UBI vs SBI education loan

When choosing between Union Bank of India (UBI) and State Bank of India (SBI) for education loans, here’s what you need to know:

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Comparing SBI and UBI Education Loans: Interest Rates, Fees and More 

Snapshot: Here’s a quick glance at how Union Bank of India (UBI) and State Bank of India (SBI) stack up when it comes to education loans:

While SBI allows higher loan limits, UBI offers quicker processing times and a longer moratorium period, making it ideal for students who value flexibility and speed. To explore the best option for your education financing needs, you can compare interest rates for education loans and evaluate which bank aligns better with your academic and financial goals.

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UBI vs SBI: Breaking Down the Key Differences

When it comes to education loans in India, both Union Bank of India (UBI) and State Bank of India (SBI) are popular choices. While they serve the same purpose, their loan features, documentation process, and flexibility can differ. Let’s explore how UBI and SBI compare across important factors.

UBI vs SBI: Loan Limits 

When choosing between Union Bank of India and SBI for an education loan, understanding how much funding each offers is crucial. Both banks provide competitive loan limits, but the right option depends on your course, country and whether you have collateral.

Union Bank of India (UBI)

• Offers unsecured education loans up to ₹40 lakh without collateral.
• Secured loans can go higher, depending on the course and borrower profile—particularly for international education.
• For abroad studies, UBI provides up to ₹150 lakh through its Premier Abroad scheme.
  

State Bank of India (SBI)

• Provides unsecured loans up to ₹50 lakh without collateral.
• Secured loans can be significantly higher—up to ₹3 crore, depending on course and co-applicant profile.
• For international students, SBI’s Global Ed‑Vantage scheme offers loans of up to ₹3 crore.

Interest Rate Comparison

When deciding between UBI and SBI for an education loan, interest rates play a key role. Both banks offer floating interest rates tied to the External Benchmark Rate (EBR), which is currently 8.15%. Interest rates are a key factor when choosing between UBI and SBI education loans, as small rate differences can significantly affect total repayment. Both banks offer floating rates linked to the 8.15% EBR, with different  schemes  for different borrower profiles.

SBI offers multiple education loan schemes with varied interest rates. PM-Vidyalaxmi rates start at 7.15% (Utkarsh), 7.45% (Uttam), and 8.65% (Uday). For regular loans, SBI charges 10.15% for unsecured loans up to ₹7.5 lakhs and 9.15% for secured loans above that.

UBI charges 11.30% interest for loans up to ₹7.5 lakhs under CGFSEL. For top colleges, the rate is 9.30%–10.80% for studying abroad and 10.30%–10.80% for medical courses. In comparison, SBI offers lower rates of 7.15%–7.90% for select colleges and 9.15% for overseas education under its Global Ed-Vantage Scheme. 

Gender-Based Concessions

Both banks provide interest rate discounts for female students, which can make a significant difference. SBI offers a 0.50% reduction for girl students across schemes like the Student Loan, Global Ed-Vantage and Shaurya Education Loan. For example, unsecured loans that typically have a rate of 10.15% drop to 9.65% for female students. Similarly, UBI offers a 0.50% discount for female students. Under its tiered structure for premier institutions, female students pay 10.55%, compared to 11.05% for male students. In the Union Education Skill Development scheme, rates are 12.05% for female students versus 12.55% for their male counterparts.

Domestic vs Abroad Study Rates

When comparing rates for domestic and abroad studies, there are noticeable differences. For domestic education, SBI’s regular schemes start at 9.15% with collateral, while UBI charges 11.30% under CGFSEL. For students studying abroad, SBI’s Global Ed-Vantage Scheme offers a competitive rate of 9.15%, whereas UBI’s premier abroad schemes range from 9.30% to 10.80%.

Repayment Flexibility

Both SBI and UBI offer student-friendly repayment structures, but with slight differences. SBI provides a 6-month moratorium after course completion or job placement, whichever is earlier. The total repayment tenure can go up to 15 years, depending on the loan amount and scheme. UBI also allows up to 15 years for repayment and offers a moratorium of course duration plus 12 months. This extended grace period can be helpful for students who may take longer to secure employment. Both banks also allow early repayment without penalties.

Eligibility Criteria 

Before applying for an education loan from Union Bank of India (UBI) or State Bank of India (SBI), it's crucial to understand their eligibility requirements. Both banks have specific criteria for students and co-applicants1, although there are some key differences between the two.

Academic Qualifications and Admission Requirements

Both UBI and SBI mandate that students must have secured admission to a recognised institution. For overseas studies, relevant exam scores are needed. UBI restricts loans to courses within India and requires an Indian passport, while SBI supports a wide range of domestic and international programs, including medical, engineering, and management.

