Education Loan Interest Rates 2026
Compare education loan rates of public-sector banks, HDFC Bank and Credila for studies in India and abroad. Understand collateral-free limits, margin money, the moratorium and how interest builds up while you study, government schemes such as PM-Vidyalaxmi and CSIS, and the Section 80E tax deduction on interest.
RBI repo rate 5.25% · Lender rates checked 27 September 2026Education Loan interest rates — 8 lenders compared
Published starting and maximum rates for each lender. The RBI repo rate is 5.25% after cuts totalling 1.25 percentage points in 2025, so floating-rate loans linked to the repo rate are cheaper than a year ago. The rate you are offered depends on your credit score, income, employer and loan details.
| Lender | Interest rate (p.a.) | Processing fee | Tenure | EMI per ₹1 lakh* | Rates as of |
|---|---|---|---|---|---|
| Union Bank Education LoanPublic sector bank | 6.75% – 10.00% | Not published in the sources checked — ask the branch | Up to 15 years after the moratorium | ₹1,148 | 27 Sep 2026 (aggregator) |
| Bank of Baroda Education LoanPublic sector bank | 6.85% – 9.90% | 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 | Up to 120 EMIs (loans up to ₹7.5 lakh) or 180 EMIs (above ₹7.5 lakh) after the moratorium | ₹1,153 | BRLLR eff 6 Dec 2025 |
| Canara Bank Education LoanPublic sector bank | 6.85% – 10.10% | Vidya Turant: nil (PM-Vidyalaxmi portal fee ₹200 + GST); Master’s-abroad scheme 0.50% (capped at ₹10,000 – ₹20,000) | Up to 15 years excluding the moratorium | ₹1,153 | Scheme page updated 1 Apr 2026 |
| SBI Education LoanPublic sector bank | 6.90% – 9.90% | 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 | Up to 15 years after the moratorium | ₹1,156 | 9 Jun 2026 |
| Bank of India Education LoanPublic sector bank | 7.00% – 9.80% | Studies in India: nil (portal fee ₹100 + GST); studies abroad: ₹5,000 (aggregator) | 15 years from start of repayment | ₹1,161 | — |
| PNB Education LoanPublic sector bank | 8.10% – 11.25% | About 1% for study-abroad loans (aggregator); India loans as per PNB’s service-charge schedule | Up to 15 years | ₹1,219 | Jul 2026 (aggregator) |
| Credila Education LoanNBFC | 8.95% – 13.00% | 0.5% – 1% of the loan + GST | Up to 14 years | ₹1,264 | 29 Jul 2026 (aggregator) |
| HDFC Bank Education LoanPrivate sector bank | 9.00% – 14.10% | Studies in India: 1% of loan or ₹1,000, whichever is higher; studies abroad: 1.5% + taxes | Up to 10 years for loans up to ₹7.5 lakh; up to 15 years above | ₹1,267 | Sep 2026 (aggregator) |
* At the lowest rate for 10 years. Starting rates go to borrowers with strong credit scores and income; your rate depends on your profile. Sources and dates on each lender page — confirm with the lender before applying.
Moratorium & EMI calculator
More: EMI calculator · Eligibility calculator · Affordability calculator · Moratorium calculator · Prepayment calculator
Moratorium: what happens to interest while you study
Example: ₹10,00,000 disbursed at the start of a 2-year course at 9.50%. The moratorium is the course plus 1 year = 36 months, during which simple interest of ₹7,917 a month accrues — ₹2,85,000 in total. Unpaid interest is added to the principal when EMIs start (10-year repayment).
| Choice during study | Interest you pay while studying | Principal when EMIs start | EMI | Total you pay |
|---|---|---|---|---|
| Pay nothing during study | ₹0 | ₹12,85,000 | ₹16,628 | ₹19,95,310 |
| Pay half the interest | ₹1,42,500 (₹3,958/month) | ₹11,42,500 | ₹14,784 | ₹19,16,541 |
| Pay all interest monthly | ₹2,85,000 (₹7,917/month) | ₹10,00,000 | ₹12,940 | ₹18,37,771 |
Assumes the whole loan is disbursed on day one; in practice fees are disbursed term by term, so accrued interest is lower. Some banks also cut the rate if you service interest during the moratorium.
