Public Vs. Private Education Loan Providers for Study Abroad
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The high cost of studying abroad presents a financial challenge for many Indian students to finance their studies. For many of them, student loans become their first experience with borrowing money. Here, the question arises which type of loan provider is best - public vs private banks?
Education is widely regarded as one of the most integral parts of our lives. It can open many doors for a person, and it shapes the path they take in their future. Education has been seen as a source of wealth, and those who have the capability to attain quality education are often very successful in their lives. The biggest wealth one generates through education is knowledge, however, it is not just education but quality education that matters.
In order to get a quality education, more and more students are going abroad. According to a media report by India Today, Indian students studying abroad are expected to spend up to $70 billion by the end of 2025 on tuition and hostel fees. It was just $1.9 billion in 2013-14 and $2.8 billion in 2017-18. Mostly, students are going to borrow education loans for abroad studies from private and public study loan providers. In this article, we’ll compare the differences between taking a student loan from a government bank and a private banks.
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Visa applicationGovernment Banks vs Private Banks for Education Loans
There is a huge difference when taking a student loan from a public sector bank or a private sector bank. The interest rate of an education loan is the first thing we consider while choosing a bank. The interest rates supplied by public banks are consistently lower than those offered by private lenders.
Additionally, we may bargain with private lenders about processing costs and loan insurance percentages in addition to interest rates. Students without good negotiating abilities can miss out on a better offer. Private lenders almost always demand greater processing costs than public institutions. Public banks may levy a processing fee for an international student loan that might be anything between zero and ten thousand rupees. Let's compare both!
| Factor | Government Banks | Private Banks |
|---|---|---|
| Interest Rates | Quickly reflect repo rate changes | Rarely reduce rates for existing customers |
| Prepayment Charges | No prepayment charges | Up to 2% charge on early repayment |
| Prepayment Period | There is no such condition. Repay anytime | Usually can't prepay before 6 months |
| Processing Fees | The processing fees charged by banks range between 0.5% to up to 1% of the total loan amount, with no agent commission | Higher (up to 2%) due to agent involvement |
| Trust Factor | More transparent policies | Possible hidden charges; read the terms carefully |
Also Read: How to Choose Your Bank for Education Loan
How to Apply for Education Loan?
To be eligible to apply for an education loan from an Indian government bank, the applicants should take the following information into consideration:
Eligibility:
- The applicant must be an Indian citizen who lives in India or abroad or is an NRI, OCI, or PIO.
- While an employed candidate must be at least 45 years old, a non-employed applicant may be as young as 35.
- They are eligible to apply for any level of study - undergraduate, graduate, doctoral, etc. in any nation.
- The institution must be either public, private, professional, or international for the student to be enrolled.
Documents Required for Student Loan
Here is the list of documents required for a student loan to finance your study abroad dream:
- Admission letter from the university
- Previous Education Marksheets
- Completed application form with signature
- Government Photo ID Proof: Aadhar Card
- Bank Statement
- Address Proof
- Salary Slips
- ITR Proof
- Passport-sized photograph
- Student Visa proof
- Valid Passport
Best Education Loans in India
According to recent data in2025, the interest rates of different banks have changed. The following table elaborates a brief estimate of how much Indian students would be charged while studying abroad:
| Indian Public / Private Banks | Interest Rates | Minimum Loan Amount | Loan Tenure |
|---|---|---|---|
| Indian Public Banks | |||
| PNB Educational Loan | 8.80% to 9.50% | Based on the requirement or need-based | 15 years |
| SBI Education Loan | 10.90% | Above 7.50 lakhs | 15 years |
| Union Bank of India Education Loan | 7.85% to 11.75% (Based on Profile of Students) | Up to INR 1.5 Crores | 15 Years |
| Bank of Baroda Education Loan | 7.90% to 13.45% | Up to INR 1.25 Crores | - |
| Private Banks | |||
| Kotak Mahindra Bank Loan | Up to 16% | INR 7,50,000 | 5-7 years |
| Federal Bank Education Loan | 11.95% | INR 10,00,000 | 15 years |
| HDFC Bank Education Loan | 9.55% to 13.25% | Up to INR 1.5 Crores | 15 years |
| Axis Bank Education Loan | 13.70% to 15.20% | No Limit (For Secured Loans) | 15 years |
Note: The interest rates are subject to change as per the regulations of the bank.
