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Rising education costs make even small interest-rate cuts matter. According to SBI’s own scheme details, the takeover interest rate for education loans above ₹10 lakh with collateral is 9.15%.
Many borrowers now shift their loans to banks offering better terms. Yes, you can transfer your education loan from one bank to another if you find a better deal. This process is called an education loan takeover, and it helps students reduce their overall repayment burden. In this blog, read what an education loan takeover is, how it helps, and the steps to transfer your education loan.
What is Education Loan Takeover?
An education loan takeover, also known as an education loan transfer or education loan refinancing, is the process of moving your existing loan from your current bank or NBFC to another lender that offers lower interest rates, better repayment terms, or enhanced service.
Example: Suppose you borrowed ₹30 lakh at 12% interest. Your EMI is about ₹43,566, and the total repayment is ~₹71.8 lakh. By transferring to a bank offering 10% interest, your EMI drops to ~₹40,462 and total repayment to ~₹63.1 lakh; a savings of nearly ₹8.7 lakh.
To get a deeper understanding, read our guide on What is Education Loan Transfer?
Get an Education Loan with Higher Chances of Approval.
Why Consider Education Loan Transfer?
Even a 1–2% cut in interest makes a big difference over a 10–15 year tenure. Borrowers typically switch lenders for:
- Lower Interest Rates: Small percentage reductions can save several lakhs over time.
- Flexible Repayment: Options like step-up EMIs, longer tenure, or partial moratoriums.
- Better Service: Digital-first or government banks often provide smoother processes and transparent charges.
- Loan Consolidation: Combine multiple education loans into a single EMI for easier management.
- Co-applicant Release: Some lenders let you remove a parent/guardian as guarantor once you have stable income.
Curious how refinancing your education loan can save you money over time? Read our complete guide on Education Loan Refinancing: Key Tips to Lower Your Loan Interest.
Types of Education Loan Transfer
Borrowers can restructure their debt in several ways:
- Secured → Secured: Moving a collateral-backed loan to another secured loan with lower rates.
- Unsecured → Secured: Start with a quick unsecured NBFC loan, then shift to a government bank loan after providing collateral to cut interest.
- Unsecured → Unsecured: Switch between lenders to access better terms or tax benefits without pledging collateral.
- Secured → Unsecured: Less common; done when collateral needs to be released for sale or other use.
Minimal Docs, Maximum Approval - Apply Now.
Step-by-Step Process of an Education Loan Takeover
Follow these practical steps to move your education loan smoothly from one lender to another.
1. Research & Compare Offers
Begin by scanning multiple banks and NBFCs for lower interest rates, flexible repayment options, and minimal processing charges. Create a side-by-side comparison of effective interest rates (including hidden fees) to understand your true savings.
2. Check Your Own Readiness
Review your repayment history, current outstanding balance, and CIBIL score to see if you meet the new lender’s minimum criteria. Having a 700+ score and a consistent EMI record strengthens your bargaining power for a lower rate.
3. Request a No Objection Certificate (NOC)
Approach your current lender for a written NOC confirming that they have no objection to the loan being taken over. This document signals to the new bank that your existing lender is willing to close the account once the dues are settled.
4. Prepare and Submit the Application
Collect KYC documents, academic records, income proofs of the co-applicant or guarantor, property papers if collateral is offered, and the NOC. Submit these to the new lender along with the formal takeover application.
5. Loan Settlement & Transfer of Documents
After approval, the new lender issues a cheque or electronic transfer to clear the outstanding amount with the old bank. Once the payment reflects, the original loan documents and collateral papers are released to the new lender.
6. Sign the New Agreement & Start Repayment
Carefully read the new sanction letter, noting interest type (fixed/floating), prepayment conditions, and repayment schedule. Begin EMIs as per the fresh terms and set up auto-debit or standing instructions to avoid delays.
Facing challenges due to a limited or low CIBIL score, but still need an education loan transfer? Read how to get an education loan with a low CIBIL score: tips & options.
Eligibility Criteria for Education Loan Transfer
Banks set clear requirements to ensure the borrower is creditworthy before approving a loan transfer.
