Education has become a powerful catalyst for personal growth and career success in today’s rapidly changing world. The rising cost of education poses a significant financial challenge for many individuals and their families. Education loans have emerged as a vital resource in India to bridge this gap and allow students to pursue their academic dreams.
Education loans are financial instruments that are specifically designed to provide students with the funds they require to pursue higher education. Banks and financial institutions provide these loans, allowing students to gain access to quality education and a world of opportunities. Education loans cover a wide range of educational pursuits, from undergraduate courses to postgraduate degrees, and professional programmes to vocational training.
Benefits of Education Loans:
- Access to Quality Education: Education loans enable students to pursue higher education in top institutions, both in India and foreign. These loans cover a wide range of courses, including engineering, medicine, management, and among others.
- Financial Assistance: Education loans provide financial support to cover tuition fees, accommodation charges, study materials, and other educational expenses. They relieve students and their families from the immediate burden of arranging funds, making education more affordable.
- Flexible Repayment Options: Education loans typically offer a moratorium period, during which students do not need to make any repayments until they complete their education. This eases the financial strain on students and allows them to focus on their studies. After the moratorium period, borrowers can choose from various repayment plans based on their financial capabilities.
- Competitive Interest Rates: Education loans in India often come with competitive interest rates, making them more affordable for students. Interest rates may vary depending on factors such as the loan amount, repayment tenure, and the borrower’s creditworthiness.
- Enhancing Credit Profile: Timely repayment of education loans helps build a positive credit history, which can be beneficial for future financial endeavors. It demonstrates responsible financial behavior and can improve an individual’s creditworthiness, facilitating access to other financial products in the future.
How Much Education Loan Can I Get?
It is no longer a secret that the education costs are skyrocketing every year. Whether you go to IVY League Schools or top institutes in India, the cost of education is high. According to a report by NSSO average expenditure for a general student has increased by 175%. The figures for higher education are much higher. By 2025, a good MBA degree is going to cost around Rs.50-60 Lakh. In such a scenario, it becomes necessary to take out an education loan. If you are planning to apply for an education loan online, here is what you need to know.
The student is the main applicant: It is important to know that the student pursuing the course is the main applicant for the loan. The student let alone will be responsible for repaying the loan. The co-guarantors, parents, spouses, or siblings are held responsible in case the student themselves is incapable of repaying the loan.
Loan amount and eligibility
Creditors want to ensure that the applicant has a good employment prospect after completing the course. Therefore, they pay special attention to the course you are planning to study. The choice of college also plays an important role in loan approval. The course should be accredited but also should be pursued from a reputed college. Completing education from top-ranked institutes increases the chances of employment. The brand of the college also affects the amount of the loan. The better the college the more is the loan amount. Creditors classify colleges into 4-5 categories. It starts from A+ or AA and goes till C. A+ or AA category consists of the few top institutes in the country. The interest rates for these colleges are the lowest. The rates increase with every change in category.
Collateral or Not
If you are seeking a loan for a smaller amount, then you will not need collateral. Generally, this applies to a loan amount of Rs.7-8 Lakh. Any student loan beyond this amount may or may not warrant collateral. If you are going to pursue the course from a good college, the amount of loan can go up as high as Rs.20-25 Lakh.
Know About Other Charges
Another thing to remember while taking out a student loan is the cost of other charges. For instance, banks can charge processing fees, pre-payment charges, and penalties for late payment of EMIs. These costs can vary from bank to bank. To get a rough idea of how much your EMIs are going to cost, you can use an education loan calculator.
Tax Benefits:
Education loans give you the benefit of deductions on the interest you have paid for the repayment of the loan.
Bank Name
Top Indian Bank’s Education Loan Interest (%) in 2023
Below is the table of India’s top public and private sector bank’s education loan interest rate in 2023:
| Bank Name | Education Loan | Interest Rate(%) |
| Bank of Baroda | Baroda Vidya | 12.45% |
| Bank of Baroda | Baroda Gyan | 11% to 11.10% |
| Bank of Baroda | Baroda Scholar | 10.35% to 11.10% |
| Bank of Baroda | Baroda Loan – Premier Institutions | 9.10% to 10.15% |
| State Bank of India | SBI Student Loan Scheme | 10.90% |
| State Bank of India | Scholar Loans | 8.30% to 9.80% |
| State Bank of India | Takeover of education loan | 10.90% |
| State Bank of India | SBI Global Ed-Vantage (Abroad) | 10.90% |
| State Bank of India | Shaurya Education Loan (Defense) | 10.90% to 11.50% |
| Bank of India | Star Education Loan – India | 9.95% to 10.75% |
| Bank of India | Star Education Loan – Abroad | 9.95% to 11.60% |
| Bank of India | Star Vidya Loan | 8.25% |
| Bank of India | Star Progressive Education Loan | 9.95% |
| Punjab National Bank | PNB Saraswati – India and Abroad | 11.2`5% to 12% |
| Punjab National Bank | PNB Kaushal | 10.25% to 10.75% |
| Punjab National Bank | PNB Pratibha | 8.55% to 10.50% |
| Punjab National Bank | PNB Udaan – Abroad | 10.75% to 11.50% |
| Punjab National Bank | PNB Honhaar | 11.25% |
| Axis Bank | Axis Education Loan | 13.70% to 15.20% |
| ICICI Bank | ICICI Education Loan | 9.50% onwards |
