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Education loans come with various costs like processing fees, prepayment penalties, and other hidden charges, which make your education loan expensive. One way to save money on your loan is by applying for education loans with the lowest processing fees.
Many banks and a few NBFCs even offer zero processing fee options, making your study abroad journey easier on your pocket. If you’re looking to save money on your loan, choosing education loans with the lowest processing fees is a smart move.
In this blog, we’ll guide you through:
- What are education loans with the lowest processing fees, and how do they work?
- How much do different banks charge, and where can you find the best deals?
- Which banks and NBFCs offer education loans with the lowest processing fees?
- Smart tips to reduce or avoid these fees altogether
Let’s explore all the details related to education loans with the lowest processing fees.
This Blog Includes:
What Are Processing Fees in Education Loans?
Processing fees are one-time charges that banks or financial institutions charge to cover the cost of verifying, approving, and disbursing your education loan.
These fees are usually non-refundable, meaning you’ll have to pay them even if your loan application gets rejected.
How Much Do Banks Charge for Processing Fees?
Processing fees vary across lenders but generally range between 0.5% to 2% of the loan amount. Some banks also charge a fixed fee (e.g., INR 5,000 to INR 20,000) regardless of the loan size. Here’s a quick comparison:
| Type of Lender | Processing Fee Range |
| Public Sector Banks (SBI, Canara Bank) | 0.5% – 1% + GST |
| Private Banks (HDFC, Axis, ICICI) | 1% – 2% + GST |
| NBFCs (Avanse, Incred) | 1.5% – 2.5% + GST |
| International Lenders (Prodigy Finance, MPOWER) | Fixed fee (100−500) |
Example: If you take a loan of INR 20 Lakhs:
- A 1% processing fee would cost INR 20,000 + 18% GST = INR 23,600
- A fixed fee of INR 10,000 would cost INR 10,000 + GST = INR 11,800
Some banks may waive processing fees during special offers, so it’s always wise to compare before applying.
Also Read: How Can You Get an Education Loan After 12th?
List of Banks Offering Education Loans with Lowest Processing Fees
Several Indian banks and NBFCs offer education loans with zero (NIL) processing fees, making them cost-effective options for students planning to study abroad.
Among private banks, Kotak Mahindra Bank stands out as it charges no processing fee, while public sector banks like Canara Bank, Bank of India, Central Bank of India, and UCO Bank also offer loans without processing fees for certain loan amounts.
Here’s a comparative table of banks/ NBFCs offering education loans with the lowest processing fees to study abroad.
| Bank / NBFC | Processing Fee (For Studying Abroad) | Key Details |
| Canara Bank (Vidya Jyothi) | NIL | No processing fee for any loan amount |
| Bank of India (Star Education Loan) | NIL | No processing fee |
| Central Bank of India (Cent Vidyarthi) | NIL | No processing fee |
| UCO Bank (UCO Vidya) | NIL | No processing fee |
| Kotak Mahindra Bank | NIL | Private bank with no processing fee |
| Indian Overseas Bank (IOB) | NIL (up to INR 10 lakhs) | Above INR 10L: 0.15% (max INR 3,000) |
| Indian Bank | NIL (up to INR 10 lakhs) | Above INR 10L: 0.15% (max INR 3,000) |
| Bank of Baroda (BoB) (Baroda Scholar) | NIL (up to INR 7.5L) | Above INR 7.5L: 1% (max INR 10,000, refundable for premium institutions) |
| IDFC First Bank | NIL (up to INR 7.5L) | Above INR 7.5L: Up to 1.5% |
| HDFC Credila | NIL (up to INR 7.5L) | Above INR 7.5L: 1% + GST |
| Punjab National Bank (PNB) (Udaan) | 0.35% (min INR 2,500, max INR 15,000) | Lower than most private banks |
| State Bank of India (SBI) (Global Ed-Vantage) | Fixed INR 10,000 + GST | No percentage-based fee |
| Union Bank of India | INR 10,000 + GST (up to INR 40L) | Above INR 40L: INR 20,000 + GST |
| ICICI Bank | Up to 2% of the loan amount | Higher than PSU banks |
| Axis Bank | Up to 2% + GST | Similar to ICICI |
| Avanse Financial Services | 1-2% of the loan amount | Case-to-case basis |
| Prodigy Finance | USD 500 (INR 41,500) | High compared to Indian banks |
Key Insights:
- Public sector banks (PSUs) generally offer lower or zero processing fees compared to private banks.
