UBI vs SBI: Which is Better for Education Loans?

    Updated on: 11 Sep 2023

    ubi vs sbi

    In the fiscal year 2021-22, SBI accounted for approximately 47% of the total loans amounting to Rs. 7.5 thousand crores provided by Public Sector Banks (PSBs) for studying abroad. Similarly, around 47% of the students who availed loans for overseas education chose SBI as their preferred lender.

    Similarly, for UBI the loan disbursed amount for abroad education was around 500 Cr. In the Indian financial marketplace, public sector banks are often considered a reliable choice for obtaining a reasonably good loan. To assist you in making an informed decision, we present a comparative guide between two prominent public sector banks that offer study abroad loans. 

    Comparative overview of UBI vs SBI abroad education loan

    Union Bank of India (UBI) and State Bank of India (SBI) are well-known institutions in the financial marketplace, particularly when it comes to finding abroad education loans from public sector banks in India. While both banks offer similar features, there are a few distinct factors that you should consider when deciding between these lenders. Below is a table that can provide you with an overview of the differences between UBI and SBI.


    Basis of difference



    Loan amount (unsecured)

    Up to 40 Lakhs INR

    Up to 7.5 Lakhs INR

    Interest rate 

    Starting at 9.8%*

    Starting at 11.15%*

    Moratorium period

    Course + 12 months

    Course + 6 months

    Processing fees

    No processing fee

    10,000 INR + GST

    Processing time

    Up to 7 days

    Up to 14 days

    Unsecured loan eligibility

    Only for masters program


    Premiere institute list 

    Have a list that can lead to fluctuation in interest rate


    Loan Approval Basis GRE / GMAT? 




    *Interest rate as of July 2023

    UBI vs SBI: Unsecured loan amount

    When choosing between banks for an education loan, the loan quantum, or the loan amount offered, plays a crucial role and can significantly impact your decision. The loan quantum determines the maximum amount the bank is willing to lend, and it should align with your financing needs. Different courses and institutions may have varying tuition fees and living costs, so it's essential to evaluate whether the loan quantum offered by a bank can adequately cover your expenses. 

    For both banks, the maximum amount which can be borrowed in case you pledge a collateral goes up to 1.5 Cr INR but this is not the same when it comes to unsecured education loans. In the case of an unsecured education loan, SBI can provide you with up to 7.5 Lakhs INR while UBI can provide you with up to 40 Lakhs INR.

    Therefore, if you want to take an education loan with collateral, both these options are equally good as both of them have the same loan quantum while in case you want to take an education loan without collateral then UBI would be a beneficial option for you. 

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    UBI vs SBI: Interest rate

    The interest rate refers to the percentage charged by a lender on the borrowed amount. It represents the cost of borrowing and is an essential factor to consider when selecting a bank for an education loan as a slight increase and decrease in interest rate can have a huge impact on borrowing costs. Both SBI and UBI have a floating interest rate but the major point of differentiation is between their starting point of interest rates. 

    SBI has a reasonable interest rate that starts from 11.15%. This interest rate can further go down based on the interest rate incentive for girl candidates enrolling for Rinn Raksha insurance. On the other hand, you can borrow money from UBI for your education loan at an interest rate that starts only from 9.8%. UBI also has the same interest rate incentives as SBI which is being a girl applicant and taking term insurance. 

    UBI vs SBI: Moratorium period

    The moratorium period refers to a specified timeframe during which borrowers are not required to make principal or interest repayments. It provides financial flexibility to students, allowing them to focus on their studies without immediate repayment obligations. Different banks may offer varying moratorium periods, and selecting a bank with a longer moratorium period can provide more breathing space and financial relief. By carefully considering the moratorium period offered by different banks, students can choose a loan provider that aligns with their financial needs and provides the necessary support during their academic journey.

    UBI provides a moratorium period that extends up to the duration of the course plus an additional 12 months. In contrast, SBI offers a moratorium period that extends only up to the duration of the course plus 6 months. Both banks may offer a free moratorium period, allowing borrowers to defer principal and interest repayments. However, in certain cases where the loan application is not good, borrowers may have to pay simple interest during the moratorium period. 