A lot of banks (both public and private) have a clause for collateral that is, property or other immovable assets, to be submitted with the bank against the loan taken till repayment. In case you're finding it difficult to apply for an education loan, you may also apply for a loan through the Shiksha website.
Also Check:
- Top Education Loan Providers in India for Study Abroad
- How to choose your bank for Education Loan to Study Abroad
Apart from the public and private sector banks, NBFCs (non-banking financial companies) are also active in the education loan segment. The average loan amount of the NBFCs is more than what the banks disburse, as it is their main source of income generation. 90% of the NBFC's education loan portfolio is over INR 10 lakh, i.e. they are preferred for big-ticket loans.
While deciding on a student loan, always consider the above-stated facts and then make your decision wisely. Calculate the overall amount you have to return after adding both the principal and the interest, then go for the one which is not heavy on your pocket. And in case you need faster and better service, then go for the private sector banks.
Note: Always consult an expert before taking the final decision.
Calculator for Educational Loan EMIs
Before you apply for a loan, figure out how much you can borrow by using the education loan EMI calculator to calculate your monthly payments and the loan's overall cost. Enter some loan-related details, including the loan amount, length, interest rate, and processing costs, to get an estimate of your equivalent monthly payment (EMI). The total interest due and a thorough amortisation chart that breaks down your EMIs into principal and interest payments on a monthly and annual basis are important data.
If you have any queries or want to ask anything related to this, feel free to connect with us. Also, you can mention your query in the comment box below. Also, you can apply for education loan through Shiksha Study Abroad.
Collateral loans are items of value which are secured and which are promised by the borrower to the lender in exchange for the loan amount. They have the right to sell the collateral if payments are not made on time. Government and commercial banks in India are the best sources of collateral loans.
Students can avail of a loan of up to INR 4 lacs without collateral. For loans, up to INR 7.5 lacs, parents or guardians are made joint borrowers and a third party guarantee is obtained. For a loan exceeding INR 7.5 lacs property or any other asset is required as collateral.
Yes, all the graduates receive a British degree irrespective of the campus locations. Programs follow similar patterns and examinations on all campuses. The degree awarded is even recognised by the reputed institutions and also approved by Royal Charter in UK.
After applying to Hertfordshire University UK, the applicants are going to receive an initial decision about their application within 2-3 working days. After the submission of the application and documents, the applicants are required to pay their tuition deposit. Then, complete the Sponsorship interview and the financial declaration. International students are required to pay a deposit of £5,000 before registration. The balance can be paid in line with the liability dates related to the year and entry of the semester.
The University of Hertfordshire has a 70% acceptance rate, making it easy to get into and having simple admissions requirements. Academic achievement, English language proficiency, references, and many other factors are taken into consideration while making the selection. At Hertfordshire, some programs may require four to five years of experience. To enroll in any programme at Hertfordshire University, students must meet the qualifying requirements. In addition, students with average performance can showcase their relevant experience or extracurricular activities participation to increase their selection probability.
Coventry University is one of the renowned universities popular for its rankings, academic structure, facilities, research opportunities, and location. The university offers over 130 UG and 100 PG programs across four faculties. Coventry University also ranked no. 1 for student-staff ratio in midlands as per 'The Complete University Guide 2025' and rated gold for student experience as per the Teaching Excellence Framework (TEF 2023).
Johnson and Wales University application fees for international students is zero. Johnson and Wales University does not charge any fees for applying to either undergraduate or to graduate programs. International students can apply throught the official application portal of Johnson and Wales University.
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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Comments
(1)
K
3 years ago
P
3 years ago
You should go to a private bank for an education loan to study abroad if you are keen to get the same as soon as possible. The advantage of getting a loan from a private bank is that with an easy process, your paperwork reduces as well as a pre-approved loan is provided.
The processing of the loan becomes easier with private banks as compared to public banks as the former is more digitized. On the other hand, public banks are quite strict with their set eligibility due to which loan processing may get delayed.