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Which Bank Is The Best For Securing An Education Loan?

Which Bank Is The Best For Securing An Education Loan?

The cost of higher education abroad is a key element that dictates the sort, of course, a student enrols in, as well as the university they choose. The best way to fund your international studies is to take out an education loan. Various financing options are available from Indian banks, depending on the institution and degree of study. However, the question in the picture is – Which bank is the best for securing an education loan? The best banks & financial institutions offering education loans for Indian students in India & abroad are –

  • HDFC Credila
  • Axis Bank
  • Bank of Baroda
  • ICICI Bank

Most education loan schemes come with flexible repayment options and allow the borrower to plan his/her finances accordingly. Education loans have a moratorium or holiday period, which is highly advantageous since it gives the borrower a time of about six months after the course is completed. Indian banks allow the education loan repayment to be started after this period or as soon as the borrower has found a job. Students can find education loans that cover 100% of their expenses. This includes the cost of boarding, student accommodation, tuition fees, travel and other related costs for the student.

Comparing Education Loan Providers: Overview

BankCollateral Loan AmountNo Collateral Loan AmountInterest Rate (Starting)Loan TenureMoratorium Period
HDFC CredilaUp to INR 1.5 croreUp to INR 75 lakhs11% p.a.10 yearsCourse + 12 months
AvanseUp to INR 1.5 croreUp to INR 50 lakhs11.5% p.a.10 yearsCourse + 12 months
Union BankUp to INR 1.5 croreUp to INR 40 lakhs11% p.a.10 yearsCourse + 12 months
Axis BankUp to INR 75 lakhsUp to INR 40 lakhs11.5% p.a.15 yearsCourse + 6 months
Bank of BarodaUp to INR 1.5 croreUp to INR 7.5 lakhs10.40% p.a.15 yearsCourse + 12 months
SBIUp to INR 1.5 croreUp to INR 7.5 lakhs11.15% p.a.15 yearsCourse + 6 months

1. HDFC Credila 

HDFC Credila is the country’s first dedicated education loan provider. HDFC Credila has spent time and money over the years to establish suitable systems, procedures, and know-how in the education business, and it has a number of databases on the subject. Wondering which bank is the best for securing an education loan? Well, HDFC Credila Financial Services provides education loans to study abroad aspirants from more than 1,000 universities across at least 35 countries.

HDFC Credila Education Loan Features – 

Sr No.FeaturesHDFC Credila Education Loan Details
1)Education Loan AmountMinimum Loan Amount – INR 1 LakhMaximum Loan Amount- INR 40 lakhs (without collateral)Exceptional cases – up to 1 Crore
2)Interest Rates 11% to 12.5%
3)Margin MoneyNIL; Finance up to 100% of the expenses
4)Processing Fee1 % to 1.25% of the loan amount
5)Loan TenureUp to 10 years
6)Prepayment ChargesNIL
7)Repayment HolidayInterest to be paid during the moratorium period; EMI starts after the completion, of course, + 6 months
8)Countries CoveredMore than 35 countries including the US, Canada, France, Ireland, Dubai, Germany, Australia, Singapore
9)Payments During Study PeriodYes, simple interest; For selected good profiles, partial interest repayment is available.
10) Processing Time3-4 working days after documentation

2. Axis Bank

Axis Bank was founded in 1993 and operates as an Indian private-sector bank that offers a wide range of financial services. An Axis Bank Education Loan can help you finance your international studies at extremely low-interest rates. Students may now achieve all of their scholastic ambitions with education loans starting at Rs. 50,000 and low-interest rates. Axis Bank Education Loans promise easy documentation, rapid loan disbursement, tax benefits under section 80(E), lengthy payback terms, and more. 

Features Of Axis Bank Education Loan –

Sr No. FeaturesDetails
1)Loan AmountRs 50,000 – Rs.40 lakh (without collateral)
2)Axis Bank Education Loan Interest RateThe exact rate depends on your profile but typically 11% -13% for loans without collateral given to Prime A and B programs. Higher for non-prime programs. Lower with collateral. 
3)Processing FeeFor loans up to 20 Lakhs, Rs. 15,000 (refundable) + GST.For loans more than 20 lakhs, 0.75% of (Loan Amount – Rs. 20 lakhs) + GST (Non-refundable).For Example, for a Rs. 21 Lakh loan: 0.75% of (Rs. 21 lakh – Rs. 20 lahks) = Rs. 750 +GST.
4)Loan Tenure20 years
5)Margin MoneyNo Margin up to Rs. 4 Lacs, 5% Margin above Rs. 4 Lacs for studies in India and 15% Margin above Rs.4 Lacs for abroad studies.
6)Moratorium PeriodCourse length + 12 Months.
7)Payments during the study periodFull Interest (SI)
8)Processing Time7 days.