Government schemes: PM-Vidyalaxmi, CSIS and CGFSEL
| Scheme | Who qualifies | Benefit |
|---|---|---|
| PM-Vidyalaxmi (approved Nov 2024) | Students admitted to Quality Higher Education Institutions: top-100 NIRF (overall, category or domain), state government institutes ranked 101–200, and all central government institutions | Collateral-free, guarantor-free loans; 75% credit guarantee on loans up to ₹7.5 lakh; 3% interest subvention during the moratorium on loans up to ₹10 lakh for family income up to ₹8 lakh (up to 1 lakh students a year, preference to government institutions and technical/professional courses) |
| CSIS — Central Sector Interest Subsidy (since 2009, part of PM-USP) | Annual gross parental income up to ₹4.5 lakh; professional or technical courses in India at NAAC/NBA-accredited institutions, Institutes of National Importance or CFTIs | Government pays the full interest during the moratorium (course + 1 year) on loans up to ₹10 lakh under the IBA model scheme; available once |
| CGFSEL — Credit Guarantee Fund Scheme for Education Loans (NCGTC) | Loans up to ₹7.5 lakh under the IBA model scheme | Guarantee to the bank so that no collateral or third-party guarantee is needed from you |
Students from families with income up to ₹4.5 lakh already get full moratorium interest paid under CSIS, so PM-Vidyalaxmi’s 3% subvention targets the next band (up to ₹8 lakh). The combined FY2026-27 allocation for PM-Vidyalaxmi, CSIS and CGFSEL is reported at ₹1,050 crore. Apply through the PM-Vidyalaxmi portal (pmvidyalaxmi.co.in).
Studying in India vs abroad
| Point | Study in India | Study abroad |
|---|---|---|
| Margin (above ₹4 lakh) | 5% | 15% |
| Typical loan size | ₹2 lakh – ₹20 lakh for most courses; higher for medical and top management programmes | ₹20 lakh – ₹1 crore+ depending on country and course |
| Collateral | Often none for premier institutes (bank lists) and up to ₹7.5 lakh elsewhere | Usually needed above ₹7.5 lakh at banks; NBFCs such as Credila lend up to ₹75 lakh unsecured |
| Typical rates | 6.75% – 8.5% at premier institutes; about 9.25% – 11.25% otherwise | SBI Global Ed-Vantage 9.40%; Bank of Baroda Scholar 8.45% – 9.90%; Credila 8.95% – 13% |
| Processing fee | Often nil at public-sector banks | 0.5% – 1.5% (e.g. SBI 0.50% capped at ₹50,000; HDFC Bank 1.5%) |
| Government interest schemes | CSIS and PM-Vidyalaxmi subvention can apply | Not covered by CSIS or PM-Vidyalaxmi |
| Costs financed | Tuition, hostel, exam, books, laptop, deposits | Also travel, health insurance, living costs, visa-related deposits |
| Disbursal | Fees paid to the college each term | Tuition wired to the university in foreign currency; living costs to the student’s account; usually after visa |
| Tax collected at source (TCS) | Not applicable | Nil on remittances financed by a loan from a financial institution (from 1 Apr 2025) |
Collateral and margin thresholds
| Loan amount | Margin money | Security |
|---|---|---|
| Up to ₹4 lakh | Nil | Parent/guardian as co-borrower; no collateral, no third-party guarantee |
| Above ₹4 lakh up to ₹7.5 lakh | 5% (India) / 15% (abroad) | Co-borrower; no collateral or third-party guarantee — covered by CGFSEL |
| Above ₹7.5 lakh | 5% (India) / 15% (abroad) | Tangible collateral of suitable value (property, FD, LIC policy, etc.) plus assignment of the student’s future income |
| Premier institutes (bank lists) | Often nil | Collateral-free up to much higher limits — e.g. SBI Scholar ₹30–50 lakh, Bank of Baroda ₹10–40 lakh, Canara Vidya Turant fully unsecured |
| PM-Vidyalaxmi institutes | As per bank | Collateral-free and guarantor-free; government guarantees 75% of loans up to ₹7.5 lakh |
Based on the IBA Model Education Loan Scheme followed by public-sector banks; private banks and NBFCs set their own limits (HDFC Bank ₹4 lakh unsecured; Credila up to ₹75 lakh).
