An education loan is a sum of money borrowed for education or higher education-related expenses. Education loans are intended to accomplish the cost of education while the student is in the process of pursuing a degree. Choosing a bank for an education loan is important as it all depends on the interest rates of the bank.
1.HDFC Bank Education Loan
Loan Amount Offered: Rs. 20 Lakhs and above depending upon the requirement.
HDFC Bank provides education loans to study in India and further studies abroad. All the cost of education is covered under the loan with no upper limit. But customer needs to provide collateral in any form of a fixed deposit or immovable property to the bank.
| Scheme | Rate of Interest |
| Education Loan for Indian Education | 9.25% to 13.68% |
| Education Loan for Foreign Education | 9.25% to 13.68% |
The loan allotted is for a maximum period of 15 years and is transferred directly to the institution according to the fee structure. The HDFC bank doesn’t have a dedicated education loan scheme for skill development courses. So they recommend personal loan for skill development courses.
Pros:
- Lower interest rates
- Quick processing
Cons
- 1% loan processing fee
- Up to 4% prepayment charges
- Less loan for study in India
Hence HDFC takes two to three days to process the loan application and issued the loan amount.
2.Axis Bank Education Loan
Loan Amount Offered: Rs. 75 Lakhs
Axis Bank offers only one scheme for education loans. Axis finances education loan only for graduate or postgraduate courses. The loan is issued only to the students who have secured a minimum of 50% marks in HSC or Graduation.
| Education loan amount | Rate of Interest |
| Up to Rs. 4 Lakhs | 15.20% |
| Above Rs. 4 Lakhs to Rs. 7.5 Lakhs | 14.70% |
| Above Rs. 7.5 Lakhs | 13.70% |
Axis Bank gives more attention to the parent’s profile. The bank has made it compulsory for parents to show their regular source of income and their bank statement.
Pros:
- Quick processing of the loan application
- Higher loan amount starting from 50,000 to 75 Lakhs
- NIL processing fee for a loan below Rs. 10 Lakhs
Cons:
- A high rate of interest.
- Up to 15% margin for loan above 4 Lakhs
- 24% p.a. penal interest for late payments.
3.Union Bank of India Education Loan
Loan Amount Offered: Need-based loan amount.
Union Bank of India offers 4 different schemes of education loans:
- Education loan for courses in India and abroad.
- Education loan for Kisan Shiksha Suvidha.
- Education loan for Premier Management & Technical institutions (India).
- Education loan for Tier II Management & Technical institutions (India).
Union Bank does not charge any processing fee from Indian students for education loans rather than the loan amount.
The union bank asks the life insurance equal to the value of the loan amount. So the customer needs to buy life insurance to get their education loan.
| Education loan scheme | Rate of Interest |
| Courses in India and abroad | up to 10.05% depending on the quantum of loan |
| For Kisan Shiksha Suvidha | up to 10.05% depending on the quantum of loan |
| For Premier Management & Technical institutions (India)Skill Development Courses | 6.80% |
| For Tier II Management & Technical institutions (India) | 8.55% |
Pros:
- No processing charges.
- Lower interest rate
- 0.50 % concessional interest rate for female students
Cons:
- Slow processing and documentation process.
- Mandatory to get life insurance
4.IDBI Bank Education Loan
Loan Amount Offered: Rs. 20 Lakhs for studies in India and Rs. 30 Lakhs for foreign education.
If anyone wants to avail education loan for AICTE, UGC, ICMR and government-approved courses, job-oriented courses and technical diploma courses then the customer should check IDBI Bank’s education loan. IDBI Bank also offers education loan for students securing admission through management quota.
The repayment terms extend up to 15 years but customers need to offer any collateral security for an education loan amount of over Rs. 7.5 Lakhs.
| Education loan scheme | Rate of Interest |
| Education loan for non-vocational courses | Up to Rs. 7.5 Lakhs – 8.40% Above Rs. 7.5 Lakhs – 8.90% |
| Education loan for vocational / skill development courses | For all amounts – 8.80% |
| Education loan for premier education institutes (including ISB) | For all amounts – 6.90% |
Pros:
- Lower interest rate for loans for premier institutes.
- NIL processing fees for study in India.
- NIL foreclosure charges
Cons:
- 1.33 times tangible collateral needed for a loan amount of over 7.5 lakhs
- Slow loan processing.
5.Avanse Education Loan
Loan Amount Offered: Rs. 50,000 for study in India.
Avanse Financial Services is an RBI regulated NBFC focused on offering affordable education loans for students in India.
Global PE firm Warburg Pincus holds 80% equity in Avanse. You can apply for all sort of education loans at Avanse like the loan for –
- Study in India
- International studies
- Vocational courses
- School fees financial, and even
- Education loan for E-learning
- Avanse provides up to 100% financing, fast processing and doorstep service.
| Education loan scheme | Rate of Interest |
| Education loan for domestic and international studies | Avanse base rate + spread. Which can go up to 18% |
Pros:
- Up to 100% loan amount
- Less paperwork and quick processing
- Education loan for E-learning too.
Cons
- High rate of interest
- 1% – 2% processing charges
- No pre-payment is allowed in the first 6 months
