Education Loan

Return on Investment in Education Loan

Return on Investment in Education Loan

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Learn how investing in your education through loans can yield significant returns. Understand the long-term benefits and strategic planning for maximizing your education loan's ROI.

Rohit Gidwani
Updated on:  26 Feb 2024  | Reviewed By: 
| 116 | 6  min read

Understanding "What is ROI in education loan?" is critical for students and families diving into the financial commitments of higher education. This blog aims to shed light on this crucial aspect, offering a comprehensive guide to evaluate and enhance the return on investment for education loans. By comparing lender terms, analyzing loan amounts versus interest rates, and highlighting additional factors crucial for a better ROI, we provide actionable insights to navigate the complex landscape of education financing. This guidance is designed to help you make informed decisions, ensuring your investment in education pays off in the long run.


Factors Influencing ROI in Education Loan

When assessing the return on investment for education loans, several pivotal elements come into play. Interest rates, the size of the loan, the terms under which repayment is structured, and the anticipated salary following graduation are all critical. These factors collectively influence the overall cost and financial feasibility of an education loan, highlighting the importance of strategic planning and informed decision-making for students aiming to maximize their educational investment's value. Here are some of the factors to consider:

Interest rates

Interest rates are crucial as they directly affect the monthly payments and total amount paid over the life of the loan, impacting what is ROI in education loan? For example, a loan with an interest rate of 10% versus one at 8% can result in significantly higher costs. It's important to compare rates across various banks and consider the impact of fixed versus variable rates on long-term payments.

Loan amount

The principle of borrowing only what you need cannot be overstated. Larger loans accrue more interest, increasing the total repayment amount. However, investing in a high-quality education can lead to better job prospects and higher salaries, enhancing ROI. Consider the cost of the program against potential salary increases post-graduation.


Check Your Education Loan Eligibility

Repayment terms

Terms of repayment, including the duration of the loan and options for deferment or forbearance, play a significant role. Longer repayment periods may reduce monthly payments but increase the total interest paid. Flexible repayment options can provide breathing room for graduates as they transition into the workforce.

Expected salary after graduation

The potential earnings in your chosen field are perhaps the most significant factor affecting ROI. Research average salaries for graduates of your program and weigh this against the cost of the loan. High-paying fields may justify larger loans, while lower-paying sectors may necessitate more cautious borrowing. You can estimate your future potential earnings here. 


Lender Comparison for Education Loan ROI

This lender comparison, based on the loan amount and interest rate for what is ROI in education loan, can be beneficial. A good balance between the loan amount and the interest rate can help you achieve a better Return on Investment (ROI) in education loans.

Lender Name Maximum Loan Amount Rate of Interest


Up to 1.5 Cr INR

10.15% - 10.65% (males)

10.65% - 11.15% (females)


Up to 1.5 Cr INR

9.25% - 9.75%

Axis Bank

Up to 75 Lakh INR

9.90% - 11.50%


Up to 1.5 Cr INR

9.50% - 11.25%


Up to 70 Lakhs INR

9.75% - 12.25% 

HDFC Credila

Up to 60 Lakhs INR

10.50% - 12.25%


Up to 50 Lakhs INR

10.50% - 12.75%


Up to 50 Lakhs INR

10.50% - 12.95%


Up to 50 Lakhs INR

10.50% - 13.50%

MPOWER Financing

Up to 100,000 USD

12.99% - 15.99%

Prodigy Finance

Up to 100% cost to study

12% - 14%

Interest rate as of February 2024


Additional Factors for Enhanced Education Loan ROI

When evaluating education loans from top banks, it's essential to look beyond just interest rates. 

  • list items Benefits and terms: Some banks offer unique benefits, such as grace periods for repayment, no penalty for early repayment, and special rates for women or economically disadvantaged students. These can all influence the overall cost of the loan.
  • list items Service and support: Consider the level of service offered by the bank, including the ease of application, the availability of loan advisors, and support for international students.
  • list items Flexibility: The ability to adjust repayment plans based on income or financial hardship can be a critical factor, especially for students who face uncertain job markets.

Strategies for Maximizing ROI in Education Loan 

Maximizing 'What is ROI in Education loan?' involves a holistic approach before, during, and after your studies. This comprehensive strategy involves careful selection of your educational program, managing finances wisely while studying, and effective loan repayment planning. Such an approach ensures that every phase of your education contributes positively to your financial well-being, ultimately enhancing the return on your educational investment. Maximizing ROI involves strategic planning before, during, and after your education:

  • list items Careful selection of program and institution: Programs with strong employment outcomes and institutions with robust alumni networks can significantly improve job prospects.
  • list items Work experience and internships: Gaining relevant work experience during your studies can enhance your resume and potentially lead to higher starting salaries upon graduation.
  • list items Financial literacy: Understanding personal finance, including budgeting, saving, and investing, can help manage loan repayments more effectively and lead to better financial decisions.
  • list items Repayment strategy: Consider strategies such as paying off interest while still in school or starting repayments early to reduce the total interest accrued. Additionally, explore loan forgiveness programs if applicable to your situation.


Investing in education is a significant financial decision that requires careful consideration of various factors to maximize ROI. By understanding the impact of interest rates, loan amounts, repayment terms, and potential earnings, students can make informed choices about borrowing for their education. Comparing loans from different banks and employing strategies to enhance ROI can lead to a more manageable financial future and a rewarding career path. This comprehensive approach ensures that students and families are well-equipped to navigate the complexities of financing higher education. If you find all this information overwhelming, there is an easy way out. This starts with checking eligibility with GyanDhan as this will enable us to analyze your requirements and align you with the best lender that can maximize your ROI in education loan.

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Frequently Asked Questions

What factors should I consider when choosing between a fixed and variable interest rate for my education loan?

Consider market trends, your financial stability, and the loan term. Fixed rates offer predictability, while variable rates may initially be lower but can fluctuate with market changes.

Can the field of study influence the interest rate or terms of an education loan?

Yes, some lenders offer more favorable terms for fields of study with high employment rates or higher earning potential, recognizing the lower risk of default.

How do scholarships or grants affect the ROI of an education loan?

Scholarships and grants reduce the amount you need to borrow, directly improving your ROI by lowering your overall debt and potentially the interest paid over time.

Is it beneficial to make interest payments on education loans while still in school?

Making interest payments during school can significantly reduce the total interest accrued, lowering the overall cost of the loan and improving ROI.

How does the repayment term length affect the total cost of an education loan?

Longer repayment terms can lower monthly payments but increase the total interest paid over the life of the loan, affecting the overall ROI. Shorter terms increase monthly payments but reduce total interest costs.

Check Your Education Loan Eligibility


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