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Education loans help students to pursue higher education in India and abroad. A student education loan covers tuition fees, living expenses, health insurance, travel expenses to the new country, and other miscellaneous expenses. As a result, it reduces the financial burden on the student and helps in achieving his/her educational goals. Moreover, the EMIs are only applicable after the completion of the degree that the student is pursuing. Hence, it is a great idea to take up an education loan. There are several banks giving education loans in India. Keep reading to know more about popular banks giving education loan in India.
| Bank Name | Interest Rate | Maximum Loan Granted |
| Axis Bank | 15.20% (till INR 4 lakh) 13.70% ( more than 7 lakhs) | INR 20 lakh and above |
| HDFC Bank | 9.25%-13.68% (for Indian and abroad studies) | INR 75 lakh |
| Union Bank of India | 10.05% (for India and abroad studies) | Need-based |
| IDBI Bank | 6.90% (for premier institutes)/ 8.80% (for vocational subjects) | INR 20 lakh / INR 30 lakh for abroad studies |
| State Bank of India | 6.90 %-9.30% (depending on the scheme chosen) | INR 1.5 crore |
| PNB | 8.95%-9.55% (depending on the scheme chosen) | No limit. Depends on the repayment capacity |
| ICICI Bank | 10.25% – 12.75% (India and abroad studies) | INR 1 crore |
| South Indian Bank | 10.05%-10.80% (Global Education scheme) | INR 1.5 crore |
| Avanse | 18% (Avanse base rate + spread) | Need-based |
Table of Contents
Expenses Covered under Education Loans
Below are the expenses covered under the education loans
- Tuition fees
- Health insurance
- Living expenses
- Travel expenses to the country of study
- Other miscellaneous expenses
Education Loan Eligibility Requirements
Before taking an education loan interested students need to meet the requirements for the same. Below are the education loan eligibility criteria for Indian students.
- The student should be a citizen of India
- The student should have secured admission to a university in India or abroad
- Students need a co-applicant. It can be their parent, guardian, spouse, or parent-in-law.
- The co-applicant needs to have a consistent source of income
- Apart from this, the student needs to have an excellent academic record
- NRI students seeking admission to Indian universities need an Indian passport and should have secured admission from an Indian university.
- There is no restriction in terms of age. However, it might differ from bank to bank.
- The parents can take the loan for students who are less than 18 years of age
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Factors Influencing Education Loans
Several factors influence loan approval from banks. These factors need to be considered by the individuals who want to apply for the loan.
- A good CIBIL score- The CIBIL full form is Credit Information Bureau (India) Limited. The CIBIL score is the credit score of the students who want to apply for an education loan. A good CIBIL score would be more than 700+.
- Whether the university is accredited or not. The University that a student wants to study at needs to be a reputed one. For example, UGC/AICTE is approved in the case of Indian Universities.
- Co-obligate or give personal guarantee- For a major student a parent with an income source will be made a joint borrower. The loans that are above 4 lakhs need a third-party guarantee as well. The third-party guarantee can be waived if the candidate makes proper financial disclosure.
- Security- A loan of more than 7.5 lakhs requires collateral security. Under this, tangible assets come in. For example, FD, LIC, NSC bonds, shares, debt bonds, and immovable property.
- Repayment- It can be done in two ways. Either you can repay the loans after finishing the course or getting a job. Another way is to repay the loan in monthly instalments after a certain period of time. That is, once you have completed the course. As a result, student needs to mention that they are willing to repay the loan.
Banks Giving Education Loans in India
Here is the list of the most popular banks giving education loan in India
Axis Bank
Axis Bank education loan is for students who want to pursue graduate and postgraduate studies. For the loan, students need to score a minimum of 50% in the last qualifying examination. Also, the parents need to have a regular source of income.
Axis Bank helps in the quick processing of the loan, they provide loans up to 75 lakhs, and no processing fee is charged for loans below 10 lakhs. The cons are, however, a high rate of interest, a 15% profit margin for loans more than 4 lakhs, and 24% p.a. penal interest charged for late payments.
HDFC Bank
HDFC Bank education loans for studying in India are limited to 20 lakhs. However, no upper limit is provided for loans for studying abroad. However, collateral is asked in the form of a fixed deposit or immovable property. The loan is offered for a period of 15 years. For skill development courses HDFC recommends personal loans.
The advantages of taking an education loan from HDFC bank are that they quickly process the loan and provide a lower interest rate. The disadvantages are that they charge a 1% loan processing fee, charge a 4% prepayment fee and provide less amount of loans for studies in India.
Union Bank of India
The Union Bank of India has four different categories. They provide loans for courses in India and abroad, loans for Kisan Shiksha Suvidha, loans for premier management and technical institutions in India, and loans for Tier 2 management and technical institutions in India. The loans provided are need-based and the limit of the loans depends on it.
