Which Bank Is Best For Education Loan

Banks in India provide various schemes for education loans and students can make the most of these depending on the institute and course of study selected. Most of these have flexible repayment options thereby allowing the student to plan his finances. Education loans also come with a moratorium period which allows the borrower about six months after course completion. Loan repayment can begin after this period or earlier in case the borrower finds a job or source of income.

Key points about education loans

Applicants must always check the eligibility criteria of the bank for education loans before applying for one. This will save time and efforts and help in avoiding the hassles of running from one bank to the other. It is always helpful to talk to a few banks at once before selecting the right one for an education loan to ensure one can get the best bargain.

Table of contents

• Why are education loans important?
• What are the interest rates offered on education loans by top banks?
• Which banks are best for education loans in India?
• What are the documents needed for education loan applications?
• FAQs of Education Loan

Why are education loans important?

Education loans allow easy access to higher education without disturbing your finances. An education loan is generally taken by students (or parents) to meet expenses such as tuition fees, hostel expenses, and other related costs while pursuing a higher education course. Banks offer education loans for students pursuing specified courses across India or overseas. 

Banks that offer education loans publish a list of courses and institutions that are eligible. If the course and institution you want to enrol in are included in the bank’s list then you can seek an education loan from that bank. If an education loan is taken by unemployed students, their guardians or parents must act as guarantors to the loan.

What are the interest rates offered on education loans by top banks?

 

Which banks are best for education loans in India?

1. SBI education loans 

SBI education loan is offered minus the processing fee. It comes with a repayment period of a maximum of 15 years after completion of the course period. SBI offers education loans of a maximum of Rs 20 Lakhs for multiple courses and universities.

• For loans up to Rs 7.5 Lakhs – the interest rate is 10.25% p.a.
• Above Rs. 7.5 Lakhs – the interest rate is 10.50% p.a.
• 0.50% interest rate concession for girl students
• 0.50% interest rate concession for students who opt for SBI Rinn Raksha or other existing policies as categorised by SBI
• 1% concession throughout the loan tenure, for students who pay the interest promptly if applied in the moratorium period. This includes course duration
• IT exemption can also be availed under Section 80(E) with regards to interest paid

2. Indian Bank education loans

Indian Bank provides education loans that cover the cost of education including fees payable, exam fees, cost of books/equipment, travel expenditure for overseas studies, cost of computers essential for the course, etc. For meritorious candidates, the bank offers a loan amount that can be further increased.

• Education Loan for premier Institutions List A – the interest rate is 8.60% 
• Education Loan for premier Institutions List B – the interest rate is 9.20% 
• Education Loan for premier Institutions List C – the interest rate is 9.60%

3. Canara Bank education loans 

Canara Bank offers education loans with zero margins and even 100% finance up to Rs 4 Lakhs. The bank offers loans to multiple co-borrowers under the same loan blanket so that beneficiaries can avail of the maximum loan amount. Loans up to Rs 4 lakhs can be availed without any collateral requirement and up to Rs 7.5 lakhs can be availed with a third party guarantee. Loans above Rs 7.5 lakhs can be taken by making an adequate collateral submission.

• Vidya Turant Loan Scheme – for IIT, IIM, ISB - 6.60% interest rate
• Loans up to Rs. 4 lakh – 10.40% interest for courses in India, abroad, or at IIT, IIM, ISB
• Loans Rs. 4.0 – 7.5 lakhs - 10.40% interest for courses in India, abroad, or at IIT, IIM, ISB
• Loans greater than Rs. 7.5 lakhs - 10.20% interest for courses in India, abroad, or at IIT, IIM, ISB

4. Andhra Bank education loans

Andhra bank provides education loans for pursuing higher studies in India or abroad. Educational loans are also available for pursuing vocational courses. The bank does not have any age-related restriction for availing of an education loan.

• Loan up to Rs. 7.50 Lakhs – MCLR (one year) + 2.00 %
• Above Rs. 7.50 Lakhs – MCLR (one year) + 1.70 %
• 0.50% concession is offered to girl students.
• Interest rate concessions can also be availed by students who are pursuing their education at certain premier institutions.
• Simple interest is charged throughout the study period until the beginning of repayment.
• Accumulated interest is compounded at the beginning of repayment tenure. The applicable EMI is decided accordingly.

5. PNB education loans 

Education loan offered by PNB allows students to meet their educational expenses such as tuition fees payable, examination fee, insurance cost etc. Here is the list of the interest rates for each of the education loans offered by the bank:

• PNB Kaushal - 8.55% and above
• PNB Saraswati / Udaan - 10.30% 
• PNB Pratibha (applicable for IITs, IIMs and XLRI Jamshedpur) - 8.45% onwards
• PNB Pratibha (other colleges) - 8.55% onwards
• PNB Honhaar - 10.45%

What are the documents needed for education loan applications?

Here is a generic list of documents that need to be submitted in most banks / financial institutions while availing of an education loan:

• Application form (filled in), two passport-sized photographs of applicant and co-applicant.
• Original admission letter from the Institute. It must include the institute name and address and must be printed on the institute’s letterhead.
• A detailed fee/cost breakup of the course as provided by the Institute. This must include the tuition fee, course term, year-wise fees and expenses.
• A detailed academic record of the student applying for the loan. This must include the 12th mark sheet, certificate of graduation or post-graduation, score sheet of the entrance exam as applicable, and any scholarship proof.
• A self-declaration that no loan has been sourced from any other bank for education purposes.
• ID proof including PAN card, Aadhar card, Driving License, passport, etc.
• Address proof such as Ration Card, Driving License, Passport, Aadhaar Card, etc
• Age proof like Birth Certificate or 10th Class certificate.

FAQs of Education Loan

1. Is education loan interest-free in India?

Education loans are not interest-free in India and banks apply interest charges just like in any other loan. Many banks, however, may offer subsidies or scholarships to deserving applicants.

2. Is getting an education loan easy?

Education loans are easily available in India. These are categorized as a priority product by all banks as per the RBI's guidelines.

3. Can I get a 1 crore education loan?

Some banks in India, such as ICICI bank, offer up to Rs. 1 crore education loans.

4. Can I take an education loan from two banks?

Yes, if a student is eligible for a second education loan, he/she can apply for a second education loan from the bank that they have already taken the first loan from or there is also a choice to apply for one from a different bank.

5. Can I repay the education loan early?

Since education loans tend to run for many years resulting in an interest burden, a borrower can pay the loan early by reaching out to the bank.

6. How many days does it take for an education loan to be approved?

While the approval process for an education loan may differ across banks, it generally takes up to 15 days for loan processing and approval depending on appropriate paperwork from the applicant.

7. Can I get an education loan before admission?

Most banks allow an education loan application only after you get an admission confirmation from the University / College.