Are you thinking of applying for an education loan? Let's Know the Education Loan Interest Rates in 2025

Education Loan:

In today's world, the cost of higher education has shot up. With hefty coaching fees for entrance exams, college fees, living expenses, and more, parents often find it overwhelming. For professional courses, you might easily spend between 10 to 50 lakh rupees, and if you're dreaming of studying abroad, the costs can be even higher. That's when education loans prove to be a lifesaver. These loans help students pay for their education and are repaid once they start earning. Let’s break down what education loans are, the different types, and how you can apply for one.

What is an Education Loan?

An education loan is money you borrow from a bank or financial institution to pay for your higher education. It covers costs like tuition fees, living expenses, books, and other educational needs. The best part? You only start repaying after you finish your studies, giving you time to find a job and settle down first. Education loans are a blessing for students who want to study but don't have enough money.

Education Loan Interest Rates


Benefits and Features of Education Loan

  1. Loan Amount: You can borrow up to Rs 1 crore, which should cover most of your education-related expenses.
  2. Flexible Repayment: You get up to 15 years to repay the loan, which gives you enough time to plan your finances.
  3. Study Anywhere: Whether you want to study in India or abroad, these loans have got you covered.
  4. Pre-Visa Disbursement: Some banks give you part of the loan even before you get your visa for studying abroad. This helps you prepare better.
  5. Simple Process: Applying for an education loan is pretty straightforward.
  6. Special Discounts: Female students and children of bank employees often get discounts on education loans.
  7. Grace Period: You don’t have to start repaying the loan until a year after you finish your course. This gives you time to find a job.

Types of Education Loans

  1. Undergraduate Loans: These are for students who want to go to college after finishing high school.
  2. Postgraduate Loans: If you’ve completed your undergraduate studies and want to continue with a master’s or Ph.D., you can take this loan.
  3. Professional Advancement Loans: These loans are for courses that help you improve your skills and qualifications.
  4. College Parents Loan: Parents can take this loan to pay for their children's education.
  5. Career Development Loans: These loans are for courses that help in career growth and better job prospects.

Education Loan Interest Rates

Education loan interest rates vary by bank and the type of loan. Below is a detailed breakdown of the Education Loan Interest Rates offered by different banks:

  • Axis Bank: offers education loan interest rates ranging from 13.70% to 15.20% per annum. Axis Bank offers competitive rates for both domestic and international education loans.
  • HDFC Bank: Starting at 10.50% per annum, HDFC Bank provides one of the lower starting rates for education loans, making it a popular choice for students.
  • IDBI Bank: With interest rates between 8.60% and 11.20% per annum, IDBI Bank offers a broad range for various education loan products.
  • Bank of India: Their rates range from 11.10% to 11.90% per annum, providing reasonable options for education financing.
  • UCO Bank: UCO Bank offers education loans with interest rates between 11.30% and 11.70% per annum.
  • Central Bank Of India: Interest rates here range from 10.30% to 10.60% per annum, making it a mid-range option for education loans.
  • Canara Bank: With a flat rate of 9.25% per annum, Canara Bank is one of the more affordable options for education loans.
  • Kotak Mahindra Bank: Their rates go up to 16.00% per annum, reflecting the wide range of loan products they offer.
  • IDFC Bank: Starting from 9.50% per annum, IDFC Bank provides competitive rates for education loans.
  • State Bank of India (SBI): SBI's rates range from 8.05% to 11.75% per annum, making it a widely chosen bank for educational loans due to its reliability and lower starting rates.
  • ICICI Bank: Interest rates range from 9.50% to 14.25% per annum and above, offering flexibility for various loan products.
  • Punjab National Bank (PNB): Their rates range from 9.55% to 11.75% per annum, providing a competitive edge in the market.
  • Maharashtra Bank: With rates starting at 8.10% per annum, Maharashtra Bank offers some of the lowest rates available.
  • Bank of Baroda: Starting from 8.15% to 11.70% per annum, Bank of Baroda provides flexible options for students.
  • Indian Bank: Offering rates from 8.35% to 11.15% per annum, Indian Bank is another strong contender for education loans.