- Kotak Mahindra Bank is one of the few private banks with no processing fee.
- HDFC Credila & IDFC First Bank offer no fee for loans up to INR 7.5L, making them good for mid-range loans.
- Private banks (ICICI, Axis) & NBFCs (Avanse, Prodigy) charge higher fees (1-2% or fixed USD fee).
Also Read: Which is the Fastest Education Loan in India?
Tips to Reduce or Waive Processing Fees on Education Loans
When applying for education loans with the lowest processing fees, a little strategy can go a long way in saving money.
By researching, negotiating, and timing your application right, you can secure education loans with the lowest processing fees or even get them waived. Always read the fine print and confirm whether GST (usually 18%) is extra!
Here are some proven ways to reduce or even eliminate processing fees:
1. Negotiate with the Bank or Lender
Many banks are willing to lower or waive processing fees if you:
- Have a strong academic profile (high scores in competitive exams like GRE/GMAT)
- Show a good repayment capacity (family income, collateral, or co-signer support)
- Already hold an account (preferred customers often get discounts)
Example: Some private banks offer zero processing fees for students with admission to top-ranked universities.
2. Compare Multiple Lenders
Don’t settle for the first offer, compare education loans with the lowest processing fees across:
- Public banks (SBI, Bank of Baroda – often charge 0.5% to 1%)
- Private banks (HDFC, Axis – may offer discounts during promotions)
- NBFCs & International Lenders (Avanse, Prodigy Finance – sometimes have fixed low fees)
Tip: Use online loan aggregators to quickly compare processing fees. Similarly, by comparing education loan interest rates, you can negotiate with the bank and reduce the interest rates on education loans.
3. Look for Special Offers or Waivers
- Festive or admission season discounts (some banks waive fees for limited periods)
- University-tied loan schemes (certain lenders partner with institutions for lower fees)
- Pre-approved offers (check if your bank has pre-negotiated terms)
- All these special offers help you secure education loans with the lowest processing fees.
4. Opt for a Higher Loan Amount (If Possible)
Since processing fees are usually a percentage of the loan amount, some banks reduce the fee slab for larger loans.
Example:
- Loan of INR 10 Lakhs at 1% processing fee = INR 10,000 + GST
- Loan of INR 20 Lakhs at 0.75% processing fee = INR 15,000 + GST (effectively a lower rate)
5. Apply Through Education Loan Consultants
Some consultancies have tie-ups with banks to offer education loans with the lowest processing fees or even full waivers as part of their service.
This was all about the education loans with the lowest processing fees. Check out the FAQs below.
FAQs
Processing fees usually range from 0.5% to 2% of the loan amount. Some banks charge a fixed fee, like INR 5,000–INR 20,000. Public banks charge less, while private banks and NBFCs may go up to 2.5%.
Public banks like Canara Bank, Bank of India, Central Bank, and UCO Bank offer zero fees. SBI charges a flat INR 10,000 + GST. Private lenders like Kotak, HDFC Credila, and IDFC First Bank offer no fees up to INR 7.5L and charge 1%–1.5% beyond.
Banks like Canara Bank, Bank of India, Central Bank, and UCO Bank offer zero fees without conditions. Private banks like Kotak Mahindra, HDFC Credila, and IDFC First Bank offer zero fees up to INR 7.5L. Indian Bank and IOB offer no fees up to INR 10L.
Kotak Mahindra Bank charges no fee. HDFC Credila offers zero fee up to INR 7.5L, then 1% + GST. IDFC First Bank charges nothing up to INR 7.5L, then up to 1.5%. ICICI and Axis Bank charge up to 2% + GST.
No fee for loans up to INR 7.5L. For higher loans, it’s 1% + 18% GST. Example: On INR 20L loan, the fee is INR 23,600.
Yes, from public banks like Canara Bank, Bank of India, Central Bank, and UCO Bank. Private lenders usually charge fees for high amounts.
– Negotiate if you have a strong profile
– Compare lenders – PSUs are cheaper
– Look for seasonal offers
– Higher loan = lower fee % (in some cases)
– Use loan consultants with fee waiver tie-ups
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