3. Bank of Baroda

The Bank of Baroda was founded in 1908 and is one of India’s oldest banks. BOB provides a variety of local and international services to its retail and business customers. For many years, the Bank of Baroda’s Education Loan has helped thousands of students realise their aspirations of studying overseas. Female students receive a 0.5 percent interest rate reduction through the BOB Education Loan. Also, being a scheduled commercial bank, Bank of Baroda provides various interest subsidy schemes such as the Central Scheme of Interest Subsidy (CSIS) for Economically Weaker sections, Dr Ambedkar Central Sector Scheme of Interest Subsidy for abroad studies for Other Backward Classes and Economically Backward classes & Padho Pardesh interest subsidy Scheme for minority communities.

Features Of Bank Of Baroda Education Loan – 

Sr No.FeaturesDetails
1)Maximum Loan AmountListed Universities: Rs.80 lakhUnlisted Universities: Rs.60 lakh
2)BOB Education Loan Rate of InterestListed Universities: 8.1% for boys, 7.6% for girls, Unlisted Universities: 8.85% for boys, 8.35% for girls.
3)Processing FeeRs.10,000 + GST (Rs.10,000 refundable); In case of Real Estate collateral, additional property valuation charge of Rs. 7,500.
4)Collateral/ SecurityLoan amount must be <= 100% of collateral value.
5)Loan TenureUp to Rs.7.5 lakh: Moratorium period + 10 years. Above Rs.7.5 lakh: Moratorium period + 15 years.
6)Margin MoneyListed Universities: 0Unlisted Universities: Up to Rs.4 lakh – 0, Above Rs.4 lakh – 10%
7)Moratorium Period12 months after the completion of the course.
8)Prepayment PenaltyNo
9) Institutions CoveredClick here

4. ICICI Bank

ICICI Bank is a major Indian private-sector bank that was founded in 1994. ICICI offers a wide range of credit products, as well as banking and financial services, to fulfil the demands of a wide range of customers. The bank is aware of students’ professional aspirations, which is why it has designed its ICICI foreign education loan to ensure that each student succeeds on his or her route to the future. With a collateral-free loan of up to Rs.40 lakh, tax savings on interest paid u/S 80(E), customizable tenure and repayment choices, and competitive ICICI Bank education loan interest rates, students may fulfil their goal of obtaining a world-class education in top universities around the world.

Features Of ICICI Bank Education Loan – 

S.No.CharacteristicsICICI Education Loan Requirements
1)Maximum Loan AmountRs.1 crore (With Collateral)Rs. 40 Lakhs (Without Collateral)
2)ICICI Bank Education Loan Interest RateStarting @ 11.5% p.a. (linked to their benchmark rate)
3)Loan TenureLoan Without Collateral: For UG – Moratorium period + 5 years. For PG – Moratorium period + 8 years. Loan With Collateral: For UG – Moratorium period + 7 years. For PG – Moratorium period + 10 years
4)Repayment HolidayCourse + 6 Months
5)Margin MoneyUp to Rs.20 lakh: NILAbove Rs.20 lakh: 15%
6)Processing Fee1 % of Loan Amount + GST
7)Processing Time7 days
8)Payments during the Study PeriodRepayment during the study period is mandatory, partial repayment options are available depending on the target course and institute.
9)Courses coveredJob-oriented degree or postgraduate diploma/professional courses offered by reputed institutes at the Undergraduate and Postgraduate level

Salient Features Of Education Loans

  • Anyone between the ages of 18 and 35 can apply for an education loan to study at any authorised university overseas.
  • Management courses, engineering courses, medical, graduate and postgraduate degrees, arts, architecture, pure science, hotel management, and other courses are all eligible for education loans.
  • Tuition, exam costs, lab and library fees, caution deposit, travel, books and equipment, projects, and study tours are all covered by an education loan.
  • For loans obtained for overseas education, borrowers must put in a margin of 5 % – 15%.
  • During the moratorium period, borrowers have to pay the interest, with the principal payment starting when the loan tenure begins.
  • Education loans can be repaid in monthly instalments through ECS or via post-dated cheques to the bank.
  • Generally, banks sanction education loans with a tenure of up to seven years, inclusive of the moratorium period.
  • A co-applicant has to be selected for education loans taken for full-time courses. Co-applicants can include siblings, spouses, parents or other family members.
  • Generally, no security has to be submitted for education loans taken up to Rs. 4 lakhs. A third-party guarantee has to be furnished for loans between Rs. 4 lakhs and Rs. 7.5 lakhs and tangible collateral security is required for loans above Rs. 7.5 lakhs.
  • The Central Government has also introduced an interest rate subsidy scheme for repayments done during the moratorium period for the benefit of the weaker section of society.

