Education Loan Interest Rates: Regional Rural Banks
Regional Rural Banks (RRBs) are scheduled commercial banks in India that are owned by the government. Here is a list of RRBs in India that are offering various education loan schemes at competitive interest rates:
Name | Interest | Processing |
Assam | 9.55% p.a. to 10.05% p.a. |
|
Arunachal | 8.5% p.a. | Contact |
Bangiya | 12% p.a. to 12.75% p.a. |
|
Baroda | 10.30% p.a. onwards | Contact |
Baroda | 10.55% p.a. to 14.55% p.a. | Nil |
J&K | 10.95% p.a. to 12.20% p.a. |
|
Karnataka |
| Contact |
Kerala | 10.50% p.a. to 13.60% p.a. |
|
Madhya | 11.50% p.a. to 13.00% p.a. |
|
Maharashtra | 11.95% p.a. to 13.45% p.a. | Contact |
NBFC Education Loan Interest Rates
Non-Banking Financial Corporation (NBFC) offer education loans to help students achieve their dreams of pursuing higher education. The education loan interest rates for leading NBFCs in India are listed below:
Name of | Interest | Processing |
Bajaj | 13.00% p.a. to 32% p.a. | Up to 3.93% of the loan amount |
HDFC Credila | 13.80% p.a. onwards | Contact the loan provider |
Types of Interest Rates in Education Loan
The type of interest rate that student loans have is set by the bank. Certain banks offer loans with fixed interest rates for the term of the loan.
Some possess interest rates connected to the Lending Rate determined by the Marginal Cost of Funds based Lending Rate (MCLR) for a year. If this were reset on a regular basis, the student loan’s interest rate might fluctuate.
Factors that Determine Education Loan EMI
There are many factors that determine how much your Equated Monthly Instalment (EMI) will be on your education loan. These factors would be:
- Interest rate on the loan
- Loan amount Repayment tenure
How to Calculate Your EMI on Education Loans
The formula that is used to calculate your education loan Equated Monthly Installment (EMI) would be:
EMI Amount = [P x R x (1+R)^N]/[(1+R)^N-1]
P = Principal amount
R = Rate of Interest
N = Number of years for repayment (this is calculated in months)
You can also use an online EMI calculator for a comprehensive EMI amortisation chart. You might use a free online education EMI calculator for this.
All you need to do is enter the required loan amount, the current interest rate, and the desired repayment time in the relevant boxes. Depending on the calculator, you may either type the numbers into the fields or use the slider to alter the figures.
Once you have supplied the necessary information, a complete breakdown of your principal and interest rate as well as an amortisation table will be displayed immediately.
Factors to Consider When Taking an Education Loan
There are many factors to look out for when choosing an education loan. These would be:
- Eligibility criteria
- Courses for which the loan is applicable
- Collateral required, if any
- Guarantor required
- Margin amount
- Interest rate
- Loan amount
- Repayment tenure
Eligibility Criteria
The eligibility criteria may differ from one lender to the other, but these are the common criteria that you have to meet to be approved for an education loan:
- Indian national
- Age: Up to 35 years for non-employed individuals and up to 45 years for employed individuals
- Proof of admission into the educational institution
- Valid educational certificates showing a good academic record (of more than 50% marks)
- Guarantor’s income proof or credit history
- Passport / i20 form/ visa in case of studies abroad
Documents Required
These are some of the documents required to complete your loan application:
- Fully filled in application form with passport-size photographs affixed as required
- Admission letter on letterhead of the educational institute
- Academic certificates of the applicant
- Marksheets of entrance examination, if any
- Scholarship document, if any
- Declaration that no loan has been availed from another lender
- Proof of identity such as Aadhaar card / passport / driving license / Permanent Account Number (PAN) card, etc.
- Proof of address or residence such as utility bills / ration card / Aadhaar card / passport , etc.
- Proof of age such as birth certificate or 10th standard certificate
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For accredited vocational courses, diplomas, undergraduate, graduate, doctoral, and professional programs, you are eligible to apply for an education loan.
No, interest will be levied by lenders on all education loans.
As per the guidelines of the RBI, education loans are priority products. Therefore, education loans can be easily availed and almost all lenders offer them. However, the eligibility criteria must be met and the relevant documents must be submitted to avail an education loan.
Yes, you can avail tax benefits on the interest payments of your education loan. This will come under Section 80C and Section 80E of the Income Tax Act, 1961.
This will depend on the lender, but for most lenders, the repayment tenure will start either at the end of your course or a few months after you get a job. This is a moratorium period after your course ends.
Usually, collateral is only required for education loans above a specific amount, which can vary from bank to bank.
For many banks, a co-applicant is mandatory for an educational loan. This can be a parent, guardian, spouse, or a parent-in-law.
Parents,
guardians, and spouses can be co-borrowers. The applicant’s chances
of getting a successful loan application are high if the co-borrower
possesses a regular source of income and a good credit history.
In
most cases, the average tenure for an education loan is between 5-7
years. However, for larger loan sums, certain lenders may provide a
longer term of up to 15 years.
The
majority of banks do not impose a prepayment penalty on education
loans. However, you must confirm with your bank/lender about the
same.
The maximum limit on education loans for studies within India is Rs.10 lakh to Rs.15 lakh whereas the majority of lenders have a maximum limit of Rs.20 lakh to Rs.30 lakh on education loans for studies abroad. However, some lenders may provide a higher loan amount if the applicant provides bank-accepted collateral.
Some banks carry out independent verification of the cosigner’s employment history, which usually consists of the student’s parent or guardian or spouse (if they are married). The prospective lender can reject the loan application if the provided information cannot be verified.
Yes, you can avail a loan for your bachelor’s and then a loan for your master’s without having to pay back the first loan. This loan may be used as a top-up loan for an existing loan. However, doing so is at the discretion of the lending bank and is subject to any internal regulations and rules of the lender.
Nishit Kunal, currently working as an Editor has been with BankBazaar for over 5 years with expertise in writing on loan, credit cards, etc. When not working, Nishit dabbles between being a cinephile, writing, and playing with his dogs.
