factor decides the number of years your financial responsibility will continue. You can opt for a short loan tenure. However, that will increase your EMI amount. To manage EMIs and make them affordable, several students opt for a longer loan tenure. 
• Processing fees - A charge you pay to the bank to process your loan application. This is a one-time charge. Most public banks even refund the fees on the first disbursement of the loan amount. 
• Moratorium period - This is a period where the borrower is not required to make any repayment to the bank. In most cases, it is a course period plus 12 months or 6 months after securing a job. This period ensures that the student is not worried about the repayment during their education and can start repayment once they graduate. Though, students should remember that banks charge interest during this period as well, which is distributed in the EMIs. Students can also opt to serve this interest during their study if they are able. Read about pre-paying your education loan and its benefits here - Loan Repayment or Loan Prepayment: Clear Your Confusion & Save Big!
• Margin Money - In simple terms, margin money is a contribution to the total expenses from the applicant’s side. Banks keep this provision as a sign of trust and to reduce their own risk. The margin money is usually 5% for loans to study in India and for abroad education loans, it is 15%. Read how margin money is calculated here - What is Margin Money in Education Loan?

Apart from this, enquire about the terms and conditions of the loan product before you apply.

Choosing the right loan product is imperative for students as it can help save money. Simply contact GyanDhan to get a fair opinion and review of the loan product.