Important Factors To Consider When Choosing An Education Loan Provider

  • Loan amount: Find a provider that offers the desired loan amount, considering your course fees and living expenses, to avoid additional financial strain.
  • Timely loan disbursement: Choose a provider with a fast approval and disbursement process to meet application deadlines and other time-sensitive requirements.
  • Interest rate: Compare interest rates across different banks and select the one that offers the most competitive rate to save on the total cost of borrowing.
  • Loan tenure: Consider your future earning potential and financial goals to determine the most suitable repayment period, balancing monthly instalments and total interest paid.
  • Moratorium period: Look for a longer moratorium period that provides financial relief while studying and job searching, allowing you to focus on education and career development.
  • Processing charges: Compare processing fees among loan providers to minimize additional expenses.
  • Post-visa disbursement: Opt for a bank that offers post-visa disbursement to ensure the loan amount is available when needed for visa application requirements.
  • Pre-visa disbursement: Consider providers that offer pre-visa disbursement, releasing a portion of the loan amount before obtaining the student visa, helpful for initial fees or deposits.
  • Remittance options: Choose a bank that can accommodate your preferred method of disbursement, whether directly to the university or deposited into a savings account, for streamlined financial management while studying abroad.

By considering these factors, students can make informed decisions and choose an education loan provider that best suits their study abroad goals and financial needs.

Different Education Loans Based on Collateral

Education loans can be classified into two main categories based on collateral:

Secured Education Loans: Secured education loans require the borrower to provide collateral as security to the lender. Collateral can be either tangible, such as real estate or a valuable asset, or intangible, such as a fixed deposit or a life insurance policy. By offering collateral, borrowers provide a form of assurance to the lender, which can result in lower interest rates and more favourable loan terms. However, in the event of default, the lender has the right to seize the collateral to recover the outstanding loan amount.

Unsecured Education Loans: Unsecured education loans, on the other hand, do not require any collateral from the borrower. These loans are ideal for students who do not have any assets or collateral to pledge. Without the need for collateral, the application process for unsecured education loans is typically faster and requires less documentation. However, due to the higher risk involved for the lender, interest rates on unsecured loans may be comparatively higher than on secured loans. Lenders may also have stricter eligibility criteria and may consider the applicant’s credit history and income potential more closely.

Both secured and unsecured education loans have their advantages and considerations. Choosing the most suitable type of loan depends on factors such as the borrower’s financial situation, availability of collateral, and risk tolerance. It is essential to carefully assess the terms and conditions, interest rates, repayment options, and other relevant factors before making a decision. Consulting with financial advisors or loan experts can also provide valuable guidance in selecting the right education loan based on individual circumstances.

Different Education Loans Based on Lenders

Education loans for studying abroad can be obtained from both public-sector banks and private banks. Here’s a breakdown of the different types of education loans based on lenders:

  1. Loans from Public-Sector Banks: Public-sector banks in India offer education loans for studying abroad, typically requiring collateral as security. For loans up to INR 7.5 lakh, some government banks may offer unsecured loans without the need for collateral. However, for higher loan amounts, collateral is usually required. Public-sector banks generally offer lower interest rates compared to private banks. The specific interest rate and terms may vary between banks, so it’s important to compare and choose the most suitable option.
  2. Loans from Private Banks: Private banks also provide education loans for studying abroad. The loan amount offered by private banks depends on various factors, including the applicant’s profile, the financial status of co-applicants (if applicable), and other criteria set by the bank. Private banks typically offer interest rates that are higher than those of public-sector banks but lower than those of non-banking financial companies (NBFCs) and foreign lenders. The rate of interest (ROI) usually starts around 6-8% per annum. Private banks often have faster processing times for education loan applications compared to public-sector banks.

Some other Banks providing Abroad Education Loan

When it comes to education loans for studying abroad, several preferred and top banking institutions in India stand out. Let’s explore the education loan offerings from six renowned lenders: State Bank of India (SBI), Bank of Baroda, Axis Bank, Union Bank, Avanse, and HDFC Credila.