1. Full Disbursement of Existing Loan
The original loan must be completely disbursed; lenders avoid taking over partly disbursed loans because future instalments could complicate ownership of the debt.
2. Active and Regular Repayment Track
You must have already started EMI payments and maintained a clean record with no defaults or late payments, which proves repayment discipline.
3. Strong Credit Profile
A good credit score is essential; for example, the minimum CIBIL score for an education loan in SBI is typically 650–700, while a score above 700 significantly improves approval chances and helps secure lower interest rates.
4. Stable Income or Employment Proof (if applicable)
If you are already working, proof of income, such as salary slips or offer letters, reassures the new lender of repayment capacity.
5. Collateral/Security When Required
For large loan amounts (often above ₹7–10 lakh), the new bank may ask for tangible collateral, such as property or fixed deposits, equal to or greater than the outstanding amount.
6. Single Takeover Condition
Most public sector banks, including SBI, allow only a first-time takeover. Subsequent transfers are rarely entertained unless under exceptional circumstances.
SBI Education Loan Takeover Highlights
State Bank of India is one of the most popular choices for education loan refinancing:
Documents Needed: PAN & Aadhaar (student & co-applicant), income proof, 6-month bank statements, original loan documents, and a brief asset–liability statement of the co-applicant.
Transferring your loan to SBI or interested in public sector options? Read about SBI education loan: know interest rates 2025 & how to apply.
Benefits of Education Loan Takeover
A loan transfer helps cut costs and offers more repayment control.
1. Save Money on Interest
A lower rate means direct savings. A 1% drop on a ₹20–30 lakh loan can save several lakhs over a 10–15 year tenure.
2. Reduce Monthly EMI
Lower interest or a longer tenure brings down monthly instalments, improving cash flow.
3. Tax Benefits Continue (Section 80E)
Interest paid on the new loan remains fully deductible for up to eight assessment years.
4. Switch from Unsecured to Secured Loan
Moving from an unsecured to a collateral-backed loan typically lowers the rate by 1–3%.
5. Flexible Tenure & Repayment
Options like step-up EMIs or extended tenure let you match payments to your income pattern.
6. Boost Credit Profile
Successful transfer and timely EMIs strengthen your credit history for future borrowing.
Can you do a Loan Transfer from the USA to India? Here’s What Students on Reddit are Asking
Reddit User in r/StudentLoans shared:
“Loan transfer from India to the USA. Did anyone transfer their education loan from India to the USA?”
Insight:
This question highlights the uncertainty many borrowers face when moving abroad after taking an Indian education loan. Typically, Indian education loans are sanctioned and serviced by Indian banks under local regulations. Directly “transferring” an existing loan to a U.S. lender isn’t a standard process.
What Do We Infer?
- Indian education loans usually must continue to be repaid in India, even if the borrower relocates.
- A true “transfer” to a U.S. bank isn’t feasible, but refinancing through an international lender or using a personal loan in the U.S. to pay off the Indian loan could be explored.
- Currency conversion, exchange rates, and cross-border repayment arrangements need careful planning.
Tip:
If you’re moving to the U.S. after graduation, discuss repayment options with your Indian bank early. Setting up an NRE/NRO account or arranging auto-debit from a U.S. account via international remittance can simplify regular EMI payments without attempting an unworkable cross-border loan transfer.
Can Students Take Over Parent PLUS Loan?
Education loans are usually in the student’s name with a parent as co-borrower. However, once you start earning, you can request the bank to restructure the loan so that the responsibility shifts primarily to you, effectively reducing the parents’ liability.
An education loan takeover is a smart way to cut costs and ease your repayment journey. Always compare interest rates, repayment terms, and fees before making the switch. With the right move, you can save lakhs over your loan tenure.
Refinancing or transferring an education loan is only worthwhile if the process is simple, transparent, and genuinely helps reduce the financial strain of your studies.
Propelld enables students to access instant, collateral-free education loans with flexible repayment, minimal paperwork, and approvals in just days. If moving your loan unlocks better terms or supports your education dreams, make it seamless. Apply with Propelld today!
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