Education Loan

Leading Indian banks offer education loans to help students achieve their academic objectives. A school loan with a payback duration of up to 15 years starts at 6.60 percent per year in interest. Both in-country and out-of-country higher education can benefit from education loans.

The lender will determine which courses are qualified for an education loan. An education loan may be obtained for courses beginning in Nursery. You can acquire a loan for full-time or part-time courses, as well as loans for working professionals, for higher education.

Compare Top Education Loan Offers 2022

Name of BankInterest Rate (p.a.)Processing Fees
PNB Up to 16.90%1% of loan amount
SBI Up to 9.05% Up to Rs.10,000
Axis 13.70% to 15.20%/td> Nil to Rs.15,000 + GST
Bank of Baroda 8.85% to 10.85% 1% of loan amount up to Rs.10,000
HDFC 9.55% to 13.25% Up to 1% of loan amount + tax
Kotak Mahindra Bank Up to 16% Nil
Federal Bank 16.05% onwards Contact the bank

Note: These interest rates are effective as of November 2021 and are subject to change as per the bank’s rules and regulations.


Depending on the bank or financial institution, you can have a fixed interest rate package or a fluctuating interest rate package. Most floating rates are based on the Repo Rate, with a spread applied before the final effective interest rate is presented to you (EIR).

Education LoanGuarantee or collateral - Before getting that education loan, make sure you  know these fine points | The Economic Times

1.Punjab National Bank Education Loan

  • Maximum Loan Amount: Need Based
  • Maximum Loan Tenure: 15 Years
  • Collateral: Nill Up to Rs.7.5 lakh
  • Margin: Nill Up to Rs.4 lakh
  • Offers loans to Indian residents and OCIs/PIOs/students born abroad to Indian parents and want to pursue studies in India.
  • No security is required up to Rs.7.50 lakh
  • Moratorium period is course period and 1 year
  • 2.SBI Education Loan

No collateral or third-party guarantee required upto Rs. 7.5 lakh
Repayment to be done one year after course completion
Repayment up to 15 years post the course completion + 12 months
Zero processing fees for loans up to Rs.20 lakh
Second loan can be availed for completing higher studies

3.Axis Bank Education Loan

  • Minimum loan amount is Rs.50,000
  • Maximum Loan Tenure: 15 years
  • Margin: Nill Up to Rs.4 lakh
  • Can secure loan before admission based on profile.
  • Loan disbursal within 15 business days from the date the bank receives your complete application.
  • Unsecured loans up to Rs.20 lakh for working professionals.
  • 4.Bank of Baroda Education Loan

  • Maximum Loan Amount: Rs.125 lakh
  • No security up to Rs.7.5 lakh
  • No margin on loans up to Rs.4 lakh
  • No processing fees
  • No documentation charges
  • 5.HDFC Bank Education Loan

  • Maximum loan amount is Rs.30 lakh

  • Loan repayment tenure is up to 15 years

  • Easy documentation process

  • No collateral required up to Rs.7.5 lakh

  • Tax benefit can be availed on education loan

  • Loan amount will be directly disbursed to the institution based on its fee structure

  • 6.Tata Capital Education Loan

  • Maximum loan amount of Rs.25 lakh
  • Minimum loan amount is Rs.75,000
  • Collateral: Nill Up to Rs.4 lakh
  • Choose from 3 EMI plans as per your convenience.
  • Minimal documentation and quick approval of loans.


Education Loan Eligibility


  1. Indian citizens
  2. Non-Indian Residents (NRIs)
  3. Overseas Citizens of India (OCI)
  4. Persons of Indian Origin (PIOs)
  5. Students born to Indian parents abroad and wish to study in India


  1. Undergraduate programs
  2. Postgraduate programs
  3. Doctoral courses and PhDs
  4. Certificate courses with 6 months or longer duration
  5. Job-oriented courses
  6. Technical/diploma/professional courses


  1. Recognized institutions and government colleges
  2. Private institutes aided by government
  3. Professional institutions
  4. International colleges and universities


  1. Collateral-free loans up to Rs.7.5 lakh from leading lenders
  2. Collateral-free loans up to Rs.40 lakh for select courses/institutions from select lenders
Acceptable collateral: Residential or commercial property or plot, fixed deposits, insurance
Loan amount: Up to Rs.1 crore

Education Loan EMI Calculator

If you apply for an education loan, you may use the Education Loan EMI Calculator to figure out how much your monthly payments will be and how much the total cost of the loan will be. Enter a few loan-related factors such as the loan amount, tenure, interest rate, and processing costs to get an estimate of your equivalent monthly instalment (EMI). The total interest payable and a thorough amortisation table that breaks down your EMIs into principal and interest amounts on a monthly and annual basis are also significant pieces of information.
Once a year, most lenders allow you to make partial prepayments on your loan. If you want to make such payments, use the calculator to see how much money you’ll save on interest and how long it will take to pay off your debt.