State Bank of India (SBI)

SBI’s Global Ed-Vantage scheme offers education loans for studying abroad with loan amounts of up to INR 1.5 crore. Interest rates start at 11.15% p.a., and the loan tenure can be up to 15 years. SBI provides options for pre and post-visa disbursement.

Bank of Baroda

Bank of Baroda’s Baroda Scholar loan scheme caters to students pursuing higher education abroad. The loan amount can go up to INR 1.5 crore with collateral or up to INR 7.5 lakhs without collateral. Interest rates start at 10.40% p.a., and the loan tenure can be up to 15 years. Bank of Baroda offers both pre and post-visa disbursement options.

Axis Bank

Axis Bank provides education loans for overseas studies, offering loan amounts up to INR 75 lakhs with collateral or up to INR 40 lakhs without collateral. Interest rates start at 11.5% p.a., and the loan tenure can be up to 15 years. Axis Bank provides pre and post-visa disbursement options and has a Prime A and B listing of universities for loan eligibility.

Union Bank

Union Bank offers education loans for studying abroad through its Union Education scheme. The loan amount is based on the student’s requirement, with both secured and unsecured loan options available. Interest rates start at 11% p.a., and the loan tenure can be up to 10 years. Union Bank provides pre and post-visa disbursement options.

Avanse

Avanse specializes in customized education loans for students pursuing higher studies abroad. Loan amounts are tailored to individual requirements, and they offer both secured and unsecured loan options. Interest rates start at 11.5% p.a., and the loan tenure can be up to 12 months after course completion. Avanse provides pre and post-visa disbursement options, 100% funding, and loan sanction based on exam scores.

HDFC Credila

HDFC Credila, a subsidiary of HDFC Ltd, offers education loans for studying abroad. Loan amounts are based on student requirements, with secured loan options available. Interest rates start at 11% p.a., and the loan tenure can be up to 10 years. HDFC Credila provides pre and post-visa disbursement options and offers 100% funding without requiring a margin.

Each bank has its own set of features, interest rates, loan amounts, and repayment terms. It’s important to thoroughly research and compare the offerings of these top education loan providers to find the one that best suits your specific requirements and financial needs. Consulting with a loan advisor or approaching the banks directly can provide further assistance in navigating the application process.

How To Apply For An Educational Loan?

Now that we’ve answered your question on – Which bank is the best for securing an education loan?; let’s understand all about the application process. Going to multiple banks to get quotations for your education loans can be a hassle. UniCreds allows you to compare and apply to the best financial institutions that offer the best education loans for your higher education dreams. As it has strategically partnered with 15+ financial partners and solves the problem of financing students’ expenses abroad. Here are some benefits of applying for an education loan through UniCreds –

  • Low Time Turnaround
  • Non-Collateral Loans
  • 100% Financing Up To 1.5Cr
  • Instant Paperless Loans
  • Free Of Cost Services
  • Dollar Loan
  • Higher Chances of Approval

So what are you waiting for? Get in touch with UniCreds & find your ideal education loan solution! 

FAQs

1. Which bank provides the best education loan options?

Many banks offer education loans, and the best option for you will depend on various factors such as your credit score, income, and the loan amount you require. Some of the popular banks that offer education loans include SBI, HDFC Bank, Axis Bank, ICICI Bank, and Bank of Baroda.

2. What factors should I consider when selecting a bank for an education loan?

When selecting a bank for an education loan, you should consider factors such as the interest rate, loan repayment period, processing fee, prepayment charges, collateral requirements, and the bank’s reputation and customer service.

3. Are there any specific eligibility criteria for securing an education loan from a bank?

Yes, most banks have specific eligibility criteria for education loans, which may include factors such as the applicant’s age, educational qualifications, income, credit score, and the institution and course they are applying for.

4. Can I get an education loan without collateral from any bank?

Yes, many banks offer education loans without requiring collateral, especially for smaller loan amounts. However, the interest rates for such loans may be higher than those for loans with collateral.

5. What is the maximum loan amount offered by banks for education purposes?

The maximum loan amount offered by banks for education purposes can vary. It is usually based on factors such as the applicant’s course of study, the institution’s reputation, and the applicant’s financial background. Some banks may have a cap on the loan amount, while others may offer higher loan limits.

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Which Bank Is The Best For Securing An Education Loan?

Which Bank Is The Best For Securing An Education Loan?

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