With the rising cost of education, an increasing number of students are turning to student loans to cover their educational expenses. To accommodate this demand, banks and non-bank financial companies (NBFCs) are stepping in to give loans at extremely low interest rates. Students have a variety of options to choose from depending on their needs (loan amount, secured or unsecured loan, etc.). It is critical for students to fully comprehend the many aspects that may be used for student loan comparison. Keep them in mind while choosing the correct bank. The following are some considerations to examine while comparing school loans:
Interest Rate: During education loan comparison, the borrower should take into account the bank’s interest rate. The loan offer is better if the interest rate is lower.
Loan Amount: The buyer must review the loan amount that the bank is willing to provide. If the bank’s loan amount is less than what the borrower requires, the borrower should look into loans offered by other banks.
Period Of Repayment: The repayment time has an impact on the EMI, thus the borrower should select the repayment period that corresponds to the EMI he/she wishes to pay after completing his/her course while carrying out student loan comparison.
Why Is It Important To Compare Education Loans?
It is imperative for students to gain a comprehensive understanding of the various factors that can be used for comparing loans and take these factors into careful consideration when choosing the right lending institution. Here are some key factors on which applicants can base their comparisons of education loans:
- Interest Rate: When evaluating education loans, borrowers should give utmost importance to the interest rate offered by the bank. A lower interest rate equates to a more favourable loan offer.
- Loan Amount: Prospective borrowers must assess the loan amount that a bank is willing to extend. If the offered amount falls short of the borrower’s requirements, it is advisable to explore loan options from other banks.
- Repayment Period: The repayment period directly impacts the Equated Monthly Installment (EMI). Therefore, borrowers should choose a repayment period that aligns with their desired EMI after completing their course.
- Moratorium Period: Some banks provide a moratorium period, ranging from 6 months to 1 year, while others may not offer any. It is essential for borrowers to factor in this moratorium period when selecting the most suitable loan offer.
Comparison Of Different Banks
Different banks use different criteria to set interest rates on loans; factors such as the borrower’s academic success, college attendance, family background, the collateral given, and so on can all influence the interest rate.
Submit Applications To Different Banks: Education loans are available from a variety of banks, and they can be compared by applying to several. While researching several banks can help you get the greatest school loan deal, the application procedure itself can be time-consuming and inconvenient.
Student Loan Comparison Tool: Students can utilise UniCreds because it provides a one-window platform, which allows them to compare and apply for loans from a variety of banks and NBFCs. UniCreds also works with banks to get the best interest rates and the quickest approvals possible. We compare and find you the best deals on student loans.
| Name of the Bank | Interest Rate (p.a.) | Processing Fees |
| SBI | 8.65% | Zero processing fee up to 20 lakhs |
| HDFC | 9.55% to 13.25% | Up to % of loan amount + tax |
| Kotak Mahindra Bank | Up to 16% | Up to 2.50% |
| Axis | 13.70% to 15.20% | Nil to Rs. 15,000 + tax |
| Federal Bank | 10.05% onwards | Contact the bank |
Note: The interest rates are subject to change as per the bank’s rules and regulations.
Education Loan Eligibility
Once you have done the student loan comparison, learn about the eligibility criteria for applying for an Education loan to study abroad.
Nationality
- Citizen of India
- Non-Indian Residents (NRIs)
- Persons of Indian Origin (PIOs)
- Overseas Citizens of India (OCI)
- Students born to Indian parents in a foreign nation but wish to study in India
Courses
- Undergraduate Courses
- Postgraduate Courses
- Doctoral Courses & PhDs
- Certificate Courses with 6 months of period or longer
- Job-Oriented Courses
- Technical/STEM/Diploma Courses
Institutes
- Government Colleges & Recognized Courses
- Professional Institutes
- Private Institutes aided by the Government
- International Colleges & Universities
Collateral
- Leading institutions are offering collateral-free loans up to Rs.7.5 lakh.
- Select lenders are offering collateral-free loans up to Rs.40 lakh for certain courses/institutions.
- The collateral that is acceptable: Fixed savings, insurance, residential or commercial property or plot.
- Amount of loan: Up to Rs.1 crore.
What Factors Should I Consider When Looking For A Private Student Loan Online?
To discover the best interest rate, compare offers from a variety of lenders, including banks, credit unions, online companies, and state-based lenders. You may be able to pick between a fixed and a variable interest rate, depending on the lender. A fixed-rate is one that remains constant over the term of the loan. A variable-rate may start off lower than a fixed rate, but depending on economic conditions, it may rise or fall over time.
Take into account any borrower protections provided by your private lender, such as deferment and forbearance, as well as repayment choices. You may also be able to choose your loan term, which means you can pay off your loan faster and pay less interest by making larger payments, or pay less and pay more interest over a longer period of time by making lower payments.
Education Loan Tax Benefits | Student Loan Comparison
The interest you pay on your student loan can be deducted under Section 80E of the Income Tax Act of 1961. This advantage is only available to individual borrowers and is only offered for the purpose of higher education. The deduction is available to all fields of study, both domestically and internationally. It includes both vocational and academic courses.
It’s important to remember that the tax deduction only applies to the interest portion of the EMI, not the principle. There is, however, no limit to how many times you can claim this benefit. To qualify for this benefit, you’ll need a certificate from your bank or financial institution that separates the principle and interest components of your EMIs.
FAQs
1. Which student loan type offers the most benefits to students?
If borrowers have the ability to repay their loans promptly and meet the eligibility criteria for a low-interest rate, a private student loan could be the most suitable choice. On the other hand, for individuals seeking benefits such as income-driven repayment plans, generous deferment programmes, and potential loan forgiveness, opting for a federal student loan would be the optimal option.
2. What is the most popular type of student loan?
The most frequently encountered federal student loan options for both undergraduate and graduate students are Direct Subsidised and Direct Unsubsidised Loans, commonly referred to as Stafford Loans.
3. Do student loan interest rates change India?
The increase in the repo rate in India directly influences the interest rates of education loans. This correlation exists because the Reserve Bank of India (RBI) regulates the repo rate, which denotes the rate at which commercial banks borrow funds from the central bank.
4. Can we take 2 education loans from different banks?
You have the flexibility to choose whether you want to obtain this loan from the same bank where you obtained your graduation loan or explore options with a different lender.
5. Do we have to pay interest for an education loan while studying?
The interest accrued on your loan account during the course period and moratorium period will not be included in your EMIs, resulting in lower monthly payments. Additionally, the interest paid on Education Loans is eligible for deduction under Section 80(E) of the Income Tax Act.
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