Section 80E tax benefit — worked example
Loan of ₹10,00,000 at 9.50% repaid over 10 years (EMI ₹12,940). All interest paid in each financial year is deductible under Section 80E for up to 8 years — there is no cap.
| Repayment year | Interest paid (deductible) | Tax saved at 30% slab | Tax saved at 20% slab |
|---|---|---|---|
| Year 1 | ₹92,305 | ₹28,799 | ₹19,199 |
| Year 2 | ₹86,055 | ₹26,849 | ₹17,899 |
| Year 3 | ₹79,185 | ₹24,706 | ₹16,470 |
| Year 4 | ₹71,633 | ₹22,350 | ₹14,900 |
| Year 5 | ₹63,332 | ₹19,759 | ₹13,173 |
| Year 6 | ₹54,206 | ₹16,912 | ₹11,275 |
| Year 7 | ₹44,175 | ₹13,783 | ₹9,188 |
| Year 8 | ₹33,149 | ₹10,342 | ₹6,895 |
| Total, years 1–8 | ₹5,24,039 | ₹1,63,500 | ₹1,09,000 |
Old tax regime only; tax saved includes 4% cess, excludes surcharge. Interest of ₹28,731 paid in years 9–10 is not deductible because the 8-year window has ended. The window starts in the year you first pay interest — including interest paid during the moratorium.
How the interest rate changes your cost
| Rate | EMI | Total interest | Extra vs lowest rate |
|---|---|---|---|
| 8.00% | ₹12,133 | ₹4,55,931 | ₹0 |
| 9.00% | ₹12,668 | ₹5,20,109 | ₹64,178 |
| 10.00% | ₹13,215 | ₹5,85,809 | ₹1,29,878 |
| 11.00% | ₹13,775 | ₹6,53,000 | ₹1,97,069 |
| 12.00% | ₹14,347 | ₹7,21,651 | ₹2,65,720 |
₹10,00,000 for 10 years.
Education Loan eligibility
- Indian national (some lenders also lend to NRI/OCI students)
- Confirmed admission to a recognised course in India or abroad, usually through an entrance test or merit-based selection
- Parent or guardian as co-borrower (spouse or parents-in-law for married students)
- Satisfactory credit history of the co-borrower; income matters more for larger or unsecured loans
- Collateral for loans above ₹7.5 lakh under the IBA model scheme (higher collateral-free limits for premier institutes)
- Margin money (your own contribution) of 5% for India or 15% for abroad on loans above ₹4 lakh
Documents required
- Student and co-borrower KYC: PAN, Aadhaar, passport (for abroad), photographs
- Admission letter and official fee schedule of the institute
- Marksheets of Class 10, 12, graduation and entrance-test scorecards
- Co-borrower income proof: salary slips / Form 16 or ITR for 2 years, 6 months’ bank statements
- Collateral papers for secured loans: title deed, encumbrance certificate, valuation and legal reports
- For studies abroad: I-20 / CAS / CoE or offer letter, visa (at disbursal), cost estimate, GRE/GMAT/IELTS/TOEFL scores
How to apply
- Shortlist lendersCompare rate, collateral-free limit, margin and moratorium for your institute — premier institutes get much better terms.
- Apply online or via PM-VidyalaxmiApply on the bank’s website, at a branch or through the PM-Vidyalaxmi portal (pmvidyalaxmi.co.in) for participating banks.
- Submit documentsAdmission letter, fee schedule, academic records, KYC and co-borrower income proof; collateral papers if needed.
- Sanction & KFSCheck the sanction letter and Key Facts Statement for APR, moratorium terms and margin before signing.
- DisbursalFees are paid directly to the institution term by term; living and other costs are released in tranches.
