11 Best Banks for Education Loan in India 2022

After my research, I have listed the “Best education loan in India 2022”. You can find the important factors that banks consider to approve an education loan in India in the later section of the article.

First, let’s check the 11 best banks for education loan in India 2022.

Best Banks for Education Loan in India 2022 (up to 75 Lakhs)

#1. HDFC Bank Education Loan

Maximum Loan Limit: Rs. 20 Lakhs and above.

HDFC Bank grants education loans to study in India and abroad. The maximum loan amount for studying in India is limited to Rs. 20 Lakhs.

Whereas, all the cost of education is covered under the loan for foreign education, with no upper limit. But you need to provide collateral in the form of a fixed deposit or immovable property to the bank.

The loan is for a maximum period of 15 years and is disbursed directly to the institution based on the fee structure.

You will find that HDFC bank doesn’t have a dedicated education loan scheme for skill development courses. That is why they recommend personal loan for skill development courses.

Usually, HDFC takes two to three days to process your loan application and disburse the loan amount.

#2. Axis Bank Education Loan

Maximum Loan Limit: Rs. 75 Lakhs

Axis Bank has only one scheme for education loans (starting from Rs. 50,000 to Rs. 75 Lakhs). Axis finances education loan only for the graduate or postgraduate courses for students who have secured a minimum of 50%  marks in HSC or Graduation.

Axis Bank gives more preference to the parent’s profile. The bank has made it mandatory for parents to show a regular source of income.

Pros:

• Quick processing of the loan application
• Higher loan amount up 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

Maximum Education Loan granted: Need-based finance

Union Bank of India has 4 different categories of education loan scheme:

• 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 irrespective of the loan amount.

But asks for life insurance equal to the value of the loan amount. So you need to buy life insurance to get your education loan.

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

If possible open a savings account or deposit account (FD or RD).

#4. IDBI Bank Education Loan

Loan Amount Offered: Up to Rs. 20 Lakhs for studies in India and Rs. 30 Lakhs for foreign education

If you are planning to get an education loan for AICTE, UGC, ICMR and government-approved courses, job-oriented courses and technical diploma courses then you should check IDBI Bank’s education loan.

IDBI Bank also provides education loan for students securing admission through management quota.

The repayment terms extend up to 15 years but you need to offer tangible collateral security for an education loan amount of over Rs. 7.5 Lakhs.

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

Maximum Loan Amount: Need-based with no upper cap. Minimum – Rs. 50,000 for study in India.

Avanse Financial Services is an RBI regulated NBFC focused on providing 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 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.

Pros:

• Up to 100% loan amount
• Less paperwork and quick processing
• Education loan for E-learning also

Cons

• High rate of interest
• 1% – 2% processing charges
• No pre-payment allowed in first 6 months

Best Banks for Education Loan in India for Foreign Studies

#6. State Bank of India Education Loan

Maximum Loan Amount: up to Rs. 1.5 Crores

SBI grants educational loans of up to Rs. 1.50 Crores under the SBI Global Ed-Vantage scheme for foreign studies.

The courses include professional & technical degree, PG and diploma courses like MCA, MBA and MS from a reputed university. Certification courses conducted by CIMA-London and CPA-US are also eligible for education loans.

SBI also offers one of the lowest interest rates for education loans in India.

The SBI Scholar Loan Scheme is exclusively for merit students who want to pursue professional/ technical courses in premier institutions like IITs, IIMs and NITs.

Pros:

• Up to 9.30% low rate of interest
• NIL processing fees up to 20 Lakhs
• Different loan schemes

Cons:

• High processing time
• 15% margin for studies abroad

#7. Punjab National Bank Education Loan

Maximum Loan Limit: No upper limit, depends on the repayment capacity and margin

PNB Udaan is an exclusive loan scheme to support meritorious students for pursuing higher education abroad in reputed universities. Degree (job oriented), PG (MCA, MS & MBA), CIMA, CPA and diploma courses in aeronautical, pilot training and shipping are eligible for the loan.

For domestic studies, Punjab National Bank offers a lot of education loan schemes. PNB Saraswathi is a normal IBA model education loan scheme for meritorious students. PNB Prathibha scheme is for the students who want to pursue higher education in premier colleges like IIT, NIT and other top business schools.

For vocational and skill development courses you have the PNB Kaushal loan scheme.

PNB also has area-specific loan schemes like PNB Honhaar for Delhi students and PNB Bihar Student credit card scheme supporting Bihar students. They have a special scheme with a concessional interest rate for persons with disabilities.

Even a scheme to help the minor communities for overseas studies through Padho Pardesh subsidy scheme.

Pros:

• Low ROI
• NIL processing fees for study in India
• Wide range of education loan schemes

Cons:

• Tedious paper works & follow-up

#8. ICICI Bank Education Loan

Get Maximum Loan of – up to Rs. 1 Crore

ICICI Bank offers education loans up to Rs. 50 Lakhs for studies in India and Rs. 1 Crore for studies aboard.

One of the key benefits is that- you do not need to keep any collateral for education loans up to Rs. 20 Lakhs (for UG courses) and Rs. 40 Lakhs (for PG Courses at selective premier institutions).

The main drawback of ICICI education loan is that- the repayment holiday period is restricted to 6 months after the completion of the course, irrespective of the employment status.

