Lowest Interest Rate on Education Loan in 2025- List of Banks & NBFCs

Lowest Interest Rates on Education Loans

Comparing education loan interest rates across various banks and NBFCs in India is essential for making informed financial decisions that align with individual needs and financial capabilities.

By analyzing and comparing interest rates from various lenders, students can make informed decisions that optimize their financial resources and minimize long-term debt obligations.

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Which Bank Provides Lowest Interest on an Education Loan ?

Choosing an education loan with the lowest interest rate is essential to minimizing the overall repayment burden. Interest rates depend on factors such as loan amount, collateral, repayment tenure, and applicant eligibility. Some banks offer special concessions for meritorious students, government subsidy schemes, or lower rates for premier institutions.

 Below is a list of banks offering education loans with the most competitive interest rates, helping students finance their higher studies affordably.

Bank of Baroda

Bank of Baroda offers education loans with high loan amounts, zero collateral requirements for select schemes, and extended repayment tenures. It also provides special interest rate concessions for female students and those admitted to premier institutions.

Key Features:

• Processing Fee: Nil
• Security: Required
• Co-borrowers: Parents or guardians
• Margin: 5% for loans above INR 4 lakh
• Concession: 0.50% discount for female applicants

State Bank of India

State Bank of India (SBI)  provides education loans with interest rate concessions for meritorious students and those availing of a loan under government subsidy schemes. The bank offers a unique SBI Scholar Loan Scheme for students admitted to top-tier institutes like IITs, IIMs, and NITs.

Key Features:

• Processing Fee: NIL charges for loan amount below Rs.20 lakh
• Security: Up to Rs. 7.50 lakh: Co-obligation of a parent or guardian, no security needed.
• Co-borrowers: Parents or guardians
• Margin: Up to Rs. 4 lakh: No margin required.
• Concession: 0.50% concession in interest for girl students

ICICI Bank

 ICICI Bank facilitates quick loan approvals with minimal documentation and offers 100% financing for select institutions. It provides unsecured loans up to a higher limit, making it ideal for students seeking hassle-free funding for studies abroad.

Key Features:

• Processing Fee: Up to 2%
• Security: Fixed deposit, property value, or existing loans
• Co-borrowers: Parents or guardians
• Margin: Nil for premier institutes; up to ₹20 lakh for others (Accepted as FD, scholarships, or initial fee paid)
• Concession: I-SMART education loans for studies in Canada offer lower rates

Central Bank of India

 Central Bank of India offers education loans under the Cent Vidyarthi Scheme, covering tuition fees, exam fees, and even living expenses for students. It also provides interest subsidies under government-backed schemes for economically weaker sections.

Key Features:

• Processing Fee: Nil
• Concession: Special rates for female students

Bank of India

Bank of India provides education loans with zero margin money for loans up to INR 7.5 lakh, meaning students do not need to contribute any personal funds. The bank also offers special benefits to students pursuing professional and technical courses.

Key Features:

• Processing Fee: Nil
• Security: NA
• Co-borrowers: Parents or guardians
• Margin: Nil for loans up to ₹4 lakh
• Concession: Up to 1% discount for female students and those in professional courses

Punjab National Bank (PNB)

Punjab National Bank (PNB)’s PNB Udaan and PNB Pratibha schemes cater to students going abroad and those studying in India’s premier institutions. The bank offers higher loan limits and flexible collateral requirements based on the institute’s category.

Key Features:

• Processing Fee: Up to 1% for overseas studies
• Security: Tangible collateral required for foreign education loans
• Co-borrowers: Parents or guardians
• Concession: 0.50% discount for female applicants & additional concessions for students with disabilities

Axis Bank

Axis Bank provides education loans with pre-admission sanction, allowing students to secure a loan before confirming their admission. It also offers special forex services for students studying abroad and loan repayment flexibility.

Key Features:

• Processing Fee: Up to 2%
• Concession: Interest rate benefits for scholarship holders and specific courses

HDFC Bank

 HDFC Bank is known for its fastest loan disbursal process, ensuring students get funding within days. It also offers tax benefits under Section 80E and allows repayment through a variety of flexible EMI options.

Key Features:

•Loan Amount: Up to Rs. 150 lakh
•Processing Fee: Nil (for Indian education loans), up to 2% for others
•Concession: Rate benefits for meritorious students and specific affiliated institutions

Union Bank of India Loan Interest Rates 2025

Union Bank of India provides education loans with interest-free moratorium periods, enabling students to focus on their studies without worrying about repayments. It also extends exclusive benefits to students from weaker economic backgrounds under government subsidy programs.

Key Features:

‍•Processing Fee: Up to 0.50%
•Concession: Reduced rates for meritorious students and female applicants

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Fast-Tracked Education Loans with Propelld – Funding your Future in Just 7 Days!

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Read to learn more about the education loan eligibility and application process.

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Education Loan Interest Rates of NBFCs

Your search for education loan does not end with just banks. There are Non Banking Financial Corporations (NBFCs) that offer hassle free education loans to help the students achieve their educational aspirations. 

Here are some of the major NBFCs and their interest rates:

Note: The Information provided is based on data available as of March 2024 from reputable sources such as RBI and official bank websites. Processing fees and concession benefits may vary based on individual applicant profiles and loan terms. It is advisable to directly contact the respective banks for the most up-to-date and personalized details regarding education loan offerings.

