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Education Loan Transfer in 2024: Ultimate Guide [Tips Included]

How to Transfer Your Student Loans From One Bank To Another Bank

It takes 10-15 years or longer to pay off student loans. Over time, you may get frustrated with the lender, the loan terms or the loan servicer, or a combination of all three. It is quite possible to move the existing college loan from one bank to another one and to potentially make financial profits from such a education loan transfer. You will also get a greater amount of credit in addition to lowering the interest rate. Yet you ought to weigh both the pros and cons involved and understand how refinancing student loans work with such a debt swap instead of immediately running into it.


Education Loan Transfer Overview 
What’s a Education Loan Transfer?Explore the possibility of transferring existing student loans to a new lender for potential financial gains, offering a chance to increase credit and lower interest rates. Consider both pros and cons before proceeding with a Education loan transfer.
Types of Education Loan Balance TransferUnderstand the four main types of education loan transfers – secured to secured, unsecured to secured, unsecured to unsecured, and secured to unsecured. Each type has its considerations and implications, influencing the decision-making process.
How To Transfer Federal Student LoanLearn the general steps involved in transferring federal student loans to another lender. The process includes obtaining a statement from the old lender, submitting it to the new bank, and finalizing the transfer after loan approval. Note the potential benefits, including lower interest rates on takeover loans.
Benefits of an Education Loan TransferDiscover the financial benefits of a lender taking over your education loan, such as lower interest rates, eligibility for government-subsidised schemes, and an extended repayment period. Evaluate whether a loan transfer aligns with your financial goals and consider the associated advantages.
Comparison of Pros & Cons Of Student Loan RefinancingAssess the advantages and disadvantages of refinancing student loans through a detailed table. Highlighted pros include lower interest rates and simplified repayment, while cons involve potential loss of federal loan protections and creditworthiness requirements. Consider individual circumstances and financial goals.

What Is A Education Loan Transfer?


Here’s how an education loan transfer from one bank to another works. Let’s say that you have taken an overseas education loan from NBFC because of their shorter processing period and a year later, you are not happy with their student loan repayment scheme and would like to apply for a student loan refinancing from a public bank. In such a scenario, you may apply for a Education loan transfer from your NBFC to a banking institution.


Types of Education Loan Balance Transfer


The four main types of students education loan transfers or takeovers are listed below:

Secured to secured: If you transfer a secured loan from one secured loan to another secured loan, the new loan will also be secured by collateral. In this scenario, the process will be completed on Xerox papers since you won’t have any collateral originals.

Unsecured to secured: Most people think about getting an unsecured education loan from private banks or NBFCs because of time restrictions or the lack of required collateral papers. Students discover how expensive their loan is when it comes time to repay it. Students can borrow money from government banks at a lower interest rate with collateral security.

Unsecured to unsecured: In the event of an unsecured-to-unsecured transfer, it is more likely that the borrower will take out a loan from an NBFC and then choose to transfer their account to a private bank because of benefits like Section 80E, which will enable them to reduce their tax liability on interest payments.

Secured to unsecured: This is extremely rare since it involves trading lower interest rates for higher interest rates. This typically occurs when the owner of the collateral is ready to sell the asset and pay off the loan.


How To Transfer Federal Student Loan To Another Lender Or Servicer? 


Education loan transfer to other banks  involves a specific process. Here are the general steps you can follow:

1. When you finally decide if you wish to move the loan, your old lender can send you a statement on the remaining balance of the loan to be repaid.

2. Following this, the document must be sent to the bank offering the student loan with refinancing.

3. Upon receipt of this statement, the loan process will proceed as normal. Once the loan has been sanctioned, the new bank will send a check to clear all unpaid fees of the previous lender.

The interest rate of takeover loans is often smaller than that of fresh loans which are because the risk factor related to a new bank is very minimal.


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Eligibility Criteria For The Transfer Of  Educational Loan


Eligibility criteria for the transfer of an educational loan can vary depending on the policies of the lending institution or loan servicer. However, here are common factors that lenders may consider when evaluating eligibility for the transfer of an educational loan:

Active Loan Status:

Typically, the loan should be in an active status, meaning that it is not in default or delinquent. Lenders may be less likely to approve a transfer if the borrower has a history of missed payments.