List of Courses that are Covered under an Education loan

  1. Nursery to class 12.
  2. Graduation and Post-Graduation courses (technical/professional/diploma) conducted by approved universities or colleges under UGC/IMC/AICTE/government.
  3. Regular degree/diploma courses administered by autonomous institutions such as IIM/IIT, etc.
  4. Regular degree or diploma courses such as pilot training, aeronautical, shipping, and more approved by the Director General of Civil Aviation/Shipping/other regulatory authority.
  5. Job oriented courses (professional/technical) for Graduation/Post Graduation/Diploma such as MBA/MCA/MS offered by reputed educational institutions, courses conducted by the Chartered Institute of Management Accountants (CIMA) – London or Certified Public Accountant (CPA) – USA.
  6. Loans for skill development.


  1. Job oriented courses (professional/technical) for Graduation/Post Graduation/Diploma such as MBA/MCA/MS, etc. offered by reputable institutions.
  2. Courses conducted by CIMA and CPA.

List of Expenses Covered in Education Loan

Here’s what the loan amount will cover:
  1. Tuition fees
  2. Hostel fees
  3. Travel expenses passage money for students studying abroad
  4. Insurance premium
  5. Cost of books/equipment/instruments/uniform
  6. Examination/laboratory/library fees
  7. Cost of a computer/laptop required for course completion
  8. Caution deposit, building fund/refundable deposit supported by institution bills/receipts
  9. Any other expenses required to complete the course such as study tours/thesis/project work

Features & Benefits of Study Loan

  1. Loan financing up to Rs.1 crore available.
  2. Loan repayment tenure up to 15 years.
  3. Get Education loans for studies in India and abroad.
  4. Some lenders offer loan disbursal before applying for a Visa.
  5. Door-step service to collect required documents.
  6. Children of the bank’s employees enjoy preferential rates at several banks.
  7. Certain banks offer concessional interest rates to female students.
  8. Enjoy a moratorium period of up to 1 year after course completion. During this period, you do not have to make payments on the loan.
  9. Enjoy tax benefits up to 8 years on the interest paid.

Tax Benefits on Education Loan

The interest you pay on your student loan can be deducted under Section 80E of the Income Tax Act of 1961. This advantage is only available to individual borrowers and is only offered for the purpose of higher education. The deduction is available to all fields of study, both domestically and internationally. It includes both vocational and academic courses.
It’s important to remember that the tax deduction only applies to the interest portion of the EMI, not the principle. There is, however, no limit to how many times you can claim this benefit. You’ll need a certificate from your bank or financial institution that separates the principal and interest components of your EMIs to qualify for this benefit.
This benefit is accessible for 8 years from the day you started repaying your loan or until the interest component is paid off, whichever comes first.

List of Documents Required for Education Loan

Here is an indicative list of documents that most lenders ask:

  1. Admission letter from the educational institution
  2. Marksheets (previous education – school/college)
  3. Age proof
  4. ID proof
  5. Address proof
  6. Signature proof
  7. Salary slips
  8. Recent bank account statements
  9. ITR with income computation
  10. Audited balance sheet
  11. Recent bank statements
  12. Proof of turnover (service tax return/sales receipt)
  13. Completed application form with signature
  14. Latest passport size photographs
  15. Appropriate Visa for studies abroad

How to Apply Education Loan

There are several ways of applying for a student loan:

Apply Online:

Step 1: This is the easiest and the most convenient way of applying. There are two ways of applying online. The first is a straightforward application form that you will fill online, attach the necessary documents, and submit the form.
Step 2: The second is where you apply through providing all the requested details and the lender will then get in touch with you to discuss the terms of the loan before proceeding with the application.
Step 1:Visit a Branch: You can apply for a loan by visiting your nearest branch with the necessary documents, discuss the terms of the loan with a representative, fill the form, and apply in person.
Step 2:Call the Lender: You can either call the lender or request a call back by expressing your interest. You can then discuss the loan terms and proceed to apply.

Virtual Assistant

To better serve their consumers, banks and other financial organisations are turning to digital ways. Using a Virtual Assistant to clear your doubts and request assistance with the application process is one such way.

