Students who have this dream of achieving something greater in India or abroad might need some help to pursue their interests. This is where the need for an education loan arises. We cannot ignore the fact that there are certain conditions to be met to be eligible for that. There are plenty of options when it comes to an education loan. There is also a different list of banks you can choose from. With such unlimited options, you can go for education loans in India with the lowest interest rates. So, here is an article providing you with a list of banks offering low-interest rates for an education loan in India. We have also discussed the eligibility criteria, the documents required and when the education loan application might get rejected. Before going onto that, let us first understand what is an education loan.
What is an Education Loan?
An education loan is an amount of money that you borrow to finance your post-secondary or higher education. An education loan covers the expenses of tuition, books, study materials, living costs, and additional financial costs like transportation, library fee, health insurance (if applicable), study tours, etc. The repayment of the education loan is done when you start reverting the sum through interest or direct EMIs. The repayment is generally conducted after the grace period is over. Payments may be deferred after 6 months of earning a degree.
Types of Interest Rates
There are two types of interest rates that can be applied to education loans:
Floating Interest Rate
Floating interest rates are interest rates that are subject to change. They may increase or decrease during the loan period. Public sector banks provide less volatile interest rates.
Fixed Interest Rate
As the name suggests, fixed interest rates are interest rates that are fixed. They do not vary thus remaining the same throughout the loan period. The EMIs also stay the same. It is an easy option for a borrower for budget purposes.
List of Banks Offering Lowest Interest Rates in India
State Bank of India
State Bank of India (SBI) provides many educational loans starting with 6.70% interest rates. It also offers flexible repayment tenures. You can apply for SBI education loans both for India and abroad. It provides loans up to 20 lacs and above. You can also avail of loans for vocational training and other courses.
Here, is a list of the education loans provided by the State Bank of India (SBI) at lower interest rates:
- SBI Take Over of Education Loan – 8.65% interest rate p.a
- SBI Global ED-VANTAGE- 8.15% – 8.65% interest rate p.a
- SBI Scholar Loan – 6.70% – 8.15% interest rate p.a
- SBI Student Loan – 8.65% interest rate p.a
Bank of Baroda
Bank of Baroda provides diverse loans for education that are available at low-interest rates. The highest amount of education loan depends on the type of loan that is chosen.
Here, is a list of the education loans by the Bank of Baroda at lower interest rates:
- Baroda Scholar – 8.90% interest rate p.a
- Baroda Education to Students of Premier Institutions- 6.75% to 8.75% interest rate p.a.
- Baroda Gyan – Maximum of 8.75% interest rate p.a.
- Baroda Vidya – 9.60% interest rate p.a.
Central Bank of India
Central Bank of India provides education loans for students in India and abroad. The lowest interest rate provided by the Central Bank of India is 6.85%. There is also concession on ROI for females and backward castes like SC and ST students. The maximum loan amount for students in India is Rs 10 lakh and Rs 20 for students studying abroad.
Here, is a list of the education loans by the Central Bank of India at lower interest rates:
- Cent Vidyarthi – 8.50% to 9.00% interest rate p.a.
- Cent Vidyarthi for Executive MBA – 6.85% to 7.35% interest rate p.a.
- Cent Skill Loan – 8.65% to 8.70% interest rate p.a.
- Cent Vidyarthi IIMs and other reputed management institutes – 7.00% interest rate p.a.
Punjab National Bank
Punjab National Bank has numerous educational loan options to provide financial support to students studying in India, abroad or in premier institutes (university-level institutions). Concessional Educational loan in PNB offers a 4% interest rate on an amount of Rs 50 lakh with 40% disability in students or more. The repayment tenure is generally 15 years.
Here, is a list of the education loans by the Punjab National Bank at lower interest rates:
- PNB Pravasi Shiksha Loan – 8.90% interest rate p.a.
- PNB Honhaar – 8.75% interest rate p.a.
- PNB Kaushal – Up to 8.25% interest rate p.a.
- PNB Udaan – Up to 9.50% interest rate p.a.
- PNB Pratibha – Up to 8.00% interest rate p.a.
- PNB Saraswati – Up to 9.50% interest rate p.a.
Bank of India
Bank of India has a long list of educational loan schemes for students wanting to pursue professional courses in India and abroad. Students who have a good academic career are considered liable for such educational loans.
Here, is a list of the education loans by the Bank of India at lower interest rates:
- Bank of India Star Vidya Loan – 9.35%
- Bank of India Star Education Loan – One Tear MCLR + 1.70%
- Bank of India Education Loan Abroad – 8.55% to 9.35%
Union Bank of India
The educational loans provided by the Union Bank of India are available for students studying in India, abroad and NRIs. The lowest interest rate is 6.80% per annum. Either of the parent, spouse, or parent(s)-in-law can serve as a co-applicant.
