Best Education Loan in India 2025: Complete Guide for Students

Education is the key to a bright future, but quality education often comes with a high cost. An education loan helps students cover expenses like tuition fees, books, accommodation, and other educational needs. In India, banks and financial institutions offer education loans to students who wish to study in India or abroad.

This guide provides detailed information on education loans, eligibility criteria, interest rates, repayment process, and FAQs to help students and parents make informed decisions.

10 Best Education Loan in India (2025)

When choosing an education loan India, it’s crucial to compare interest rates, loan types, and terms across different banks to make an informed decision. Below is a table of the top banks offering education loans in India in 2025:

BANK	INTEREST RATE	LOAN AMOUNT
HDFC Bank	9.55% to 13.25%	Up to ₹150 lakh
ICICI Bank	10.50% to 13.50%	Up to ₹50 lakh
State Bank of India	8.15% to 11.15%	Up to ₹20 lakh for studies in India Up to ₹3 crore for studies abroad
Kotak Mahindra Bank	10.75% to 12.50%	Up to ₹20 lakh
Axis Bank	13.70% to 15.20%	₹50,000 to ₹75 lakh
Bank of Baroda	8.85% to 10.85%	Up to ₹80 lakh
Punjab National Bank	8.55% to 10.55%	Up to ₹10 lakh for studies in India Up to ₹20 lakh for studies abroad
IndusInd Bank	11.00% to 13.00%	Up to ₹40 lakh
Indian Overseas Bank	9.95% to 11.95%	Up to ₹30 lakh
Canara Bank	8.75% to 10.75%	Up to ₹40 lakh

You can find more details on the respective bank websites: HDFC Bank, ICICI Bank, State Bank of India, Kotak Mahindra Bank, etc.

Check For :- Education Loan EMI Calculator

Types of Education Loans in India

Education loans help students finance their studies without financial burden. In India, there are different types of education loans available, depending on study location, collateral, and the lender. Below is a detailed and easy-to-understand guide on the types of education loans in India.

1. Types of Education Loans Based on Study Location

(a) Domestic Education Loan

This loan is for students who wish to study within India. It covers expenses like tuition fees, hostel fees, books, travel, and other academic costs.

Eligibility:

• The student must be an Indian citizen.
• The course should be recognized by UGC, AICTE, or a government body.
• The applicant should have an admission offer from an Indian college/university.

Examples of Courses Covered:

• Engineering, Medical, MBA, and Law degrees from Indian universities
• Diploma and vocational courses
• Government-recognized professional courses

Common Banks Offering Domestic Education Loans:

• State Bank of India (SBI) – Scholar Loan Scheme
• Punjab National Bank (PNB) – PNB Saraswati Scheme
• HDFC Bank Education Loan

(b) Abroad Education Loan

This loan is for students who want to study in foreign universities. It covers tuition fees, visa charges, living expenses, travel expenses, and more.

Eligibility:

• The student must be an Indian citizen.
• The course should be in an international university recognized by the bank.
• The applicant should have an admission letter from a foreign institution.

Common Banks Offering Abroad Education Loans:

• SBI Global Ed-Vantage Loan
• ICICI Bank Study Abroad Loan
• Axis Bank Education Loan for Abroad Studies

Examples of Courses Covered:

• MBA, MS, and MBBS in countries like the USA, UK, Canada, Australia
• Undergraduate programs in top universities
• Research and doctoral programs

🔰 Tip: Loans for studying abroad usually require a co-applicant (parent/guardian) and sometimes collateral security.

2. Types of Education Loans Based on Collateral Requirement

(a) Secured Education Loan (With Collateral)

A secured loan requires collateral, meaning you need to pledge an asset like property, fixed deposit (FD), or government bonds as security.

Collateral Can Be:

• House or land (immovable property)
• Fixed deposits (FD)
• Government bonds or LIC policy

Key Features:

• Higher loan amount (up to ₹1.5 crore for studying abroad)
• Lower interest rates
• Longer repayment period (up to 15 years)

Common Lenders for Secured Loans:

• State Bank of India (SBI)
• Bank of Baroda (BOB)
• Union Bank of India

(b) Unsecured Education Loan (Without Collateral)

This loan does not require collateral and is given based on the student’s academic record, course reputation, and co-applicant’s financial stability.

Key Features:

• No need to pledge property or assets
• Usually available for top-ranking colleges and universities
• Interest rates may be slightly higher than secured loans

Common Lenders for Unsecured Loans:

• HDFC Credila
• ICICI Bank Education Loan
• Axis Bank Education Loan

🔰 Tip: Unsecured loans usually have lower loan limits (₹10–₹40 lakh) compared to secured loans.

3. Types of Education Loans Based on Lenders

(a) Government Education Loan

These loans are offered by the Government of India to support students from economically weaker sections (EWS). They often come with subsidized interest rates and easy repayment options.

