Moratorium & repayment
Education Loan Prepayment & Foreclosure
Pay off your education loan early with no charges — rules, when it makes sense and how to do it.
Updated 27 September 2026 · 8 lenders trackedLowest education loan rate
6.75%
Union Bank Education LoanWhat you need to know
Education loans to individuals are floating-rate, so RBI rules bar prepayment and foreclosure charges at every lender — part or full, from any source, with no lock-in. For loans sanctioned from 1 January 2026, the RBI (Pre-payment Charges on Loans) Directions, 2025 spell this out and require charges on any other loan to be disclosed in the KFS.
RBI rules
| Situation | Rule |
|---|---|
| Floating-rate loans to individuals (non-business) | No prepayment / foreclosure charge — any lender, part or full, from any source of funds |
| Loans sanctioned or renewed from 1 Jan 2026 | RBI (Pre-payment Charges on Loans) Directions, 2025 also bar charges on floating-rate business loans to individuals and MSEs at most banks and large NBFCs; no minimum lock-in |
| Fixed-rate loans | Lender may charge as per the sanction letter and Key Facts Statement |
| Disclosure | Any charge must be shown in the sanction letter, loan agreement and KFS; waived charges cannot be levied later |
Lender-wise
| Lender | Processing fee | Prepayment / foreclosure |
|---|---|---|
| Union Bank Education Loan | Not published in the sources checked — ask the branch | No prepayment charge on floating-rate loans to individuals |
| Bank of Baroda Education Loan | Nil up to ₹7.5 lakh and for premier institutes in India; studies abroad 1% (max ₹10,000), refunded for premier institutes; ₹8,500 per property mortgaged | No prepayment charge on floating-rate loans to individuals |
| Canara Bank Education Loan | Vidya Turant: nil (PM-Vidyalaxmi portal fee ₹200 + GST); Master’s-abroad scheme 0.50% (capped at ₹10,000 – ₹20,000) | No prepayment penalty |
| SBI Education Loan | Student Loan: nil up to ₹10 lakh, ₹5,000 + GST for ₹10–20 lakh, 0.50% (max ₹25,000) above ₹20 lakh. Scholar Loan: nil. Global Ed-Vantage: 0.50% (min ₹10,000, max ₹50,000) + GST | No prepayment or foreclosure charge — education loans are floating-rate loans to individuals |
| Bank of India Education Loan | Studies in India: nil (portal fee ₹100 + GST); studies abroad: ₹5,000 (aggregator) | No prepayment charge on floating-rate loans to individuals |
| PNB Education Loan | About 1% for study-abroad loans (aggregator); India loans as per PNB’s service-charge schedule | No prepayment penalty (PNB Udaan); no charge on floating-rate loans to individuals |
| Credila Education Loan | 0.5% – 1% of the loan + GST | No prepayment charges |
| HDFC Bank Education Loan | Studies in India: 1% of loan or ₹1,000, whichever is higher; studies abroad: 1.5% + taxes | No prepayment charge on floating-rate loans to individuals; confirm in the Key Facts Statement |
How to prepay
- Check the outstandingAsk for a statement or foreclosure letter with interest up to the payment date.
- PayTransfer to the loan account; for part-payment, ask the bank to reduce tenure or EMI.
- CloseOn full repayment get a no-dues certificate and ensure the credit bureau is updated.
- Release securityFor secured loans, collect original property papers and ensure any mortgage charge is released.
Prepayment calculator
Frequently asked questions
Does prepaying hurt my 80E benefit?
It reduces future interest and therefore the deduction, but you save more in interest than you lose in tax benefit.
For information and comparison only. Loan terms, rates and rules change — confirm with the lender and read the Key Facts Statement before borrowing.