Education Loan Interest Rate

Education Loans are usually borrowed by students who want to pursue their higher studies but are not financially eligible. Public sector banks, as well as the private sector banks, provide loans for the students. The rate of interest charged on these loans may vary from bank to another. The bank's rates usually start at 8% and go up to 15%. All the banks calculate the interest rates on the basis of the marginal cost of funds-based lending rate (MCLR) and additional spread is added on these rates. 

The repayment period for these loans differs from one institution to another. NBFC’s and Private sector banks usually expect the loans to be paid during the course period. Public sector banks provide a moratorium period or the interest-free period after the completion of the course where students are expected to secure a job and be able to repay the loan amount. During the course period, the education loan borrowed will be calculated under the simple interest method. After the completion of the course, the interest will be compounded and the students are expected to pay these amounts through Equated Monthly Installments (EMI). A concession of 2% will be given to female students.

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Education Loan Interest Rates in Public Sector Banks

The public sector banks charge less interest compared to the private sector banks, however, the amount of loan that will be provided is also comparatively less.

Name of the Bank

Interest Rates

 

Courses in India

Courses Abroad

1. State Bank of India (SBI)

8.60%

9.75%

2. Bank of Baroda (BOB)

10.40%

11.45%

3. IDBI Bank

9.50%

9.50%

4. Punjab National Bank (PNB)

8.35%

10.45%

5. Central Bank of India (CBI)

10.10%

10.00%

6. Canara Bank

9.90%

9.90%

7. Bank of India (BOI)

9.80%

9.80%

8. Indian Bank

8.60%

10.60%

9. Union Bank of India

10.05%

10.05%

10. Oriental Bank of Commerce

10.40%

10.40%

 


Education Loan Interest Rates in Private Sector Banks

The rate of interest charged by the private banks is usually higher, but, amount of loan that will be provided will also be higher and there is a chance of 100% coverage of the expenses. The repayment period can also be extended.

Name of the Bank

Interest Rates

 

Courses in India

Courses Abroad

1. ICICI Bank   

11.00%

11.00%

2. Axis Bank

13.45%

13.45%

3. Kotak Mahindra Bank

10.25%

15.5%

4. Yes Bank

12.25%

12.25%

5. Federal Bank

10.90%

10.90%

6. Indusland Bank

11.00%

11.00%

7. RBL Bank

12.25%

12.25%

8. HDFC Bank 

11.97%

11.97%

9. Karur Vysya Bank

11.65%

11.65%

10. Bandhan Bank

10.52%

10.52%

 


Repayment of Education Loans

  • The repayment period of the loans usually commences after the completion of the course.

  • Most of the banks also give the students a moratorium period during which no interest will be charged and the students are supposed to secure a job within 6 months or a year (whichever is earlier).

  • However, the students also have the option of prepayment where the loan is cleared before the given period. This helps improve the credit score and, in the future, loans can be procured easily.

  • The interest rates can be paid beforehand and the amount of EMI to be paid will be reduced.

  • The students should ensure that the repayment of education loans happens regularly.



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