Popular Education Loan by Government Schemes:

• Central Sector Interest Subsidy (CSIS) Scheme
  • Covers students from economically weaker backgrounds.
    The government pays the interest on the loan during the study period.
    Available for loans up to ₹7.5 lakh.
• Dr. Ambedkar Interest Subsidy Scheme
  • For students belonging to Other Backward Classes (OBC) and Economically Backward Classes (EBC).
    Helps students pursuing master’s and Ph.D. programs abroad.

Banks Providing Government Education Loans:

• State Bank of India (SBI)
• Punjab National Bank (PNB)
• Bank of Baroda (BOB)

(b) Private Education Loan

These loans are offered by private banks and NBFCs (Non-Banking Financial Companies). They usually have flexible terms but higher interest rates than government loans.

Common Features of Private Education Loans:

• Quick processing time
• Available for international and private institutions
• Requires strong academic record or co-applicant’s good financial background

Common Private Lenders in India:

• HDFC Credila
• ICICI Bank
• Axis Bank
• Avanse Financial Services (NBFC)

🔰 Tip: If you are applying for a private loan, compare interest rates and repayment terms to choose the best option.

Education loans in India come in different types, depending on where you study, whether you need collateral, and who is lending the money.

Choosing the right type of education loan can help you achieve your academic dreams without financial stress.

Eligibility Criteria for Education Loan

Before applying for an education loan, it’s important to check if you meet the education loan eligibility requirements. Here’s what lenders typically look for:

CRITERIA	REQUIREMENTS
Nationality	Indian citizen
Age	16-35 years
Admission	Confirmed admission to a recognized institution
Course	Graduate, postgraduate, diploma, or certificate courses
Co-applicant	Required (parent/guardian/spouse)

Documents Required for Student Loan

The following documents are generally required when applying for a student loan:

• Income Proof: Salary slips or income certificates of the co-applicant.
• Identification Proof: Passport, Aadhaar, or PAN card.
• Address Proof: Utility bill, rental agreement, or valid address proof.
• Bank Statement of Last 6 Months: To assess financial history.
• Copy of Admission Letter: Issued by the institution confirming admission.
• Demand Letter from College: Fee structure and details provided by the institution.
• Loan Agreement/Sanction Letter: Required for loan sanction and disbursement.
• Documents for Collateral Security: If applicable, details of the pledged asset.
• Form A2: For overseas studies, signed by applicant/co-applicant.
• Mark Sheets/Certificates: Educational qualification documents.

How to Apply for an Education Loan

Applying for an education loan is a straightforward process. Follow these steps:

1. Research Lenders
   • Compare interest rates, processing fees, and repayment terms to find the best option.
2. Check Eligibility
   • Ensure you meet the lender’s eligibility criteria.
3. Gather Documents
   • Collect all required documents, including proof of admission and income.
4. Submit Application
   • Fill out the application form online or visit the lender’s branch.
5. Loan Approval
   • Once approved, the loan amount will be disbursed directly to the educational institution.

Features and Benefits of Education Loan

Education loans provide flexible financial solutions that make higher education more accessible. They offer a range of features, from tax benefits to adjustable interest rates, that ease students’ financial burden throughout their academic journey.

• Margin: Some banks require students to contribute a portion (often 5 to 15%) of the loan amount as margin money, especially for higher-value loans. This margin reduces lenders’ risk while ensuring students or their families also invest in education.
• Collateral: Banks may ask for collateral (like property or fixed deposits) as security for large loan amounts. Smaller loan amounts are typically unsecured, which benefits students needing funds without significant assets.
• Tax Deduction: Borrowers enjoy tax deductions on interest payments under Section 80E of the Income Tax Act, applicable for up to eight years from the start of repayment. This deduction lowers the overall financial burden.
• Rate of Interest: Education loan interest rates vary based on loan type, lender policies, and student eligibility. Rates can be competitive, especially with government-backed loans, and are often fixed or floating.
• Processing Fees: Banks may charge a processing fee to cover administrative costs, usually a small percentage of the loan amount. Some banks, especially under government schemes, waive or reduce this fee to encourage higher education.

Considerations Before Applying for an Education Loan

Before applying for an education loan, it is crucial to assess essential elements that may impact the loan’s affordability and repayment terms. Each component should be carefully analyzed, as it can affect the overall cost and advantages.

1. Government Schemes

Education loan by government of India are Vidya Lakshmi Education Loan and Central Sector Interest Subsidy offer subsidized interest rates, making education loans more affordable, especially for economically weaker sections.

2. Tax Benefits

Under Section 80E, borrowers can claim tax deductions on loan interest, reducing their taxable income and making the loan more cost-effective.

3. Bank Concessions

Some banks offer special concessions, such as lower rates for female students or discounted rates for specific courses, helping students save on interest costs.

4. Interest Payment Discounts

Certain banks provide discount rates for timely or early payments, encouraging borrowers to manage their loans efficiently and reduce the total interest paid.