    UBI vs SBI: Processing fees and time

    Processing fees and processing time are significant factors to consider when choosing between banks for an education loan. The processing fees are charges imposed by the bank for processing the loan application. Comparing the processing fees of different banks allows you to evaluate the additional costs associated with obtaining the loan. Additionally, the processing time refers to the duration it takes for the bank to review and approve the loan application. A shorter processing time means quicker access to funds, which can be crucial when dealing with admission deadlines or financial obligations. 

    UBI stands out with a relatively shorter processing time of 7 - 10 days, allowing for quicker access to funds. Moreover, UBI either does not charge any processing fees or charges a lower processing fee of 5,000 INR plus GST. On the other hand, SBI has a longer processing time of 10 - 15 days and charges a higher processing fee of 10,000 INR plus GST. By opting for UBI, applicants can benefit from a faster loan application process and incur lower processing fees, which can contribute to a smoother and more cost-effective borrowing experience.

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    UBI vs SBI: Eligibility and university list

    When choosing between banks for an abroad education loan, eligibility criteria, and the bank's approved university list are crucial factors to consider. Each bank may have specific eligibility requirements regarding the applicant's academic qualifications, admission to recognized universities, and co-borrower criteria. Ensuring that you meet the eligibility criteria of a particular bank is essential to increase the chances of loan approval.

    SBI does not provide unsecured education loans of high amounts which is why it does not have additional eligibility criteria or an approved university list, while UBI has specific requirements for unsecured education loans. To avail of an unsecured loan from UBI, applicants must be enrolled in a master's program only. Furthermore, UBI may offer attractive benefits such as low-interest rates and other perks primarily for select premier universities.

    Did you know?

    UBI is one of those public sector banks that accepts Gram Panchayat property as well for collateral while SBI does not accept the same. In a few cases, UBI can also accept agricultural land in alignment with state laws. 

    After analyzing all the differences it can be concluded that there is no one bank that is a clear winner in all the aspects mentioned above. There were some aspects in which SBI was more favorable, then there were some factors in which we can say that UBI is a better choice. It all comes down to one's individual requirements. In case you want a loan of up to 40 Lakhs at the lower interest rate and processing fees and do not have 100% collateral to pledge but apart from it everything aligns well then you can proceed with UBI. This can also be a case when you have collateral to pledge but it is a Gram Panchayat Property. On the contrary, if you want a secured education loan but your university is not approved by UBI which leads to an increase in interest rate then SBI can be a clear choice.

    Now that you know several differences between UBI and SBI, you can confidently start your abroad education journey by comparing each of the aspects with your personal requirements and then evaluating which bank’s loan offering better aligns with you. You have to check all the things before applying for abroad education loan. If you still can’t decide which is better for you and believes that evaluating the best bank in accordance with your requirements is too much work for you then don’t worry, let GyanDhan help you. All you have to do is check your eligibility with us.

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    Frequently Asked Questions

    Does SBI or UBI provide unsecured education loans?

    Yes, SBI and UBI both provide unsecured education loans the difference between them is their loan quantum. In the case of SBI, you can get up to 7.5 Lakhs INR as an unsecured education loan while in the case of UBI the loan quantum for an unsecured education loan can go up to 40 Lakhs INR.

    Is there any pre-payment penalty associated with either SBI or UBI education loan?

    No, there is no pre-payment penalty that you would have to pay in case you decide to foreclose your loan. 

    What are the processing fees charged by SBI and UBI Banks?

    The processing fee that is charged by SBI is around 10,000 INR while in the case of UBI, it is 5,000 INR. 

    What are some collateral restrictions in the case of SBI?

    In the case of SBI, the collateral property that you are pledging must not be either a agricultural land or a Gram Panchayat Property.

    First published date: 28 Jul 2023

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Sahil Sahil khan

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