Finance should never be a barrier to education, yet many students abandon their dreams due to financial restraints. While education loans are a viable option, the fear of high interest rates often discourages students from utilising them. What many aspiring scholars don’t realize is that a world of low-interest rate education loans exists, waiting to help them achieve their academic goals without the burden of ballooning debts. With the right information and planning, higher education can be more accessible and affordable than ever, empowering scholars to turn their dreams into reality without the burden of financial stress.
Breaking Down Interest Rates on Education Loans
Understanding interest rates can be confusing for many, so let’s break down what they really mean. An interest rate is the cost of borrowing money, expressed as a percentage of the principal amount. It represents the amount a lender charges a borrower for a loan or any form of debt. Simply put, it’s the price paid for using borrowed funds.
Like every other loan, interest rates are applicable to education loans as well. However, what sets them apart is that many banks and financial institutions offer student-friendly terms, including lower interest rates, flexible repayment options and government subsidies. Education loans typically come with two types of interest rates:
- Fixed Interest Rate: This rate remains consistent throughout the loan’s term, ensuring predictable monthly repayments. Fixed rates offer stability, allowing students to organise their finances without concern about market swings.
- Floating Interest Rate: This rate varies depending on market conditions and changes in the bank’s benchmark rates. While floating rates may begin cheaper than fixed rates, they might rise over time, thereby increasing the total repayment amount.
What is considered a low-interest education loan? Generally, interest rates on education loans range from 8% to 15%, depending on the lender, the borrower’s profile and government-backed subsidies. Loans with interest rates on the lower end of this spectrum, particularly those below 10%, are considered affordable and student-friendly. Still, with the plethora of education loan options available, students may feel overwhelmed and unsure about making the right choice. To simplify the decision-making process, this article highlights the top education loans with low interest rates, helping students find the most affordable and suitable financial support for their academic journey.
Best Low-Interest Education Loans for Students
- State Bank of India: The State Bank of India (SBI) offers various education loan schemes to support students in financing their higher education. They provide competitive interest rates and flexible repayment options, making it one of the most sought-after banks for education loans.
Scheme | Loan amount | Interest rate |
---|---|---|
SBI Student Loan Scheme | According to requirement | 10.15% |
SBI Scholar Loan Scheme (IITs, IIMs, NITs, etc.) | Rs.7.5 Lakh onwards, no upper limit | 8.30% – 9.80% |
SBI Skill Loan Scheme | ₹1.50 lakh (Without Collateral) | 10.65% |
SBI Global Ed-vantage Scheme | Rs.7.5 Lakh – Rs.1.5 Crore | 10.90% |
Click here to check SBI interest rates.
- Bank of India: Bank of India provides a diverse range of education loans, making studies more accessible with low-interest financing options. With promising low interest rates, no hidden charges, minimal documentation and a seamless online application process, Bank of India stands out as one of the top choices for students seeking education loans.
Scheme | Loan amount | Interest rate |
---|---|---|
Star Education Loan – Studies in India | Maximum Rs.1.5 Crore | 9.95% – 10.75% |
Star Education Loan – Studies Abroad | Up to Rs.1.5 Crore | 9.95% – 10.75% |
Star Vidya Loan | Up to Rs.40 Lakh, depending on the institute | 8.25% |
Star Progressive Education Loan | Up to Rs.4 Lakh | RBLR+ CRP of 1.70 % p.a., floating with monthly rests |
Click here to check the Bank of India interest rates.
- ICICI Bank: Pursuing higher education at a top university is a dream for many, and ICICI Bank makes it easier to achieve. With education loans of up to ₹3 crore for overseas studies and ₹1 crore for courses in India, students can focus on their future without financial worries. Here’s more about ICICI Bank educational loans.
Scheme | Loan amount | Interest rate |
---|---|---|
For domestic courses | Up to Rs.1 Crore | 9.50% onwards |
For international courses | Up to Rs.3 Crore | 9.50% onwards |
Click here to check ICICI Bank interest rates.