Education Loan Repayment Process

The loan repayment period normally begins 6-12 months after you complete your study or, whichever comes first, when you obtain a job. Applicants are given varied moratorium periods by different lenders when it comes to repaying their loans. You will be required to repay your loan in EMIs.

Here are the different modes of repayments usually available:

  • Internet Banking – Pay online through the lender’s website or mobile app.
  • Cheque – Drop a cheque at any of the branches.
  • Direct debit – Set up recurring payments for your EMI to be directly debited from your bank account on the payment due date.
  • Demand Draft – Pay through a DD.
The preferred method of repayment varies between lenders. Therefore, it is advisable to check with your lender when taking the loan.
Discussed below are a few important details in regard to education loan repayment process:
Moratorium period: In the case of education loans, the beneficiaries will be able to start paying off the loan after the completion of the educational course or after successful employment.
Part-payment of education loans: The beneficiaries of education loans will be allowed to make part payments towards their loans. As an applicant, you can pay back a lump sum amount to make part repayment of the loan.

Pre-payment of education loan: If an applicant is able to manage the funds for the pre-payment of the loan amount, he or she will be able to do the same. However, it should be kept in mind that this might invite a processing fee.

If money is the only thing standing between you and your professional goals, consider taking out an education or student loan to help you achieve them. You can receive collateral-free goals, which means you won’t have to provide the lender any security and your payments won’t start right after graduation.

What do the Lenders Consider to Approve the Loan?

Lenders consider the following factors when approving a loan:

  1. The course and institute you choose
  2. The amount you need
  3. Your academic performance
  4. Repayment capacity of your family
  5. Family assets
  6. Annual income

Expenses Covered by Education Loans

Some of the additional expenses covered by education loans are:

  1. Hostel fees
  2. Exam fees, laboratory and library fees
  3. Cost of books, uniforms, projects, etc.
  4. Travel expenses for overseas education
  5. Deposits required by the educational institute


Yes, the Reserve Bank of India’s moratorium on retail loans, due to people undergoing financial challenges due to the Covid-19 pandemic, is applicable to education loans as well. The moratorium on Equated Monthly Instalments (EMIs) could be availed from March 2020 to August 2020.

No, usually education loans for courses in India do not offer the same amount as for comparable level courses abroad. Education loans offer higher amounts for courses abroad as fees and other expenses may be higher there than for courses in India (which also depends on the educational institution).

Almost all education loans from banks and other lenders require a collateral which can be fixed deposits, property, shares, bonds, etc. However, you can still avail an education loan without having to give any collateral. This can be achieved through the Credit Guarantee Fund for Education Loan (CGFEL) Schemes which covers a collateral-free loan of up to Rs.7.5 lakh. This is only for education loans dispersed under the Model Education Loan Scheme of Indian Banks’ Association (IBA). To avail this, you have to apply for an education loan under this scheme through a scheduled commercial bank. You don’t need to provide security or collateral for amounts of up to Rs.7.5 lakh but anything above that will require a collateral.

For courses abroad, education loans are typically paid directly to the educational institution in the local currency of that country.

The moratorium period on education loans differ from lender to lender. However, it is usually until the borrower gets employed or for up to 1 year of the course being completed, whichever is earlier. If you choose to take a sabbatical and want an extension of your moratorium, it would depend on the bank whether to grant it or not, so it is best to have a discussion about this with the lender.

One of the eligibility criteria for education loans that are offered by banks and other financial institutions in India is that the individual should be an Indian national. This means that any student who is a citizen of India can apply for and avail an education loan from a lender in the country. Collateral or documents which can be taken as security should be those that are enforceable in India.

In case you choose to discontinue the course mid-way, you must start repaying the loan immediately after getting a job.

Yes, you can move your education loan from one bank to another. However, your current bank might charge a refinance fees. Therefore, it is important to consider all factors of the existing bank and the new bank before moving the loan.

Yes, education loans cover 100% of the education expenses. However, full coverage may only be provided for expenses under a certain limit. Lenders have a margin if the expenses go above the limit.


Study Loan Resources

  • Education Loan Calculator
  • Education Loan Eligibility
  • Education Loan Interest Rate
  • Study Loan For Foreign Education

Study Loan by Banks

  • SBI Education Loan
  • HDFC Bank Education Loan
  • Bank Of India Education Loan
  • Bank Of Baroda Education Loan

Study Loan by Courses

  • Study Loan for Vocation Courses
  • Study Loan for Medical Courses
  • How To Get An Education Loan
  • Study Loan for Engineering

NEWS on Education Loan

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