Are you planning for graduate studies? Find out which bank offers the cheapest education loan

Popularly known as student loans, education loans help you borrow money from banks to pay for your education costs. Students opt for this type of loan mainly for higher education or specialized courses in reputable institutions inside and outside the country.

Often thousands of Indian students pass through some of the best universities for higher education but they struggle to organize a huge body to complete their studies. We see that some courses and establishments are expensive and require bank financing. Since it is easy to get an education loan and the terms and conditions are also flexible, it helps deserving students to pursue their higher education in the best colleges in India and abroad. Depending on your needs, many student loans allow you to cover your tuition fees as well as your travel and accommodation costs.

Banks keep criteria simple and instant disbursement process for student loans so that students do not pay late fees and other charges. If you meet the criteria, obtaining a loan for your studies is very simple. Before you start applying for a student loan, it is advisable to check your eligibility first. You can check your eligibility online at portals like BankBazaar.com.

Banks are careful in analyzing eligibility to ensure that their funding only reaches deserving students. Thus, they would usually check the academic performance of the students, the educational institutions he has studied and is going to study, the ranking in the entrance exams and the course from the point of view of employment, the status of admission, etc.

To apply, you will need to complete an application form. You can also go to the nearest bank branch, log into the bank’s website or contact customer service to help you with the process.

Remember that the role of your parents, spouse, etc. is very important in this process, as your guardian will be treated as a co-applicant on the loan. One of the benefits of taking out an education loan is that you will receive a tax deduction under Section 80E of the Income Tax Act on interest.

To study in India, you can avail a loan of up to Rs 50 lakh, while students going abroad can even take out a loan of up to Rs 1 crore depending on their eligibility. The repayment term can be up to 15 years and may vary from bank to bank.

Generally, no collateral is required for a loan up to Rs 7.5 lakh, but collateral with a co-applicant is mandatory for loans above Rs 7.5 lakh. If you meet the bank’s eligibility criteria, you’ll likely get 100% financing. The interest rate on your loan may vary depending on the amount of the loan. Banks may also require student life insurance for an amount equivalent to the borrowed loan. Repayment of the education loan begins at the end of the moratorium, which is normally a period of 6 to 12 months after the end of the course. But this period may vary from one bank to another.

Remember that you must repay the student loan on time. In the event of default, the credit ratings of the borrower and co-applicants will be affected and forfeiture of collateral may also occur. In case of late repayment, the interest may also increase, so there are many challenges if you delay or do not repay the loan. Therefore, it is advisable to go through all the terms and conditions carefully and clear your doubts with the bank before signing the loan agreement.

In the table below, you can compare interest rates and EMIs for education loans of Rs 20 lakh for seven years.

Interest Rate and EMI on Student Loan

Compiled by BankBazaar.com

Note: Student loan interest rates for all listed public and private banks (ESB) considered for data compilation; Banks whose data is not available on their website are not taken into account. Data collected from respective bank’s website as of April 27, 2022. Banks are listed in ascending order based on interest rate, i.e. the bank offering the lowest interest rate on the student loan (regardless of the loan amount and duration) is placed at the top and the highest at the bottom. The EMI is calculated based on the interest rate mentioned in the table for a loan of Rs 20 lakh with a tenor of 7 years (processing fees and other charges are assumed to be zero for the calculation of EMI) ; *Minimum APR rate during the period from October 21 to December 21.