- Central Bank of India: The Central Bank of India offers student-friendly education loans designed to make higher education more accessible and affordable. With competitive interest rates, minimal processing fees and flexible repayment options, students can finance their studies in India and abroad without financial strain.
Scheme | Loan amount | Interest rate |
---|---|---|
Cent Vidyarthi | Up to Rs.2 crore | 10.65% – 11.25% |
Cent Vidyarthi for Executive MBA | Up to Rs.40 Lakh | 8.30% |
Cent Skill Loan | Rs.5,000 to Rs.1.5 Lakh | 10.90% – 10.95% |
Click here to check Central Bank of India interest rates.
- Canara Bank: Canara Bank offers a range of education loan schemes designed to support students in pursuing their academic aspirations without financial barriers. With low-interest rates, flexible repayment options and minimal processing fees, Canara Bank ensures that higher education remains within reach for deserving students.
Scheme | Loan amount | Interest rate |
---|---|---|
Vidya Turant | Up to Rs.50 Lakh (depending on institute) | 9.25% – 9.85% |
IBA Skill Loan Scheme – Education Loans | Rs.5,000 to Rs.1.5 Lakh | 10.65% |
Click here to check Canara Bank interest rates.
- Punjab National Bank: Punjab National Bank (PNB) offers a range of education loan schemes designed to make higher education accessible and affordable for students in India and abroad. With competitive interest rates, zero processing fees for smaller loans, and flexible repayment options, PNB ensures that financial constraints do not stand in the way of academic aspirations.
Scheme | Loan amount | Interest rate |
---|---|---|
PNB Saraswati | According to requirement | 10.75% – 12% |
PNB Pratibha | According to requirement | 8.55% – 10.50% |
PNB Udaan | According to requirement | 10.75% – 12% |
PNB Kaushal | Rs.5,000 to Rs.1.5 Lakh | 10.25% – 10.75% |
Click here to check Punjab National Bank interest rates.
How to Secure the Cheapest Education Loan in India
Education loan interest rates and eligibility criteria vary across different banks, but with the right approach, you can secure the most cost-effective loan. By exploring your options and making informed decisions, you can enhance your chances of obtaining an education loan at the lowest possible interest rate, making higher education more financially feasible. Here are some essential steps to help you get the best deal:
- Explore Multiple Options: Before finalizing a lender, conduct thorough research and compare loan offerings from different banks. Engage with shortlisted banks to understand their terms and negotiate the most competitive interest rate.
- Opt for a Secured Education Loan: If you have the option to pledge collateral, such as property or fixed deposits, consider taking a secured education loan. Since these loans involve lower risk for the lender, they often come with reduced interest rates.
- Ensure You Meet All Eligibility Requirements: Each financial institution has specific eligibility criteria for education loans. Reviewing and fulfilling these requirements enhances your chances of approval and may allow you to negotiate better loan terms.
- Check for Government Subsidies and Special Loan Schemes: The central and state governments offer various financial assistance programs and subsidies for higher education, some tailored to specific fields of study. Staying informed about such schemes can help you secure a larger loan at a subsidized rate.
Also Read – What is CIBIL Score?
FAQs
What is considered a low-interest rate for education loans?
A low-interest education loan typically falls within the 8% to 10% range, depending on the lender, loan type, and borrower’s eligibility. Government-backed loans and secured loans often offer lower interest rates.
Can I get an education loan without collateral?
Yes, many banks offer unsecured education loans (without collateral) for amounts up to ₹7.5 lakh. However, for higher loan amounts, collateral such as property, fixed deposits, or insurance policies may be required.
How does the moratorium period work in education loans?
The moratorium period is the loan repayment holiday provided during the course duration and an additional 6 to 12 months after completing the studies. Interest may accrue during this period, depending on the bank’s policy.
Are there any government subsidies for education loans?
Yes, schemes like the Central Sector Interest Subsidy (CSIS), Padho Pardesh, and Dr. Ambedkar Interest Subsidy Scheme provide relief on interest rates for eligible students, particularly from economically weaker sections.