Good Repayment History:

A positive repayment history, with on-time payments and adherence to the agreed-upon repayment plan, can enhance eligibility for a loan transfer. Lenders may review your payment history with the current servicer.


Some lenders may assess the borrower’s creditworthiness before approving a loan transfer. This can include factors such as credit score, employment status, and income. A strong credit profile may increase the likelihood of approval.

Loan Type:

The type of educational loan may influence eligibility. Federal student loans, for example, may have specific requirements and protections, and transferring them may involve a different process compared to private student loans.

New Educational Institution Acceptance:

If you are transferring your loan due to a change in educational institutions, you may be required to provide proof of acceptance from the new school. This ensures that the loan is being used for educational purposes.


Lenders typically require documentation to process a loan transfer. This may include an application form, identification documents, proof of enrollment, and any other paperwork specified by the lender.

Loan Amount:

Some lenders may have minimum or maximum loan amount requirements for transfers. Be aware of any limitations on the amount that can be transferred, and ensure that the new loan aligns with these guidelines.

Interest Rates and Terms:

The terms and conditions of the new loan, including interest rates and repayment terms, may influence eligibility. Lenders may assess whether the new loan offers favourable terms compared to the existing one.

You should also see to it that there are no more disbursements that the loan applicant must take from their current lender’s loan. It means that your previous bank has already disbursed whatever loan amount had to be disbursed and the loan applicant can not borrow any more money from the previous loan.

Before you plan to move your education loan, you must keep some things in mind, such as processing costs, interest costs for education loans, and other expenses, to see if your final outflow will be less or more.



What Are The Benefits Of An Education Loan Transfer?


A lender taking over your education loan provides numerous financial benefits. Some of them are listed below-

Low student loan interest rate: If you are switching from a private lender to a government bank, you are in for a treat! The most important takeaway is that the you can transfer educational loan at low interest rate will be significantly lower than it would have been had you continued with your private lender.

Eligibility for government-subsidised education loans: If you are eligible for interest subsidy schemes on education loans under one of several government-funded schemes, you can get it when you switch from a private lender to a government lender. 

The longer repayment period for education loans: Most NBFCs have set a ten-year repayment period for education loans. Students can obtain a total repayment term of 15 years from public banks. Another way to look at it is that the lower the initial EMIs are, the longer the repayment period.


What Should You Be Aware Of During The Transfer Process?  


When transferring a federal student loan to another lender or servicer, it’s crucial to be aware of several factors to ensure a smooth process and avoid potential issues. Here are key considerations:

Check out your final financial outflow: By offering lower EMIs, at a low student loan interest rate and a longer maturity schedule, modern banks aim to draw buyers, which may seem appealing on the face of it, but it may turn out to be more costly in the final analysis. So, determine how much you would potentially pay in both scenarios, and then consider which situation will be more appropriate for you. Experts will advise you to stick with your current bank and pay greater EMIs if you are not too hard-pressed for cash, finish off your loan sooner, even if the interest rate for education loans is higher, and rest easy.

It is important to calculate processing and other fees beforehand: Think how much you are paying out, and what the new bank will charge for a transaction tax, stamp tax, appraisal cost, and legal costs, then balance it against the interest rate cut. If you find that the new education loan in India is still cheaper after taking these items into consideration, then you should go with it, or else stick to the old education loan.

Associated account requirements : If you take out an education loan in India, banks normally require you to open a savings account with them so that they can route your EMIs via it. So, if you intend to transfer student loan to another bank, this aspect would also need to be taken into consideration closing one saving account and opening another with another bank, and the costs it will require.

Relations matter: Personal relationships do matter in banking, as in all other sectors; they will make the operation and procedures simpler. In other words, the simplicity of doing business leads to a great deal of peace of mind. If you transfer student loan to another bank and the workers don’t comply much, it will only raise your problems, mess with your professional job, and make life more complicated in general. So, in those cases, Education loan transfer may not be worth it.

Collateral ratio to outstanding ratio: If you’ve already repaid a substantial part of your loan, don’t give your current bank absolute original collateral. Why would you agree to offer a security that is double the value of your loan outstanding? Instead, you can use it to take an extra loan, if the need emerges. Give a smaller sum of collateral to the current bank. And if the bank also persists on the same matter, bargain more to lower the interest rate.