Co-Applicant Requirements and Income Criteria

UBI accepts a wider set of co-applicants (immediate and some extended family), while SBI allows only parents, guardians, or spouses. Both banks require a co-applicant income of at least ₹30,000/month for unsecured loans. UBI is more flexible with secured loans, accepting even retired professionals and farmers as co-applicants.

Age Limits and Professional Flexibility

UBI stands out with its no maximum age limit policy, making it a viable choice for older students or professionals looking to further their education. SBI, by contrast, typically has a maximum age limit of 35 years for education loan applicants.

Both banks also accommodate working professionals seeking to enhance their qualifications, offering support for second degrees or top-up loans.

Special Considerations for Different Student Categories

For students approaching SBI's age limit, submitting a detailed repayment plan that highlights expected earnings after graduation can strengthen the loan application. Meanwhile, UBI's flexible age policy makes it an appealing option for career changers or those pursuing advanced degrees later in life.

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Education loan - 2 Days Approval. 3 Steps Process. 4 Documents Required

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Loan Types and Coverage: Secured vs Unsecured

When deciding between Union Bank of India (UBI) and State Bank of India (SBI) for education loans, understanding the differences between secured and unsecured loans is essential. Each bank offers unique benefits tailored to various financial needs and loan preferences.

Unsecured Education Loans: No Collateral Needed

For students unable to provide collateral, unsecured loans are a practical way to finance education. SBI offers unsecured loans up to ₹50 lakhs, while UBI provides up to ₹40 lakhs. Interest rates for these loans vary slightly: SBI starts at 9.65%, whereas UBI begins at 9.75%.

However, there's a key distinction: UBI limits unsecured loans to master's programmes, while SBI extends this option to students across all programmes.

Secured Education Loans: Higher Limits with Collateral

If you can offer collateral, both banks significantly increase their loan limits. SBI allows secured loans up to ₹3 crores, which is twice the limit offered by UBI at ₹1.5 crores.

UBI requires collateral valued at a minimum of 50% of the loan amount plus accrued interest. Additionally, UBI provides a 0.50% interest concession if the collateral covers 100% or more of the loan amount - an appealing benefit for borrowers.

Collateral Options and Acceptable Securities

Both banks accept a variety of securities, but UBI's list is more extensive. It includes buildings, government securities, public sector bonds, UTI units, NSC, KVP, life insurance policies, gold, and bank deposits. On the other hand, SBI's Global Ed-Vantage Scheme offers collateral-free loans of up to ₹50 lakhs for students attending select premier institutions.

Collateral can be owned by the borrower, co-borrower, immediate family members, or even third parties, provided the necessary guarantees are in place.

Special Schemes for Premier Institutions

SBI stands out with its Scholar Loan Scheme, designed specifically for students of premier institutions. This scheme offers 100% financing with no processing fee and lower interest rates ranging from 8.15% to 8.90% for premier institutions in India.

Property Ownership and Third-Party Guarantees

UBI accepts third-party property as collateral if the owner agrees to be a co-applicant or guarantor, which is helpful for students whose immediate family lacks suitable assets but have extended family willing to support. When choosing between secured and unsecured loans, factors like the required loan amount, availability of collateral, and course expenses matter. SBI is often better for high-cost international programs while UBI’s flexible collateral options work well for students needing broader acceptance criteria.

Required Documents for Education Loans

Getting your documents in order is a key step after understanding the different types of education loans. Proper documentation ensures a smoother application process. Both Union Bank of India (UBI) and State Bank of India (SBI) require similar sets of documents, including proofs of identity, academics, admission, and co-applicant income. Submitting complete and accurate documents can significantly speed up the verification process.

Student KYC and Identity Documents

Both SBI and UBI require KYC documents like Aadhaar, PAN, and passport-sized photos. For abroad studies, SBI mandates a passport, while UBI treats it as optional. Students must also submit academic records such as 10th/12th mark sheets and relevant entrance exam scores with admission proof.

Admission and Course-Related Documents

An admission letter or offer letter from your chosen institution is a must for both banks. For international studies, you’ll need to attach the official offer letter that outlines the course details and fee structure. This helps verify your study destination and course specifics. Once your admission documents are sorted, ensure your co-applicant’s financial documentation is ready.

Co-Applicant Income and Financial Documents

Your co-applicant, usually a parent or guardian, must provide proof of income. For salaried individuals, this includes documents like a salary certificate, Form 16, and bank statements. Self-employed co-applicants will need to submit income tax returns or equivalent documents to establish their financial standing.

