Education Loan Interest Rates 2024

Education is one of the most important times for a human being as it will decide how the person’s social and economic standing will be.

We spend 25% of our lifetime in place or work carving out our careers and hence, becomes very important to ensure our education is best.

One of the biggest problems that we face when we are on the path toward quality education is the rising cost of education which was already very expensive.

If you want a quality education, then you’ll have to get it from the best institutions but the cost of education is very high in those institutes.

 To ease that burden, Education loans can be a great way that students can take for pursuing their education. in this article, we will discuss education loans, the latest Education Loan Interest Rates, etc.

What is Education Loan?

Education Loan is the funds borrowed by a student to finance their education and the fees and other expenses occurred for education like tuition fees, examination fees, living expenses, books, etc. are all paid by the bank under the education loan.

Payments are all deferred until the student gets his/her degree and the repayment of the loan can be done after getting a job.

The interest charged on the loan is also very affordable. Until the completion of the course, the loan charged is calculated on Simple Interest and after completion of the course, the loan calculation will be on compound bases.

Education Loan Interest Rates 2024

The following are the interest rate of various banks which they charge on education loans-

Bank	Interest Rate Range	Processing Fees
Union Bank of India	8.20% p.a. onwards	Nil
State Bank of India	8.20% p.a. onwards	No charges below Rs.20 lakh; Rs.10,000 (plus taxes) above Rs.20 lakh
Punjab National Bank	8.55% p.a. onwards	Rs.250 plus GST
IDFC FIRST Bank	9.00% p.a. – 15.00% p.a.	Up to 1.5% of the loan amount
Bank of Baroda	9.15% p.a. onwards	No processing charges up to Rs.7.50 lakh; 1% of the loan amount up to Rs.10,000
Canara Bank	9.25% p.a. onwards	Refer to the bank’s website
Bank of Maharashtra	9.45% p.a. onwards	0.50% of the loan amount
HDFC	9.50% p.a. onwards	As per the criteria of the bank
Indian Overseas Bank	9.75% p.a. onwards	Contact the bank
ICICI Bank	9.85% p.a. – 15.50% p.a.	Up to 2% plus GST
Karnataka Bank	9.95% p.a. onwards	Contact the bank
Tamilnad Mercantile Bank	11.15% p.a. – 12.40% p.a.	No processing charge for studies in India; 1% of the loan amount for studies abroad
Karur Vysya Bank	11.48% p.a. – 13.98% p.a.	Nil
Axis Bank	13.70% p.a. – 15.20% p.a.	2.00% of the loan amount plus GST
IDBI Bank	Contact the bank	Contact the bank
Bank of India	Contact the bank	Study in India: Nil; Study abroad: Rs.5,000
UCO Bank	Refer to the bank’s website	Refer to the bank’s website
Federal Bank	Contact the bank	Contact the bank
Kotak Mahindra Bank	Up to 16% p.a.	Nil

Benefits of Education Loan

The following are the benefits of Education Loans-

• The interest rate charged on the education loan is very low compared to other loans like Term Loans, Personal loans, Unsecured Loan, etc
• A moratorium period is offered in this loan meaning, you’ll have to pay the loan after the completion of your education
• The expenses covered under this type of loan are very broad hence, the cost which you’ll have to currently bear for admission, tuition fee, etc. is minimum
• The government for promoting higher education also offer scholarship and subsidy for certain education preferably STEM Education
• You’ll also get a tax benefit under section 80E of the Income Tax Act
• The loan offered for education does not need any collateral which enables you to have peace of mind
• The education loan is born by the student himself which relieves a lot of stress from the parents

Eligibility for Education Loan

The following are the eligibility for getting an education loan-

• The Student must have confirmed admission seat in an educational institution
• Strong financial background of parents/guardians/co-borrower
• Displaying good prospects for future employment/income generation
• Displaying good academic record
• Entrance examination score (if any)

How to Apply for Education Loan

The following is the application process for applying for the education loan-

• The very first step to secure an education loan is to collect the documents mentioned below and evaluate various bank’s eligibility and find the best match for your chance of increasing the loan
• After finalizing your bank, you’ll have to visit the official website or the bank branch and ask the bank representative for education loan information
• The bank representative will evaluate your documents and based on that further application will be processed.
• Upon processing the loan, you’ll be offered a loan with an interest rate, amount, and other details, you can negotiate and decide upon the tenure, interest rate, and other key points
• If you agree with the loan terms and conditions, you can rest assured as the bank will take care of other processing
• The bank will settle your college fee on your behalf semester wise and you can simply focus on your education

Documents Required for Education Loan

The following are the documents required for an education loan-

• Duly filled in and signed application form with affixed photographs
• Two photographs
• Copy of exam mark sheets of 10th/12th or latest education certificate
• Statement of course expenses/cost of study
• Aadhaar Card and Pan Card of the student and Parent/ Guardian

Age proof

• Copy of Aadhaar Card
• Voter ID
• Passport
• Driving Licence

Identity proof

• Copy of Voter ID
• Aadhaar Card
• Driving Licence
• Passport

Residence proof

• Rental agreement
• Bank statement of 6 months of the student or co-borrower
• Guarantor
• Copy of Ration card
• Gas Book
• Electricity Bill
• Tel Bill

Income proof

• Most recent salary slips or Form 16 of the parent/ guardian/co-borrower
• Six-month bank statement of the borrower or updated passbook of the bank
• Updated ITR (Income Tax Return with income computation) of two years or IT assessment order of last 2 years of parent/co-borrower/guardian
• Documents stating the assets and liabilities of the parent/co-borrower/guardian

Education Loan Calculation

Here’s a table format illustrating the education loan repayment plan for a loan amount of 15 lakhs with a repayment period of 2 years. The interest rate considered is 9.5% per annum.

Semester	Loan Disbursement	Interest (for 6 months)
1	3,75,000 INR	17,812.50 INR
2	7,50,000 INR	35,625.00 INR
3	10,00,000 INR	47,500.00 INR
4	15,00,000 INR	71,250.00 INR
Total	15,00,000 INR	1,72,187.50 INR

Now after getting the degree, your simple interest calculation will become a compound-based calculation. The following is a three-year plan for the repayment of the loan-

Year	Opening Balance	EMI	Interest	Principal	Closing Balance
1	16,72,187.50 INR	6,74,128.00 INR	1,58,949.61 INR	5,15,178.39 INR	11,57,009.11 INR
2	11,57,009.11 INR	6,74,128.00 INR	98,964.81 INR	5,75,163.19 INR	5,81,845.92 INR
3	5,81,845.92 INR	6,74,128.00 INR	36,148.76 INR	6,37,979.24 INR	–

The monthly EMI for this calculation is Rs. 56,168.00/-

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