Here, is a list of the education loans by the Union Bank of India at lower interest rates:
- Union Education Skill Development – 8.30% to 10.05%
- Union Education Special Education Loan Scheme – 6.80% to 8.55%
- Union Education Loan for Indian School of Business (ISB) Students – 6.80% to 7.00%
- Union Education (Up to 7.5 lakh) – 8.40% to 10.05%
- Union Education (Above 7.5 lakh) – 8.80%
Eligibility Criteria for Education Loan
Courses Providing Education Loan
The different types of courses for which you avail of education loans are:
- Undergraduate courses
- Postgraduate courses
- PhD and Doctorate courses
- Professional certification courses
- Vocational training courses
- Job-oriented courses
Nationality eligibility for Education Loan
All Indian-origin students who are eligible for loans for education include:
- Indian citizens
- Persons of Indian Origin (PIO): Students who are Indians but have settled abroad.
- Non-Resident Indians (NRIs): An Indian citizen who resides outside India for an indefinite period.
- Overseas Citizens of India (OCI): Foreign nationals who are OCI cardholders under Section 7A of the Citizenship Act, 1955.
Institutes Providing Education Loan
Banks extend loans for education to the following institutes:
- Private institutions
- Government colleges
- Recognized universities
- International colleges and universities
Documents Required
Certain documents are required as valid proof once a student seeks out an education loan. There is no need for submitting original documents but scanned photocopies to the bank. The documents required to apply for an education loan are as follows:
- Admission letter from the college or university
- Marksheets of 10, 10 +2, and graduation
- Permanent Account Number (PAN) card
- Aadhar card
- Voter ID card
- Passport
- Bank passbook
- Salary slips of the co-applicant
- Income Tax Returns (ITR) for the last two years of the co-applicant (parent(s)/spouse/parent(s)-in-law)
- Two passport-size photographs
Banks Offering Lowest Interest Rates Abroad
Both secured education loans from government banks and unsecured loans from abroad incur the following expenses on behalf of the students:
- Tuition Fees
- Abroad Living Expenses
- Health Insurance
- Travel Tickets
- Study Aid
The list of Banks Offering the Lowest Interest Rates for Education Abroad is as follows:
- SBI – Starts at 9.05 % p.a.
- Bank of Baroda – starts at 9.7% p.a.
- Axis – starts at 10.5% p.a.
- ICICI – starts at 10.5% p.a.
- HDFC Credila- starts at 9.75% p.a.
- Advanse- starts at 11.0% p.a.
- InCred- starts at 11.5% p.a.
- Auxilo – starts at 0.5% p.a.
(As of October 2022)
When Banks Reject your Education Loan Application?
Banks may reject your education loan application in the following circumstances:
- A CIBIL score less than 600 for you or your co-applicant is rejectable.
- Students who may be repeatedly failing in specific subjects, or is unable to complete their course in time may get rejected for education loan on such grounds. Some education courses may have some benchmark scores which need to be fulfilled to apply for such a loan. If your institute bars you from qualifying examinations, you might not be deemed suitable for education loans by the bank.
- The bank may not provide education loans for some countries like Ukraine, China and Afghanistan. Some of the countries which are on the lender’s list include the USA, Canada, the UK, Germany etc.
- Banks may reject education loans for professional courses that are unapproved.
- If incomplete or fake documentation is produced by the student and the joint applicant, there are high chances of education loan rejection by banks.
- Correspondence, distance and part-time learning are not taken as viable by banks to provide educational loans.
Final Thought!
Education loans at low-interest rates can be taken advantage of when you want to have the maximum benefit with the minimum expenses. Education loans in India offered by banks make it possible for students to dream big. In cases of financial constraints, these educational loans at the lowest interest rates provide the opportunity for students to continue their education despite the odds. When people in India are educated and financially stable, they can help the country grow and prosper, negating all the ills and setbacks.
Frequently Asked Questions (FAQs)
Which bank has the lowest interest rate on education loans in India?
SBI Scholar Loan provides a 6.70% – 8.15% interest rate per annum.
Which bank approves education loans easily?
Some of the banks approving education loans are the State Bank of India, Punjab National Bank, Bank of Baroda, Central Bank of India etc.
Which loan is better for students?
Any education loans provided by different banks are better for students. If you are looking for an educational loan at lower interest rates, then you may consider applying to banks like the State Bank of India, Punjab National Bank, Bank of Baroda, Union Bank of India, Central Bank of India etc.
Can banks reject education loans?
Yes, banks may reject education loans if the CIBIL score is low, poor grades, unapproved professional courses or institutions, fake documentation etc.
Can an education loan be reduced?
The burden on education loans can be reduced by selecting a short tenure, opting for a loan with collateral or interest subsidy, completing the loan payment throughout the moratorium period etc.
Which bank provides education loan at 0% interest?
There is no bank providing an education loan at 0% interest. The minimum interest rate for an education loan may vary from 6-7% p.a.