RBI rules that protect you
| Protection | What it means for you |
|---|---|
| Key Facts Statement (KFS) | Mandatory for all retail and MSME term loans since 1 Oct 2024; shows the all-inclusive Annual Percentage Rate (APR), EMI schedule and every fee |
| Charges not in KFS | Cannot be levied without your explicit consent |
| Validity | At least 3 working days for loans of 7 days or more — time to compare offers |
| Floating-rate reset (RBI, Aug 2023) | At a rate reset you can choose a higher EMI, a longer tenure (without negative amortisation), switch to fixed rate, or prepay; you get quarterly statements |
Prepayment & foreclosure
| 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 |
Education Loan guides, calculators & lenders
Rates & lenders
Compare lenders, rates and charges
Calculators
EMI, moratorium interest, eligibility, affordability and prepayment
Getting a loan
Eligibility, documents, co-applicant, expenses covered and applying
India, abroad & security
Study in India or abroad, collateral and margin money
Moratorium & repayment
Moratorium, EMIs, prepayment, tax benefit and disbursal
Government schemes
PM-Vidyalaxmi, interest subsidies and the loan portal
Frequently asked questions
Which bank offers the cheapest education loan?
Among lenders we track, Union Bank (6.75% for IIM students), Bank of Baroda (6.85% for top premier institutes), Canara Bank (6.85% Vidya Turant), SBI (6.90% Scholar / PM-Vidyalaxmi Utkarsh) and Bank of India (7.00% Star Vidya) have the lowest starting rates. These rates are for listed premier institutes; for other colleges public-sector banks typically charge about 9.25% – 10.10%.
How much education loan can I get without collateral?
Under the IBA model scheme banks lend up to ₹7.5 lakh without collateral or a third-party guarantee, backed by the government’s Credit Guarantee Fund Scheme for Education Loans (CGFSEL). Premier institutes get much higher limits — for example SBI Scholar up to ₹50 lakh and Bank of Baroda up to ₹40 lakh for Category AA — and NBFC Credila lends up to ₹75 lakh unsecured. Under PM-Vidyalaxmi, students at eligible institutes can get collateral-free, guarantor-free loans.
What is the moratorium period on an education loan?
Usually the course period plus 1 year. You need not pay EMIs during this time, but interest accrues — typically simple interest — and unpaid interest is added to the principal when EMIs begin. On ₹10,00,000 at 9.50% for a 2-year course, about ₹2,85,000 of interest builds up over 3 years, raising the 10-year EMI from ₹12,940 to ₹16,628.
What is margin money?
It is the share of the course cost you pay yourself. Under the IBA model scheme it is nil for loans up to ₹4 lakh, 5% for studies in India and 15% for studies abroad above that. Scholarships and assistantships count towards margin, and it can be paid year by year as disbursements happen.
How does Section 80E work?
You can deduct the entire interest paid on an education loan (no upper limit) for up to 8 years starting from the year you begin paying interest. The loan must be from a bank or approved financial/charitable institution for higher education of yourself, your spouse, your children or a student for whom you are the legal guardian. The deduction is available only under the old tax regime, and principal repayment is not deductible.
What is PM-Vidyalaxmi?
A central scheme approved in November 2024 for students admitted to Quality Higher Education Institutions (top-100 NIRF institutes, state government institutes ranked 101–200 and all central government institutions). It offers collateral-free, guarantor-free loans, a 75% credit guarantee on loans up to ₹7.5 lakh, and 3% interest subvention during the moratorium for family income up to ₹8 lakh on loans up to ₹10 lakh. Applications go through pmvidyalaxmi.co.in.
Can I prepay an education loan without penalty?
Yes. Education loans are almost always floating-rate loans to individuals, and RBI rules do not allow prepayment or foreclosure charges on these — whether you pay part or all of the loan, from any source.
Is TCS charged when my education loan is sent abroad?
From 1 April 2025, following Budget 2025, no TCS is collected on remittances for education that are financed by a loan from a financial institution. TCS still applies to self-funded education remittances above the annual threshold.
Is interest charged on the full sanctioned amount?
No. Interest runs only on the amount actually disbursed, from the date of each disbursement. Because fees are released term by term, the interest during a multi-year course is lower than on a lump-sum loan.
Who can be the co-applicant?
A parent or guardian is normally mandatory; for married students the spouse or parents-in-law. Lenders look at the co-applicant’s income and credit history, and the loan appears in both the student’s and the co-applicant’s credit reports.
Rates compiled from lenders’ published rate pages and reputable aggregators (dates on each lender page) for comparison only. FinancePortal is not a lender or financial adviser; confirm terms and read the Key Facts Statement before borrowing.