Education is one of the biggest investments a person makes. Whether it’s studying in India or abroad, tuition fees, living expenses, books, travel, and other costs add up quickly. That’s why many students and parents look for the cheapest education loan interest rates comparison before choosing a lender.
Finding the lowest interest rate is important — but understanding the full cost of an education loan is even more important. In this detailed guide, we will break down how to compare education loan interest rates in India, what factors affect rates, and how to choose the best option responsibly.
Why comparing education loan interest rates matters
Even a small difference in interest rate can change the total repayment amount significantly over the years.
For example:
- Loan amount: ₹10,00,000
- Tenure: 10 years
- Interest rate difference: 1%
That 1% difference can increase or reduce your repayment by thousands of rupees over the loan tenure.
That’s why doing a proper education loan interest rates comparison is critical before applying.
What is the interest rate on an education loan?
An education loan interest rate is the percentage charged by the bank or NBFC on the loan amount borrowed for studies.
Education loan interest rates generally depend on:
- Type of course
- Institute ranking
- Loan amount
- Collateral or non-collateral loan
- Credit profile of co-applicant
- Bank policies
Interest rates are usually floating and linked to benchmark rates.
Cheapest education loan interest rates in India (comparison overview)
Below is a general comparison format commonly seen in the market. Rates may vary depending on profile and bank policy.
| Bank / Lender | Starting Interest Rate (Approx) | Loan Type |
|---|---|---|
| SBI Education Loan | 8.50% onwards | Secured / Unsecured |
| Bank of Baroda | 8.55% onwards | Secured |
| Punjab National Bank | 8.70% onwards | Secured |
| HDFC Bank | 9.50% onwards | Unsecured |
| Axis Bank | 9.75% onwards | Unsecured |
Note: Interest rates vary based on loan amount, course type, and applicant profile. Always verify the latest rate directly from the lender.
This table helps in basic cheapest education loan comparison, but interest rate alone should not decide everything.
Secured vs unsecured education loan interest rates
Understanding this difference is important when comparing lowest education loan interest rates.
Secured education loan
- Requires collateral (property, FD, etc.)
- Lower interest rates
- Higher loan amount eligibility
- Longer tenure
Unsecured education loan
- No collateral required
- Slightly higher interest rates
- Faster processing
- Lower loan limit
Usually, secured loans offer the cheapest education loan interest rates.
Factors that affect education loan interest rates
When doing an education loan comparison, look at these key factors:
1. Credit score of co-applicant
Higher credit score can result in better interest rate.
2. Type of institution
Top-ranked universities may get lower rates.
3. Course type
Professional courses often receive better terms.
4. Loan amount
Higher loan amounts sometimes qualify for negotiated rates.
5. Government subsidy schemes
Certain categories qualify for interest subsidy.
Education loan interest calculation explained simply
Education loans usually follow a floating interest structure.
Basic formula:
Interest = Principal × Rate × Time
However, repayment generally follows EMI (Equated Monthly Installment).
EMI depends on:
- Loan amount
- Interest rate
- Tenure
Lower interest rate = Lower EMI = Lower total repayment.
This is why proper education loan interest rates comparison is essential before applying.
Moratorium period in education loans
Most education loans provide a moratorium period:
- Course duration
- Plus 6–12 months
During this time:
- Simple interest may apply
- EMI repayment may start later
Understanding this helps in calculating total repayment cost accurately.
Government education loan schemes
In India, some public sector banks offer:
- Interest subsidy for economically weaker sections
- Special schemes for girl students
- Lower margin money requirement
These schemes can significantly reduce effective interest burden.
How to compare cheapest education loan interest rates properly
When comparing lowest education loan interest rates, follow this checklist:
- Compare starting interest rate
- Check whether rate is fixed or floating
- Review processing fee
- Check prepayment charges
- Understand moratorium interest rules
- Compare EMI using loan calculator
- Check loan tenure flexibility
Never select a loan purely based on lowest advertised rate.
Common mistakes students make
- Ignoring floating rate changes
- Not checking total repayment amount
- Choosing unsecured loan without comparing secured options
- Not checking co-applicant credit score
- Applying to multiple banks without research
Avoiding these mistakes ensures better financial planning.
Education loan vs personal loan for studies
| Feature | Education Loan | Personal Loan |
|---|---|---|
| Interest Rate | Lower | Higher |
| Moratorium | Yes | No |
| Tax Benefit | Yes (Section 80E) | No |
| Loan Tenure | Longer | Shorter |
| Purpose | Education Only | Any Purpose |
Education loans are usually cheaper and structured better for students.
Frequently asked questions
Which bank offers the cheapest education loan interest rates?
Public sector banks often offer lower starting interest rates, especially for secured loans. Final rate depends on applicant profile.
Is education loan interest fixed or floating?
Most education loans have floating interest rates linked to benchmark rates.
Can I get an education loan without collateral?
Yes, but unsecured loans generally have slightly higher interest rates.
Does education loan offer tax benefits?
Yes, interest paid on education loan is eligible for deduction under Section 80E.
Final conclusion
Choosing the right loan is not just about finding the cheapest education loan interest rates. It is about understanding the total cost, repayment flexibility, moratorium period, and your long-term repayment capacity.
A proper education loan interest rates comparison helps reduce financial stress in the future. Always compare multiple lenders, review loan terms carefully, and choose a loan that fits your financial situation responsibly.