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Eligibility Criteria for Education Loans

Eligible Courses

• Full-time courses: Loans typically cover a wide range of full-time courses, including undergraduate, postgraduate, professional, and technical courses, offered by recognized institutions globally.
• Part-time courses: Many banks extend loans for part-time courses, especially if they are from reputed institutions.
• Vocational courses: Given the rising demand for skill-based learning, vocational courses are increasingly being covered under education loans.

Nationality Requirements for Loan Applicants

• Indian citizenship: Applicants must typically be Indian nationals.
• Age criteria: There are usually age requirements, often the applicant must be 18 or have a co-applicant (usually a parent or guardian) if underage.

Eligible Institutions and the Role of Admission Letters in Loan Approval

• Recognized institutions: Loans are usually sanctioned for courses from universities and colleges recognized by the government or accredited by authorized bodies.
• Admission letter importance: A confirmed admission letter from the institution significantly strengthens the loan application, acting as proof that the applicant has been selected for the course.

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No Collateral Required. Approval Based on Student Potential. Check Your Eligibility

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Documents Required for Education Loan 

Fueling your academic dreams with an education loan requires navigating some paperwork. But fret not! This section will equip you with the knowledge to conquer this step.

Comprehensive list of documents needed for education loan applications

• Identity & Address Proof: Photocopies of PAN Card, Aadhaar Card, Passport (if applicable), and your residence proof (utility bills, rental agreement).
• Academic Documents: Class 10th and 12th mark sheets, acceptance letter from your chosen institution, and course fee structure.
• Financial Documents: Bank statements for the past 6 months, income tax returns of your guardian/co-applicant (if applicable).

How to Apply Education Loan: Step-by-Step Process

Gone are the days of lengthy in-person applications. Many banks now offer a convenient online process. Here's a simplified guide:

1. Visit the Bank's Website: Locate the education loan section and initiate the application.
2. Fill out the Online Application: Provide your basic details, academic qualifications, and loan requirements.
3. Upload Required Documents: Attach scanned copies of the documents mentioned earlier.
4. Submit and Track Application: Once submitted, you can track the application status online.

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How to Calculate Your EMI for Education Loans? 

To calculate your EMI (Equated Monthly Installment) for an education loan in India, use the formula:

EMI =   [P x R x (1+R)^N]/[(1+R)^N-1]

Where 

P = Principal Amount

R= Rate of Interest

N= Number of years for repayment (in months)

You can also use the EMI calculator to calculate your EMI details easily. 

Example: Mr. X borrowed an education loan of ₹10,00,000 for a tenure of 10 years at an interest rate of 10% per annum. Using the Propelld Education Loan EMI Calculator, the EMI for his loan comes out to be 

Your monthly EMI is

₹104640.38

Your Principal Amount is

₹1000000.00

Your total interest is

₹46403.81

Your total amount is

₹1046403.81

For an accurate EMI calculation based on your loan details, visit the Propelld Education Loan EMI Calculator.

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Factors to Consider While Taking an Education Loan

There are several factors to consider while taking an education loan: 

1. Interest Rates: Compare rates offered by banks and financial institutions.

2. Loan Amount: Determine the total cost of education and the amount needed

3. Repayment Options: Check flexibility in repayment schedules and EMI options.

4. Collateral Requirements: Understand if collateral or a guarantor is needed.

5. Processing Fees: Consider one-time fees for processing the loan application.

6. Moratorium Period: Verify if there's a grace period before repayment begins.

7. Loan Tenure: Choose a tenure that suits your financial situation.

8. Prepayment Charges: Know if there are penalties for early repayment.

9. Credit Score: Ensure your credit score meets the lender's requirements.

10. Loan Disbursement: Confirm how and when funds will be disbursed.

Choosing the right education loan is crucial for achieving your academic goals. At Propelld, we offer tailored education loan solutions with competitive interest rates and flexible repayment plans.

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Why Propelld?

The following are the primary benefits of Propelld.

FAQs on Lowest Interest Rate on Education Loans

Are there any banks offering interest-free education loans in India?

While truly interest-free education loans are rare, some government schemes and subsidies like the Central Sector Interest Subsidy Scheme offer effective interest relief for qualifying students. Research and application specifics are crucial for availing such benefits.

What do education loans typically cover, and how do repayment terms vary?

Education loans in India usually cover tuition fees, books, equipment, and living expenses. Repayment terms can vary significantly, with grace periods extending from the course completion date and repayment durations up to 10-15 years, depending on the bank and loan amount.

What should I do if my education loan application is rejected?

If your education loan application is rejected, first understand the reasons behind the rejection. Then, explore options with other banks or NBFCs, improve your creditworthiness or consider having a co-applicant. Additionally, seek advice on structuring your application more effectively or consider alternative financing options.

How to get 0% interest education loan?

You cannot get an Education Loan at a 0% interest rate. However, you can still fulfil your aspirations to study at a prestigious education institute by taking an Education Loan at low-interest rates. You can also consider taking a Personal Loan for your education fees in some cases.

How to pay an education loan without interest?

If you want to know how to pay an education loan without interest, here is a tip for you. If you land a good and high-paying job after you graduate, speak to your lender and change the schedule of repayment of education loan. Opt for a higher volume of EMI so that the loan tenure gets shortened.