Who can take an education loan
Because the cost of inflation in education runs much higher than overall consumer price inflation, higher education is becoming costlier every year. Funding it out of savings is increasingly difficult, which is why most families now turn to an education loan.
An education loan can be taken by the student, the parents or the spouse to fund higher education in India or abroad. It covers the cost of the course and the related expenses around it. “Higher education” here means study after senior secondary level. Loan amounts and terms differ from lender to lender.
Where we come in. Public sector banks run the cheapest education loan schemes in the country — PNB Pratibha, Canara Vidya Turant, SBI’s premier-institute rates — but they are rarely marketed. We know which scheme your admission letter qualifies for.
The benefits worth knowing about
1. Section 80E deduction on the entire interest
The person in whose name the loan is taken can claim a deduction for the entire interest component of the loan under Section 80E of the Income Tax Act. Two conditions apply:
- The loan must be taken from a specified financial institution — banks, or any other institution the Central Government notifies in the Official Gazette. A loan from any other source does not qualify for the deduction.
- It must be for higher education, meaning study after the senior secondary exam.
2. It covers far more than tuition
Most banks fund up to 90% of the total cost of education, and the definition of “cost” is broad:
- Tuition fees and hostel expenses
- Exam, library and lab fees
- Any refundable fees paid to the institute
- Uniforms, books and other essentials
- Travelling expenses
- Equipment such as a computer, where the course requires it
3. A concession for female students
Banks generally offer a 0.5% discount on the education loan interest rate to female students pursuing higher education. Over a fifteen-year repayment, that is a meaningful sum.
4. The moratorium period
You get a holiday period during which no repayment is due. EMIs do not start immediately after the course finishes — there is generally a gap of six months to a year first.
A trick worth using. You have the option of servicing just the interest during the moratorium period. If you do, many banks will reduce your interest rate by a further 1 percent — a large saving for a small monthly outgo during the study years.
Eligibility criteria
Every bank sets its own criteria, but these parameters are common across nearly all of them:
- Nationality
- The applicant should be an Indian national
- Admission
- At the time of application, the applicant must hold documents confirming admission
- Age
- Generally within the 16–35 year bracket
- Course Level
- Higher education — study after the senior secondary exam
- Co-applicant
- A parent, guardian or spouse is normally required as joint borrower
Documents required
- Two passport-size photographs
- Age proof
- Identity proof
- Residence proof
- Bank account statement for the past 6 months
- Papers validating any scholarship the applicant has qualified for, and the admission confirmation letter
- Statement of expenses for the course
- Mark sheet of the qualifying test
- Copy of the foreign exchange permit, for overseas study
Education loan rates across banks
Rates vary enormously by scheme and by institution — a student admitted to a premier institute can borrow several percentage points cheaper than the standard rate.
| Bank / NBFC | Loan amount or scheme | Rate of interest |
|---|---|---|
| State Bank of India | Up to ₹7.5 lakh | 10.25% |
| State Bank of India | Above ₹7.5 lakh | 10.50% |
| Punjab National Bank | PNB Pratibha — IIT, IIM, XLRI Jamshedpur | 8.45% onwards |
| Punjab National Bank | PNB Kaushal | 8.55% onwards |
| Punjab National Bank | PNB Saraswati / Udaan | 10.30% onwards |
| Punjab National Bank | PNB Honhaar | 10.45% |
| Bank of Baroda | All loan types and amounts | 8.50% onwards |
| Canara Bank | Vidya Turant Loan Scheme | 6.60% |
| Canara Bank | Up to ₹7.5 lakh | 10.40% |
| Canara Bank | Above ₹7.5 lakh | 10.20% |
| Indian Bank | Premier institutions — List A | 8.60% |
| Indian Bank | Premier institutions — List B | 9.20% |
| Indian Bank | Premier institutions — List C | 9.60% |
| HDFC Bank | Minimum to maximum APR | 9.00% – 13.86% |
| Axis Bank | Above ₹7.5 lakh | 13.70% |
| Kotak Mahindra Bank | All loan types and amounts | 11.5% – 24% |
| Avanse | All loan types and amounts | 10% – 16.50% |
| Credila | All loan types and amounts | 11.85% onwards |
Swipe the table sideways to see all columns.
Rates change. These figures are indicative and were published in 2024. Several are linked to MCLR and move whenever the bank revises it. Call us for a current quote.
Notable bank schemes in detail
SBI education loan
Available with no processing fee and a repayment period of up to 15 years after the course period, covering loans up to ₹20 lakh across a wide range of courses and universities. Concessions stack up meaningfully:
- 0.50% concession for a girl student.
- 0.50% concession for students taking SBI Rinn Raksha or another policy assigned in favour of SBI.
- 1% concession for the full tenure, if interest is serviced promptly during the moratorium period including the course duration.
- Income tax exemption under Section 80E on interest paid.
Canara Bank education loan
Canara Bank takes nil margin and offers 100% finance for loans up to ₹4 lakh, and allows multiple co-borrowers to raise the maximum loan. Loans up to ₹4 lakh need no collateral; up to ₹7.5 lakh requires a third-party guarantee; above ₹7.5 lakh requires adequate collateral.
Indian Bank education loan
Covers fees payable to the college, school or hostel, exam fees, purchase of books and equipment, travel and passage money for study abroad, and the purchase of a computer where the course requires it. For meritorious and deserving candidates the loan quantum can be increased further. The rate is floating and linked to the bank’s MCLR.