5. Risk Premium

Lenders may charge a risk premium based on the applicant’s creditworthiness or co-applicant profile, affecting the interest rate and total loan cost.

How to Apply for an Education Loan?

Applying for an education loan involves gathering information, preparing necessary documents, and choosing the right application method. Applicants can opt for either an offline or online process, requiring careful attention to eligibility and documentation.

1. How to Apply Offline for Education Loan

The offline application allows applicants to visit the bank for personalized assistance in loan processing.

• Research Loan Options: Compare loan terms, interest rates, and benefits various banks offer to select the best option.
• Gather Documents: To ensure a smooth application process, collect all required documents, including proof of income, identification, and admission details.
• Check Eligibility: Before proceeding, review the bank’s eligibility criteria, including academic, income, and co-applicant requirements.
• Choose a Co-applicant: Most loans require a co-applicant (usually a parent or guardian) to support the application and loan repayment.
• Fill Out Application: Complete the loan application form with accurate information about the applicant and course details.
• Provide Course Details: Include all necessary information about the chosen course, including duration and fees, in the application.
• Submit Application: Submit the filled application and supporting documents to the bank for further processing.
• Await Processing: The bank will review the application, verify documents, and evaluate eligibility criteria, which may take a few days.
• Receive Sanction Letter: If approved, the bank issues a sanction letter detailing the loan amount, interest rate, and repayment terms.
• Complete Formalities: Finalize required documentation and sign agreements to proceed with loan disbursement.
• Loan Disbursement: Once formalities are completed, the bank disburses the loan amount directly to the educational institution.
• Repayment Plan: The bank provides a repayment schedule outlining monthly payments and tenure, which typically starts post-graduation.

2. How to Apply Online for Education Loan

Online applications offer a convenient way to apply from anywhere with digital form submission and quick processing.

• Mobile Number: Enter a valid mobile number to receive updates and notifications on the loan application process.
• Course Details: Provide accurate information about the chosen course, including the program name and institution.
• Course Fees: Mention the complete fee structure to determine the loan amount needed to cover educational expenses.
• Applicant Details: Fill in personal information like name, age, and address to help verify identity.
• Co-applicant Details: Include co-applicant information, often required for security purposes in educational loans.
• Email Address: Enter an active email for communication and document submission throughout the loan process.
• Agreement: Read and agree to the loan terms provided by the bank as part of the application’s final steps.

Once you have completed the form, please submit it to initiate the application process.

Expenses Covered Under Education Loans Process in India

Education loans in India let students finish their studies without facing financial difficulties by covering various costs. These loans are designed to pay all academic expenses, including tuition and travel expenses.

• Tuition Fees: The loan covers the tuition fees the institution charges, a primary component of education expenses.
• Examination Fees: Examination and assessment fees are included to ease the financial burden of exams throughout the course.
• Library Fees: Library memberships and related costs are covered, allowing students access to essential study resources.
• Accommodation Fees: The loan covers these housing expenses for students living on campus or in rented accommodation.
• Lab Fees: Laboratory charges for practical work and research are included for courses that require lab access.
• Travel Expenses: The loan also includes travel costs for students studying abroad or in a distant city.
• Books and Materials: The loan covers textbooks, stationery, and other course materials necessary for completing assignments and projects.
• Insurance Premiums: Many loans cover health or travel insurance premiums for students, especially those studying abroad.
• Miscellaneous Costs: Additional expenses, such as study tours, projects, and personal computers, are often included under miscellaneous costs.

Tips to Secure the Best Education Loan Deal

Here are some actionable tips to help you get the best education loan :

• Compare Multiple Lenders : Don’t settle for the first option. Compare at least 3–4 lenders.
• Negotiate Terms : Ask for lower interest rates or waived processing fees.
• Maintain a Good Credit Score : A high credit score can improve your chances of approval and better terms.
• Apply Early : Start the process well in advance to avoid last-minute hassles.

Conclusion

An education loan is a powerful tool that can help you achieve your academic dreams without financial stress. By understanding how these loans work, comparing lenders, and preparing a strong application, you can secure the best deal tailored to your needs. Remember to focus on reputable lenders, maintain transparency, and plan your finances wisely to ensure smooth repayment.

💡 Key Takeaways:

✅ Studying in India? Apply for a domestic education loan.
✅ Studying abroad? Apply for an abroad education loan (may require collateral).
✅ Have collateral? Opt for a secured loan for lower interest rates.
✅ No collateral? Apply for an unsecured loan (based on academic merit and co-applicant’s income).
✅ Need financial help from the government? Apply for a government-subsidized education loan.
✅ Want a faster loan process? Consider private bank or NBFC education loans.

If you’re ready to take the next step, start researching lenders today and gather the necessary documents. With the right approach, your education loan can pave the way for a successful and fulfilling career.

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Frequently Asked Questions