Pros:

• High loan amount
• Less paperwork and quick processing
• No margin up to Rs. 20 Lakhs

Cons

• High rate of interest
• Hidden charges

#9. South Indian Bank Education Loan

Maximum Loan amount – Rs. 1.5 Crores for global education

You can get foreign education loan from South Indian Bank (SIB) for pursuing a full-time UG/ PG/ PhD and diploma, skill development courses abroad with a duration of more than a year.

The SIB Global education scheme provides funding for tuition fees, exams, library & lab fees, travel expenses, hostel, insurance and books costs.

Students up-to 50 years of age are eligible for the loan and SIB offers a 0.5% concession for women borrowers.

Pros:

• High up to 1.5 crore loan amount
• Covers diploma & skill development courses
• Maximum application age up to 50 years

Cons

• High 25% margin required
• 100% collateral equal to loan amount & interest needed
• SIB reimburses course fees and accommodation within one year with proof

Best Bank for Education Loan in India For Vocational and Skill Development Courses.

#10. Canara Bank Education Loan

Maximum Loan amount – Rs. 1.5 Lakhs for skill development. Need-based finance for others.

Canara Bank gives need-based finance under the Skill Loan Scheme for vocational education and training. The maximum amount you can get is Rs. 1.5 Lakhs.

For other types of education loans, Canara Bank follows the IBA education loan model. The amount of loan you get is need-based and can stretch up to Rs. 40 Lakhs for premier institutes like ISB- Hyderabad.

For the students, who want to pursue professional courses in selective premier institutions, they offer a maximum loan of up to Rs. 40 Lakhs under the Vidya Turant scheme.

Canara Bank does not have any special schemes for overseas studies with a higher loan limit. So getting a higher amount of loan (more than the IBA model) is very difficult.

Pros:

• Low-interest rate for vocational courses.
• Low processing fees.
• 0.50% concession in ROI for girl students.

Cons:

• Low loan amount
• Tedious paper works for loan processing.

Best Bank for Education Loan in India for School studies

#11. Bank of Baroda Education Loan

Maximum Loan Limit: Rs. 4 Lakhs for school studies. Up to 80 Lakhs for other education loans.

Bank of Baroda gives education loans for school education from nursery to 12th Std under the scheme Baroda Vidya. This scheme helps economically backward students get basic education from a reputed school.

The maximum loan amount is Rs. 4 Lakhs and the loan should be repaid in 12 installments. Bank of Baroda does not charge processing fees for any of their education schemes.

Other educational loans include Baroda Gyan (up to 80 Lakhs) for higher studies in India, Baroda Scholar (up to 80 Lakhs) for study abroad.

Pros:

• Competitive Interest rate.
• Good range of education loan products.
• No processing charge.

Cons:

• Slow processing of the loan application.

Factors Affecting Approval of Best Education Loan in India 2022

#1. CIBIL Score

Checking CIBIL score and ensuring that the report doesn’t have any errors should be your first step while applying for an education loan.

“A Good CIBIL report with score of 700+ is an entry ticket for your loan application.

If you or your co-applicant doesn’t have a good CIBIL score then the bank may reject your loan application.

#2. Eligibility of the Course and University

Only accredited professional, technical and UG/ PG courses from recognized universities (UGC/ AICTE approved) are eligible.

So before applying for an education loan, you need to check the type of course and the university. For vocational training courses, additionally, check the Bank’s education loan schemes.

For example, you can not take an education loan for a beautician degree course from an XYZ Bridal Institute. Beautician degree is not a professional course and the institute conducting the course is also not recognized by UGC and AICTE.

#3. Eligible Education Expense

All expenses mentioned in the fees structure are not considered for finance by the banks. For example, the college bus fee is not considered while calculating the eligible expenses. But overseas travel expense to the college location is considered.

Banks consider expenses that are essential to complete the course for arriving at the loan amount.

#5. Co-obligant/ Personal Guarantee

In case of a minor student, you and your spouse will act as a joint borrower. For a major student, any one of the parents with an income source will be made a joint borrower.

If the loan amount is above Rs. 4 lakhs, Bank will insist on a third-party guarantee, means a guarantee from a reputed person who is not in your relation.

“If you disclose your net-worth properly along with documentary evidence at the time of application, the Bank may consider waiving third party guarantee clause.”

#6. Tangible Security

If you are looking for a loan amount of Rs. 7.5 lakhs and above, you need to secure the loan by providing collateral security. The security should be tangible assets such as FD, LIC, NSC bonds, shares, debt bonds and immovable properties.

“Mention your collateral securities details clearly and keep xerox copies of all the supporting documents related to the collateral security ready.”

#7. Holiday Period for Repayment

You have two options of repaying the education loan. One is repaying the installment after completing the course and getting the job.

Another is by paying the monthly interest and getting installment holiday for principal up to course completion.

The holiday period is available up to one year after the end of studies or six months after getting a job, whichever is earlier.

“On your loan application, you need to mention that you are willing to pay the monthly interest and submit your income source. This will show your intention to repay the education loan.”

Conclusion

If you are looking for a higher loan amount for studying abroad then you can consider applying at SBI (Rs. 1.5 Crores). But if you are looking for quick processing and a higher amount, then you can apply for an education loan at ICICI Bank (up to Rs. 1 Crore).