Collateral Documentation for Secured Loans

If you’re applying for a secured education loan, you’ll need to provide additional collateral-related documents. These include property documents like sale deeds, title documents, and valuation reports. The specific requirements may vary depending on the type of collateral and the bank’s policies.

Both banks allow you to submit documents digitally, but original documents will need to be verified before the loan is disbursed. Organise your paperwork as early as possible to avoid delays. 

Processing Time and Fees

When applying for an education loan, understanding the processing time and fees is key to planning your finances. Both Union Bank of India (UBI) and State Bank of India (SBI) have different timelines and fee structures, which can impact your overall expenses. 

Processing Fees

When it comes to fees, UBI has a transparent structure that depends on the specific loan scheme. For its standard education loan, the bank charges a processing fee of ₹10,000 + GST. However, students opting for the "Union Education Loan: Empowering Aspirations" scheme benefit from zero processing fees, making it a more cost-effective choice.

SBI's processing fees, on the other hand, are not uniformly defined and may vary based on the loan type and amount. To get precise details, it's best to visit your nearest SBI branch.

Next, we’ll explore the moratorium period policies for these banks.

Moratorium Period Rules

When comparing education loans from Union Bank of India (UBI) and State Bank of India (SBI), the moratorium period plays a crucial role. This period essentially decides when you need to start repaying your loan, giving students time to complete their studies and secure employment before EMIs kick in. However, the duration of this grace period differs significantly between the two banks, impacting the overall loan experience.

Interest Accumulation and Total Loan Cost

While you don’t have to make EMI payments during the moratorium period, interest continues to accumulate. If you opt for a full moratorium, the accrued interest is added to the principal, which can lead to a higher repayment amount due to compounding. To manage this, borrowers can choose from several repayment options during the moratorium period, such as:

Full Moratorium: No payments during the grace period.

Simple Interest Payments: Pay only the interest to prevent it from compounding.

Partial Simple Interest Payments: Pay a portion of the interest.

EMI Payments: Begin full repayment early if financially feasible.

UBI offers a longer 12-month post-course moratorium compared to SBI’s 6 months, which can benefit students in fields like medicine or engineering where job placement takes time. Paying simple interest during this period helps lower total costs. Understanding these rules is key to choosing the right repayment plan.

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Best Bank for Abroad Studies

When planning to study abroad, selecting the right education loan plays a major role in shaping your financial journey. Among the popular options, Union Bank of India (UBI) and State Bank of India (SBI) stand out for offering comprehensive solutions tailored to international education. However, they differ in key areas that can influence your decision as an overseas student.

Here’s a closer look at how these two banks compare in terms of international education funding.

Coverage for Tuition and Living Expenses

Both UBI and SBI cover essential costs like tuition fees, living expenses, and visa-related charges. However, their interest rates vary based on whether your university is listed or not.

Forex and Currency Exchange Considerations

When dealing with international transactions, currency exchange becomes an important factor. Both banks disburse loans in INR, which means you’ll need to account for forex charges when converting funds for tuition or living expenses. Additionally, currency fluctuations during repayment can impact the total cost. Some students explore USD loans to minimise these risks, though availability depends on the bank's policies and loan amount.

Embassy Compliance and Documentation Support

Both banks provide support for visa and embassy requirements, but SBI offers a distinct advantage by sanctioning loans even before I-20 or visa approval. This can strengthen your visa application by showcasing financial preparedness. Required documents typically include your passport, admission letter, and proof of financial capacity. UBI also offers tailored document checklists to simplify the process.

Moratorium Period for International Students

The moratorium period, which delays the start of loan repayment, can be particularly useful for international students. UBI provides a slightly longer buffer, giving you extra time to settle into post-study life, whether that’s finding a job or planning your next steps.

Making the Right Choice

If your funding needs exceed ₹40 lakhs, SBI is the better option due to its higher unsecured loan limit. However, if you're attending a recognised international university and prefer benefits like a longer moratorium period or quicker loan processing, UBI could be a better fit.

Ultimately, your choice should balance immediate financial needs with repayment flexibility. Both banks provide strong support for students pursuing international education, so weigh your priorities carefully before making a decision.

Choosing between UBI and SBI for an education loan depends on your study plans and financial needs. UBI is ideal for students going abroad, offering up to ₹40 lakhs unsecured—great for those seeking high-value, collateral-free loans. SBI, on the other hand, suits domestic students better with low-interest Scholar Loans, especially for premier institutes and girl students. While both offer fast processing, SBI provides more branch support, and UBI stands out for international education funding.  For more tailored education loan options, visit Propelld to find the solution that aligns with your academic journey.

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