Here’s a look at what different banks offer:

Bank

Interest Rate (per annum)

Axis Bank

13.70% to 15.20%

HDFC Bank

Starting from 10.50%

IDBI Bank

8.60% to 11.20%

Bank of India

11.10% to 11.90%

UCO Bank

11.30% to 11.70%

Central Bank Of India

10.30% to 10.60%

Canara Bank

9.25%

Kotak Mahindra Bank

Up to 16.00%

IDFC Bank

Starting from 9.50%

State Bank of India (SBI)

8.05% to 11.75%

ICICI Bank

9.50% to 14.25% and above

Punjab National Bank (PNB)

9.55% to 11.75%

Maharashtra Bank

8.10%

Bank of Baroda

8.15% to 11.70%

Indian Bank

8.35% to 11.15%

 

Tax Benefits of Education Loans

One great thing about education loans is the tax benefit. Under Section 80-E of the Income Tax Act 1961, you can get a tax deduction on the interest you pay on your loan. This benefit is available for up to eight years or until you finish paying off the interest, whichever comes first. It’s a nice way to save some money while repaying your loan.

Use our Income Tax Calculator to calculate tax deductions.

Disbursement Process

Here’s how the loan disbursement process works:

  1. You apply for the loan and submit all the necessary documents.
  2. The bank verifies your documents to check if you’re eligible.
  3. If everything checks out, your loan gets approved.
  4. The bank then sends the money either directly to your educational institution or to you, depending on what’s needed.

Required Documents For Education Loan

Here are the documents you usually need when applying for an education loan:

Personal Documents:

 

A few passport-size photos.

Identity proof (like Aadhaar card, PAN card, passport, or voter ID).

Address proof (like a utility bill, ration card, or rent agreement).

 

Academic Documents:

 

Admission letter from the college or university.

Course fee structure.

Previous education mark sheets (10th, 12th, or graduation certificates).

 

Financial Documents:

 

Bank account statements from the last 6 months.

Income proof of the co-applicant (like salary slips, tax returns, or Form 16).

Documents for any property being used as collateral (if required).

 

Loan Application Documents:

 

Filled loan application form.

Co-applicant’s (like a parent or guardian) ID and address proof.

Details of any existing loans or debts.

 

Education Loan Insurance Cover

Some banks offer insurance with education loans. This insurance ensures that the loan is repaid even if something unexpected happens, giving both you and your family peace of mind.

In conclusion, education loans are a great way to fund your studies without financial stress. By understanding the Education Loan Interest Rates, types of loans, benefits, and the application process, you can make informed decisions and focus on achieving your educational goals.

Frequently Asked Questions (FAQs)

1. Who can apply for an education loan?

Anyone who wants to pursue higher education, whether in India or abroad, can apply for an education loan. Generally, the applicant is the student, but a co-applicant, such as a parent or guardian, is also required.

2. What expenses does an education loan cover?

Education loans typically cover tuition fees, hostel charges, cost of books, travel expenses, and other related costs. Some banks may also cover the purchase of a laptop if it’s essential for the course.

3. Is a guarantor needed for an education loan?

Yes, most banks require a guarantor or co-applicant, usually a parent or guardian, who is responsible for repaying the loan if the student cannot.

4. When do I start repaying the education loan?

Repayment usually begins one year after the course is completed or six months after you start working, whichever comes earlier. This period is known as the moratorium period.

5. Can I get a loan for studying abroad?

Yes, many banks offer education loans for studying abroad. These loans cover expenses like tuition fees, travel costs, and living expenses.

6. Are there any tax benefits on education loans?

Yes, under Section 80-E of the Income Tax Act, you can claim a deduction on the interest paid on the education loan for up to eight years.

Use Our Education Loan EMI Calculator.

In conclusion, education loans are a great way to fund your studies without financial stress. By understanding the interest rates, types of loans, benefits, and the application process, you can make informed decisions and focus on achieving your educational goals.

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Sachin Chopade
I am a Finance and Tax Analyst, Content Creator, sharing valuable articles and calculators related to Finance, Accounting and Banking industry.