Some Other Terms and Conditions For the Student Loan Transfer


 If you plan on transferring your current education loan from one bank to another during the Education loan transfer of collateral, the new bank will take over your existing collateral.

You may have to place valuable collateral with a particular public bank if you have an existing non-collateral loan with your current lender and you want to transfer student loan to another bank, which mostly lends collateral-based loans. No loan margin occurs. You will be granted a 100 percent credit on the collateral value by the public bank to which you plan to move the education loan.

If you have used a moratorium on your equalised monthly installments (EMI) and are planning to move your loan to another bank with a lower interest rate, it is possible that your proposal will be denied. On the basis of the credit policies and risk appraisal of the issuer, not all balance Education loan transfer demands submitted by borrowers who applied for a moratorium may be authorised by the creditors. This is because the lender would conclude the borrowers who applied for a moratorium are facing cash flow difficulties. So, until they can persuade shareholders that their cash flow issues have been fixed, it can be tough to get a loan transition completed.



Final Steps When Loan Transfer Is Being Serviced


The final steps when your loan transfer is being serviced involve ensuring a seamless transition and updating your records accordingly. Here’s a guide to the concluding steps:

Confirmation of Transfer:

Confirm with both your current and new loan servicers that the transfer has been completed successfully. Ensure that all relevant details, including your loan balance and repayment terms, have been accurately transferred.

Update Contact Information:

Make sure your contact information is up to date with the new loan servicer. This includes your mailing address, email address, and phone number. This ensures that you receive important notifications and statements.

Set Up Online Account with New Servicer:

If your new loan servicer offers online account management, set up your account. This allows you to access your loan information, make payments, and track your repayment progress conveniently.

Review Repayment Schedule:

Carefully review the repayment schedule provided by the new servicer. Confirm the due dates, amounts, and any changes in your repayment plan. If you have automatic payments set up, ensure they are aligned with the new schedule.

Update Automatic Payments:

If you have automatic payments set up with your bank, update the payment details to reflect the information of the new loan servicer. This helps avoid any disruptions in your payment schedule.

Monitor Loan Status:

Keep a close eye on your loan status with the new servicer. Verify that payments are being applied correctly, and address any discrepancies promptly. This may involve checking your account statements regularly.

Stay Informed about Benefits and Protections:

Confirm that any federal benefits and protections associated with your student loan, such as income-driven repayment plans or loan forgiveness programs, remain intact after the transfer. Seek clarification from the new servicer if needed.

Save Documentation:

Retain all documentation related to the loan transfer, including confirmation notices, communication with both servicers, and any paperwork provided during the process. This documentation may be useful for future reference.

Contact Customer Service for Clarifications:

If you have any questions or concerns, reach out to the customer service of your new loan servicer. They can provide assistance and clarification on any issues you may encounter.

Gradually Adjust to the New Servicer:

Familiarise yourself with the policies and procedures of the new loan servicer. Understand how they handle inquiries, where to find important information, and any additional services they offer.

By completing these final steps, you can ensure a smooth transition between loan servicers and maintain control over your student loan repayment. 


Comparison Between Different Banks For Transfer Of Student Loans


When exploring options to transfer student loans, it’s essential to compare offerings from various banks to find the most suitable terms for your financial needs. The table below provides a comprehensive overview of key criteria such as interest rates, repayment terms, eligibility requirements, and additional features for top financial institutions of India. Consider these factors carefully as you weigh the pros and cons of each bank to make an informed decision.

Bank NameEligibilityDocuments Required
Education loan transfer to Axis BankBorrower’s credit score as a key factor in determining eligibility. A higher credit score may improve the chances of approval. The borrower’s repayment history on existing loans or credit accounts may be evaluated to assess their creditworthiness.The amount that can be transferred may depend on the outstanding balance on existing loans or credit cards. 

-Completed Axis Bank education loan transfer application form. 
-KYC documents

-Existing loan documents
-Academic Documents
-Income proof of co-applicant.

Education loan transfer to SBIThe borrower must be a legal adult when switching the loan for the first time. The loan must be fully disbursed and repayment should have commenced with regular EMIs at the previous bank or financial institution.