The Union Bank of India does not charge a processing fee for loans, they provide a lower rate of interest and a 0.50% concession on the interest rate to female students. The drawbacks include the slow processing of loans. It is also compulsory to get life insurance for loans.
IDBI Bank
IDBI Bank provides loans for government-approved courses. They even provide loans for students seeking admissions through management quota. The repayment period is about 15 years. However, you would need to provide tangible security for loans of more than 7.5 lakhs. They offer loans of INR 20 lakhs for Indian institutions and 30 lakhs for foreign institutions.
IDBI Bank gives loans with low-interest rates for premier institutions. No processing fee or foreclosure fee is charged for studies in India. However, students would need to provide 1.33 times tangible collateral for loans of more than 7.5 lakhs. The loans are also processed slowly.
- Avanse
Avanse Financial Services is an NBFC offering educational loans to need-based students. There is no upper limitation to studying abroad. However, for Indian universities, 50,000 is the limit. The loans are provided mainly for studies in India, abroad, vocational courses, school fees, and for E-learning.
Students can receive 100% loan funds from Avanse. There is less paperwork and quick processing. Loans are provided for E-learning as well. However, the downside is that they charge a high rate of interest, a 1-2% processing fee, and, for 6 months pre-payment is not allowed.
Types of Education Loans for Indian Students
Popular Banks Giving Education Loan in India
Below is a list of some other famous banks giving education loan in India
State Bank of India
For foreign studies, SBI gives out an education loan for up to INR 1.50 crores. It is granted under the Global Ed Vantage scheme. The courses included in this scheme are postgraduate and diploma courses such as MCA, MBA, and MAS. Other courses include professional and technical degrees and certification courses by CIMA (London) and CPA (US). The SBI scholar loan scheme is for meritorious students who want to study at prestigious universities such as IIT.
SBI offers loans with a low-interest rate of 9.30%. Another benefit is that no processing fee is charged for studies up to 20 lakhs. They also have different loan schemes that students can check out. The cons are that they take a lot of processing time, and charge a 15% margin for foreign studies.
Punjab National Bank
PNB offers loans for Indian studies and for abroad studies. The PNB Udaan scheme supports students who want to study at prestigious universities. However, they should choose to study job-oriented courses such as PG MCA, MS, and MBA, CPA. Students can also get loans for diploma courses such as pilot training and shipping.
For studies in India, students can apply for the PNB Saraswati scheme and PNB Pratibha scheme. PNB Kaushal loan scheme is for vocational and skills development courses. There is a scheme to support minor communities as well. It is called ‘ Padho Pardesh’ for foreign studies. PNB offers low ROI and no processing charges. Students can choose to form a wide range of education schemes. The only drawback is the tedious paperwork.
ICICI Bank
At ICICI Bank students can get loans up to INR 50 lakhs for studying in India. The maximum limit is 1 crore for studying abroad. There is no requirement for collateral for ug courses. That is loans up to INR 20 lakhs. For PG courses the amount is INR 40 lakhs.
ICICI Bank gives out high amounts of loans. There is also less paperwork. The drawback is that the repayment holiday is limited to 6 months after finishing the course. There are hidden charges and you would be charged a high rate of interest.
South Indian Bank
SIB offers education loans for full-time undergraduate and postgraduate studies and skill development courses. The duration of the course has to be more than a year. Students who are 50 years of age can also apply for the loan. In fact, 0.5% concessions are provided for women borrowers. For global education, a maximum of 1.5 crores are provided by SIB.
- SIB grants a loan of 1.5 crores. Besides that, they cover diploma and skill development courses. The maximum age for the loan application is 50 years. The drawback is that they charge a 25% margin, 100% collateral equal to the loan amount, and repay course fees and accommodation within one year with proof.
List of Documents Required for Education Loan
The following are the educational loan documents required. Students need to present these documents for loan approval.
- Proof of academic qualifications. It includes educational certificates and admission documents such as mark sheets and fee details.
- KYC documents such as address proof, Voter ID card, Pan Card, driving license, electricity bill, passport, current house lease agreement, and proof of signature and age
- Present income proof such as bank statements, proof of turnover, income tax returns, and last two-month salary slips.
- Application form and two passport-size photographs
FAQs
Ans. State Bank of India and Axis Bank are the best banks for educational loans.
Ans. Unfortunately, it is not possible to get an educational loan for an interest rate of 0%.
Ans. Central Bank of India provides education loans with low-interest rates. For studies abroad or in India the interest rate charged is 6.5%.
Getting an education loan to financially support yourself is an excellent idea. Education loans not only have low-interest rates but students can pay them off after completion of the course. These banks help you do exactly that. Need help with study abroad admissions? Call us at 1800 572 000 and book our free 30-minute counselling session today.