Updated on: 14 Apr 2021 The cost of higher education, whether in India or abroad, has been on a consistent rise in the last few years. And this trend is mirrored across institutions not just in India but abroad too. As such, a rising proportion of students in India are facing a financial crunch when it comes to funding their higher education. For all such students, an education loan has come as a blessing in disguise. Not only does it help them make their higher education dream in India and abroad a reality, but if chosen wisely even helps them with other things such as get tax benefits, build a good credit score and even keep family and personal funds safe for exigencies. But the market is flooded with numerous different kinds of education loan schemes - all with different fine prints that if missed might land the student in a soup. In such a scenario, most students wonder about which education loan to choose and also which is the cheapest education loan scheme in India. In this blog, we will talk about the cheapest education loan in India that a student can apply for. So, without further ado, let us begin right away. Which is the cheapest education loan in India? Well, education loans from public sector banks are cheaper than education loans from private sector banks or NBFCs. But why is that so? Let us take a look at some of the reasons for this. Rate of Interest - The rate of interest of an education loan offered by public sector banks is always lower - by 1% to 2.5% - than that offered by private sector banks and NBFCs. The rate of interest for an education loan by a public sector bank is between 8.5% to 10.5% while it is between 10.5% to 13.5% for a private sector bank. For NBFCs, the rate of interest is still higher and is between 11% to 14.5%. One reason why the rate of interest on education loans by NBFCs is highest is that banks use funds that are deposited with them to give loans while NBFCs borrow money from investors, banks, and other financial institutions and then lend it to students. Processing fee - The processing fee charged by public sector banks is lower than NBFCs and sometimes even lower than private banks. Most public sector banks have a low processing fee and sometimes even have zero processing fee for an education loan. While SBI has a fixed fee of INR 10,0000 (non-refundable) for an education loan of INR 40 lakhs, both Bank of Baroda and Axis Bank have a refundable processing fee of INR 10,000. However, NBFCs would charge a non-refundable processing fee between INR 40,000 and 80000 for the same loan amount. Looking for an abroad education loan? Fill the form and get free assistance Among public sector banks, which is the cheapest education loan scheme? Well, now that it is clear that education loans from public sector banks are the cheapest, let us dig deeper and find out which education loan scheme among public sector banks is the cheapest. We carefully researched all the various public bank education loan schemes and have come to the following conclusion: Bank of Baroda education loan schemes - Bank of Baroda education loan schemes are amongst the cheapest schemes in India. Let us take a look at the interest rates offered by the scheme under different scenarios- Baroda Education Loan to Students of Premier Institutions (For Studies in India) is the cheapest education loan in India. If your institute is included in the premiere AA or A list of institutions, then you can get an education loan at a rate of interest of 6.75% and if your institution falls under List B, then you can get an education loan of up to INR 7.5 Lakhs at a rate of interest of 7.85%. For institutions falling under List B, education loans above INR 7.5 lakhs are given at an interest rate of 7.6%. Students who have got admission to institutions under List C will get an education loan of up to INR 7.50 lakhs at an interest of 8.6% while those who seek an education loan above INR 7.5 lakhs for studying in institutions in List C will get the loan at an interest of 8.35%. Students who are heading abroad for higher education can apply for the Baroda Scholar (for studies abroad) education loan scheme. Under this scheme, students who have got admission to an institute under the list of Premier Institutions can get an education loan at a rate of interest of 8.25% while those who have got admission to a college that does not come under the list of Premier Institutions will get the education loan at 8.9% Rate of Interest. SBI education loan schemes - If your institution does not come under the list of institutions in the list of Bank of Baroda, then SBI education loan schemes are your next cheapest education loan option. Students can apply for the Student Loan Scheme or the Global Ed-vantage Education Loan offered by SBI and take the SBI Rinn Raksha policy. By taking the Rinn Raksha policy, the rate of interest in their education loan will decrease by 0.5%. To know more about the SBI Rinn Raksha scheme, you can read it here. Under the Global Ed-vantage Education Loan or the Student Loan Scheme, students can take the Rinn Raksha Scheme and get the loan at a rate of interest of 8.8%. Girls can get a further concession of .5% on the rate of interest. Still, boggled by the various nitty-gritty that comes hidden with an education loan scheme? Well, help is at hand in the form of GyanDhan, India’s first education financing platform. We are committed to helping our students get the best education loan scheme and make their higher education dream a reality. We assign a dedicated loan counselor who studies every student’s profile in detail and then advises the best loan scheme for that particular case. We also provide a customized list of documents that need to be submitted and even help with the collection and submission of the loan application and required documents. Get in touch with us now and get help in not only choosing the best education loan but also get help in your loan application and sanction too.
This is a companion discussion topic for the original entry at https://www.gyandhan.com/blogs/cheapest-education-loan-india