-Completely filled-in Loan Application Form2 passport size photographs PAN Card of the student and Parent/ Guardian / other co-borrower
-Aadhaar Card of the student and Parent/ Guardian/ other co-borrower.
-Proof of Identity
-Proof of Residence

– bank account statement of the Student/Co-borrower/Guarantor,for the last 6 months.
-IT return/ IT assessment order, pertaining to previous 2 years, of Parent/ -Guardian/ other co-borrower (if IT Payee)
-Brief statement of assets & liabilities of Parent/ Guardian/ other co-borrower
-Proof of Income (i.e. salary slips/ Form 16) of Parent/ Guardian/ other co-borrower

Transfer education loan to HDFC CredilaLenders often consider the borrower’s credit score to assess creditworthiness. A higher credit score may improve the chances of approval.
The repayment history on the current education loan or other credit accounts may be evaluated to gauge the borrower’s financial responsibility.
Lenders may have minimum income requirements to ensure that the borrower has the financial capacity to repay the transferred balance. Employment status and stability may also be considered.
The amount that can be transferred may depend on the outstanding balance on the existing education loan.
-Fully filled balance transfer application form. KYC Documents like Aadhar Card, PAN Card, Driving Licence, etc. 
-Fee repayment receipts of the existing lender. 
-Any Additional Documents Requested by Credila

Can we transfer education loans from one university to another?


Certainly, you can transfer education loans from one university to another, but it’s crucial to inform the bank about the change and submit the required documents. You might be wondering, “If I change universities, do I have to repay any loan amounts?”

In short, no, you won’t be obligated to repay any loan sums if you switch universities. However, to benefit from the latest changes, it’s essential to communicate with the bank.

Ensure you provide the necessary paperwork, including an acceptance letter from the new school, evidence of any scholarships earned, and other documents specified by the bank.




It may, thus, be concluded that an educational loan may be transferred from one bank to another. But there is a need to be aware and to take into consideration all the factors mentioned above before deciding whether to transfer the educational loan or not.




Q1. Can student loan be transferred?

Ans: Yes, you can transfer your education loan to a lender with a lower interest rate, but remember to also consider repayment terms, processing fees, and customer service before deciding.

Q2. What happens to my student loan if I change university?

Ans: You can modify your education loan details, including changing your university, by filling out a form with the new information and submitting it to the bank.

Q3. Can I take a student loan from 2 different banks?

Ans: Yes, you are eligible to obtain a second education loan as long as you meet the necessary requirements. You have the option to choose either the same bank that provided your graduation loan or a different lender for this second loan.

Q4. Can I transfer my loan account to another bank?

Ans: To transfer your loan to a new bank, simply close your loan account with the current lender and pay a transfer fee to the new bank. The new bank will then clear your existing loan, and you can start repaying them through equated monthly instalments at a new rate of interest.

Q5.  What is balance transfer in an education loan?

Ans: Balance transfer in an education loan involves moving an existing loan from one lender to another, often to secure better terms or interest rates.

Q6. Will my credit score be affected if I transfer my education loan?

Ans: Transferring your education loan should not significantly impact your credit score, as it’s considered a standard financial activity. However, maintaining regular payments and a positive credit history during and after the transfer is crucial to preserve or improve your credit score.

Q7. Will I be charged a penalty if I transfer my education loan before the end of the repayment period?

Ans: Penalties for transferring an education loan before the end of the repayment period depend on the terms set by the specific lender. Some lenders may charge a prepayment penalty or processing fees, while others may not.

Q8. Can I transfer my education loan if I have defaulted on payments?

Ans: Transferring an education loan while in default may be challenging, as lenders typically assess the borrower’s creditworthiness and repayment history. It’s advisable to first address the default by working with the current lender to establish a repayment plan.

Q9. Can I transfer my education loan to a lender that offers a lower interest rate?

Ans: Yes, you can transfer your education loan to a lender offering a lower interest rate through a process known as loan refinancing or balance transfer. 

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How to Transfer Your Student Loans From One Bank To Another Bank

Education Loan Transfer in 2024: Ultimate Guide [Tips Included]

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