Best Education Loans from Top Banks in India

Public Sector Banks often offer Competitive Rates

For those looking for lesser educational loans, public sector banks might just prove to be a good choice. Some of these banks include SBI, PNB, Bank of Baroda, Bank of Maharashtra, Canara Bank, IDBI Bank, Bank of India, and UCO Bank and they offer interest rates starting at or around 7%.

For instance, PNB and Bank of Baroda commence with 6.85% per annum, while Bank of Maharashtra also commences with 6.85%. SBI’s rates commence with 6.90%, while UCO Bank’s rates commence with 6.90%. On the other hand, IDBI Bank commences with 6.95%, and Bank of India commences with 7%.

However, the rate which starts with the lowest amount does not necessarily imply that it is the best deal for you. Different banks may have varied rates based on the applicant’s profile, course, educational institution, loan amount, and loan scheme.

Among these, SBI still continues to be among the leading options for education loans, having an interest rate between 6.90% and 9.90% annually as per the table above. In addition, SBI has zero processing fees on loans up to Rs.7.5 lakh.

The interest rates offered by PNB range between 6.85% and 11.60% annually, with zero processing fees. Interest rates offered by Bank of Baroda range between 6.85% and 11.25% annually, again with zero processing fees.

In case of students who borrow in the range of Rs.7.5 lakh, this can be very useful since the borrower can save one more fee, and at the same time get a very competitive interest rate.

Also read: Education Loans in India - The Complete Student Guide

What changes when you need a larger loan?

This calculation becomes significant especially if the education loan crosses Rs.7.5 lakh. This is especially true for the students who want to pursue their higher education either through post graduate course or some professional course.

Instead, in such scenarios, one must consider the effective cost of borrowing, rather than just choosing the bank with the lowest interest rate.

For instance, in HDFC Bank, there is no processing fee for loans less than Rs.7.5 lakh; however, 1% after that amount. In ICICI Bank, it may be up to 2% of the loan amount plus GST, while in Axis Bank, the processing fee is up to 2% of the loan amount plus GST.

For a large loan, even a seemingly small difference in processing fees can translate into a sizeable upfront expense.

“Education is an investment for building up the future society, and education loans serve as a vital catalyst for equity, access, ambition, quality and social mobility. By dismantling economic barriers to quality learning, student financing enables deserving individuals to pursue studies and transform their high aspirations into tangible achievements.

This democratization of opportunity ensures that merit and potential, rather than financial status, determine students’ academic success. Furthermore, an enrolment of diverse and capable minds in the higher educational institutions makes them inclusive and flourish through expanded enrolment, deeper research, and elevated standards of excellence. Ultimately, accessible student financing converts individual potential into collective progress, fortifying a resilient, inclusive, and globally competitive higher education ecosystem that drives long-term societal growth,” Prof.(Dr.) D K Bandyopadhyay, FAIMA, FIETE, Fellow (EICEP), Chief Advisor (FPO); Chairman (Amity Law Schools).

Education Loans for Studying Abroad

The students who wish to pursue their studies outside India should consider taking education loans in an entirely different way because studying abroad comes with relatively expensive tuition cost, accommodation, travelling expenses among others.

For instance, Karnataka Bank states that the processing fees for India study is nil but it charges Rs.10,000 plus GST for foreign study loans. Also, Tamilnad Mercantile Bank does not charge any processing fee for education loan in India but charges 1% of the loan amount for international education.

This explains why students need to inquire about the charges for international education loans from banks as opposed to assuming that the processing fee for domestic education will apply.