Education loan Interest Rates in India to Study Abroad
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Education loan Interest Rates in India to Study Abroad

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Raj
Raj Vimal
Study Abroad Expert
Updated on Apr 9, 2024 18:30 IST

Studying abroad is more expensive than studying in India. Students borrow study loans from banks and NBFCs to finance their higher education. Knowing the updated education loan interest rates and planning the budget accordingly is a smart decision.

Education Loan Interest Rates

Education Loan Interest Rates: Many students apply for a student loan to finance their dreams of studying abroad. You may be going to borrow a loan from your bank so you ask for every small detail and terms of your study loan. After comparing all loan offers students choose the best education loan in India according to their need. Education loan interest rate is one of the important deciding factors in choosing the loan.

Education is the foundation of a bright future this is why every student wants to get it. The cost of studying abroad doesn't include just tuition fees but some other unforeseen expenses such as living expenses, travel costs and more. To pay all these expenses students borrow study loans with attractive repayment options and low interest rates. In this article, we will help you to know the education loan interest rates announced by different banks in India to study abroad. This will assist you to choose the best offer for you.

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Useful Reads

Student Loan Guide Best Time to Think about Finances to Study Abroad Best Education Loan Providers
Education Loan Eligibility Criteria Student Loan Vs Self-Finance Documents for Education Loan

Best Education Loan Interest Rates For Abroad Studies

There are multiple student loan schemes available in the market. Not only banks but also some NBFCs offer study loans. Here, we have included a table to help you compare the interest rates of top Indian banks for education loans.

Banks

Education Loan Interest Rates in India to Study Abroad

Processing Fees

SBI Education Loan Interest Rate

11.15%

INR 10,000

HDFC Education Loan Interest Rate

12.50%

1% or ₹1000, whichever is higher.

ICICI Bank Education Loan Interest Rate

Current REPO Rate+3.75

Upto 2% + GST

AXIS Bank Education Loan Interest Rate

13.70%

2%+ GST

Canara Bank Education Loan Interest Rate

15%

0.5% of Total Amount

Source: Official Websites of Banks

This table is according to the information present on the website of this bank. It is advisable to visit the official websites of these banks before applying for student loans. Also, you can use the education loan EMI calculator to compare the offers and choose the best one for you.

Useful Links

How to Choose Your Bank for Education Loan SBI Education Loan for Study Abroad HDFC Credila Education Loan

Importance of Education Loan Interest Rates

Studying abroad is not limited to students with wealthy families anymore. Now, students living in Tier-2 and Tier-3 Indian cities and other smaller Indian cities, are going to study in countries like USA, UK, Canada, and Australia. They borrow student loans from banks in India to finance their dream of studying abroad.

Before diving into loan details, you should know what is education loan interest rate. It is a type of fee that you pay on the amount you borrow to study abroad. The banks offer study loans on fixed or floating interest rate. The interest rate of a loan directly and significantly affects how much you'll repay in total to the bank. It is denoted as the yearly rate of interest.

For example: If you have borrowed an education loan of 10 lakhs to study abroad for 10 years and your rate of interest is 10% then you are going to pay INR 18,99,652.40 to the bank. This includes the principal amount (INR 10,00,000) and the total interest paid (INR 8,99,652.40).

Fixed vs Floating Rate of Interest

Check out the difference between fixed rate of interest and floating rate of interest

 

Fixed Rates

Floating Rates

Interest Rates

The rate of interest is fixed throughout the loan duration.

Fluctuates based on the repo rate set by RBI.

Payment Certainty

Fixed EMI throughout the loan term.

Keeps changing according to the interest rate.

Budgeting

It becomes easier to plan the budget as you know about EMI.

Budget planning is challenging due to floating rates.

Pros

You know the EMI that gives you a piece of mind

Interest rates may drop if RBI announces a rebate in the REPO rate.

Cons

No EMI relaxation even if interest rates fall generally.

Floating EMI and it keeps changing.

What Affects Your Education Loan Interest Rate?

You have decided to take a student loan to pay the expenses of higher studies. One crucial factor impacting the affordability of your education loan is the interest rate. It's time to understand the important factors that can affect the education loan interest rate. Based on these factors, interest rates may be reduced or increased. Let's check out the factors.

  • Academic Profile of Student- A student with impressive academic records and good scores in entrance exams can expect a lower interest rate for their education loan. Banks analyze the potential of candidates.
  • University Reputation- Admission to top-ranked universities or pursuing demanding courses can be a ticket to securing an education loan at lower interest rates. Banks understand that graduates from such institutions are more likely to land high-paying jobs, making them lower-risk borrowers.
  • Loan Amount- Banks charge low interest rates on low-amount student loans. The logic is simple, the risk associated with smaller loans is lower.
  • Study Destination- If your study destination has a stable economy and stable job market then there is a high chance of getting a low-interest study loan. Countries like the USA, UK, New Zealand, and Germany check these points.
  • Credit Score of Co-applicant- This factor is less known to students that if the CIBIL score of your co-applicant is impressive then the bank will offer you a favourable interest rate with better loan terms to you.
  • Collateral- Students can provide some collateral (Property or investment) to reduce the interest rate. It is like a security for a bank.

Interest Rates of Government Education Loan Schemes

The central and state governments in India offer education loans with subsidized interest rates. Many schemes are specially for studying abroad. Students who fulfil the eligibility to get government student loans can apply for these schemes. We have mentioned a list of government education loan schemes below, so you can explore more about it.

  1. Vidya Lakshmi Education Loan Portal 
  2. Gujarat Government Education Loan for Studying Abroad 
  3. Education Loan Scheme of the NBCFDC 
  4. Padho Pardesh Scheme 
  5. Dr Ambedkar Central Sector Scheme

Tips to Reduce the Education Loan Interest Rates

It’s the first time when you are going to borrow a loan and you should prioritize the shorter loan duration. So here are the tips that can help you reduce your interest rates and reach your objectives. These tips are especially for Indian students who are going borrow a loan for abroad studies

  • Be an Academic Superstar- Performing well in academics is in your hands. Banks prefer candidates with good grades.
  • Top Ranked University- As mentioned earlier, getting admission to a reputed university will increase the chances of getting a lower interest rate education loan.
  • Scholarships- Try to reduce your principal amount which can help you to reduce the total repayment. You can try government scholarships or university-based scholarships.
  • Negotiation- Show your negotiation skills! If you have the above points, then ask the bank to reduce your interest rate. You never know, you get a great deal.

That’s all from our side about this topic. We understand that getting an education loan is a time-consuming process but do proper research and choose the one that fits your needs, even if it takes time.

Note: Students, who wish to study abroad, may get in touch with India’s top-rated loan providers and apply for an education loan through Shiksha Study Abroad 

Read More: 5 Common Mistakes You Should Avoid While Applying For Study Loan

About the Author
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Written by
Raj Vimal
Study Abroad Expert

Raj Vimal has experience of 7+ years in SEO Content Writing, which includes 5+ years in the Ed-Tech industry. He has written articles about studying abroad, especially in the USA, UK, and other English-speaking coun... Read Full Bio

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