Education is the birthright of every child, but how many children can afford it in these turbulent times when education costs continue to rise? Gradually getting a good education is becoming a dream that only the upper-middle class or rich people can afford.
So, what happens to the students from lesser backgrounds who want to break the shackles of poverty through education? Well, building an education fund is an ideal option, but if they can’t reach their goal in time, an education loan is a great option. It can be repaid slowly within a stipulated time frame.
Leading government and private banks, cooperatives and NBFCs are offering loans at reasonable rates; hence it seems sensible to apply for it especially when the terms and conditions are aligned with your interests.
Average education loan rates
The average education loan rate in India is 11% if the student wants to study here. It increases to 12.5% if the student is interested in attending a foreign university.
Comparing the top education loan offers in India in 2023
The Reserve Bank of India in September 2022 hiked the repo rate to 5.9%, which resulted in an increase in ROI on loans.
Let us compare the education loan rates in India of some of the public as well as private sector banking institutions to get a clear picture of the type of plan that will suit your personal preferences
| Name | National Institutions ROI (%) | International Institutions ROI (%) | Processing Fees |
| Punjab National Bank | 8.65% – 9.90% | 10.65% – 11.40% | Nil – 1% |
| State Bank of India | 7.95% – 10.55% | 10.55% | Nil – INR 10,000 |
| Axis Bank | 13.70% – 15.20% | 13.70% – 15.20% | Up to 2% |
| Bank of Baroda | 10.50% – 11.85% | 10.25% – 10.90% | Nil – 1% |
| ICICI Bank | 9.5% onwards | 9.5% onward | Up to 2% |
| Bank of Maharashtra | 8.85% – 10.70% | 10.35% – 10.70% | Nil – 0.50% |
| Federal Bank | 11.95% onwards | 11.95% onwards | NA |
| Bank of India | 10.45% – 11.25% | As Applicable | Nil – INR 5,000 |
| Canara Bank | 8.8% – 10.80% | 10.40% – 10.90% | 0.50% |
| Kotak Mahindra Bank | Up to 16% | Up to 16% | NA |
How do banks calculate education loan rates in India?
Education loan rates of the lending Institutions depend upon several critical factors. These are-
1. University
If the college or university that the student is getting admitted to has a record of good placements, then most banks would be willing to sanction loans at a lower interest rate.
2. Academic record
The academic record of a student matters a lot because if a student has been able to maintain very good grades throughout their academic career, the chance of getting a loan at low-interest rates becomes high.
If the record is average or below average, the chance of loan approval becomes less, and the rate of interest will be comparatively higher.
3. Collateral
Secured loans or loan applications where the applicant can provide collateral have lower ROI compared to unsecured loans without collateral.
4. Credit score of the co-borrower
If the co-borrower has a low credit score, then the chance of the loan application being rejected or an increased rate of interest becomes high, whereas a good credit score will secure the loan quickly at low interest.
Education loan through the EduFund app
Edufund is one of the leading apps that helps students with easy education loans. Students can access loans up to an amount of 1 crore to study in either India or a foreign university.
The service is free, and there are no hidden charges that can later come to haunt you.
Through the Edufund App, you have direct access to its NBFC partners and banking institutions like Axis Bank, HDFC Bank, MPower Financing, ICICI Bank, etc., so that the loan approval process becomes quick and easy.
The best thing about getting a loan through the app is that collateral is not needed for loan amounts up to INR 75 Lakh. The icing on the cake is that the higher the amount of the loan, the lower the interest rate you have to pay.
The education calculator on the site is a blessing in disguise as it helps to calculate the required sum with some simple steps within a few seconds.
Income Tax benefit on education loans
Applicants should know that the interest amount and not the principal part that an individual pays on an education loan can be claimed as a deduction under Section 80E of the Income Tax Act of India 1961.
The exemption is for a maximum of 8 years or till the date when the interest is paid, whichever is earlier.
Conclusion
It is vital to know about the education loan rates in India to make comparisons and understand where to apply and how to get the minimum rate of interest on the loan amount
