Public Vs. Private Education Loan Providers for Study Abroad

A public bank or a private bank?

That’s the first and most confusing question every Indian student faces when hunting for a study abroad loan.

When you start comparing public bank vs. private bank education loans for studying abroad, the lenders can feel worlds apart. 

You learn that there are too many things to navigate. A minor difference over interest, approval time, or paperwork can tip the scales in lender selection.

To make this easy for you we are going to discuss how you can easily choose a bank best fitted for you.

So let’s break down public vs private education loans in a way that actually helps you decide.

Understanding public and private banks as lenders

Every major education loan provider in India is RBI regulated.

That includes public banks, private banks, and NBFCs.

This means each one operates under strict guidelines set by the Reserve Bank of India, making them legitimate and safe options.

However, while comparing public banks vs. private banks for an education loan abroad, your choice of a lender will will depend on how they work:

• • Public Sector Banks: State Bank of India (SBI), Bank of India, and Punjab National Bank are the oldest and often most trusted names. Many families pick them for their reliability and government backing. Subsidies like Central Sector Interest Subsidy (CSIS) or Vidya Lakshmi apply only if you go this route.

• Private Banks And NBFCs: They offer speed and flexibility. Notable names are HDFC, ICICI, Axis, Avanse, and InCred. They offer digital processing and approve loans quicker. Collateral-free loans are possible, especially for top universities, but interest rates are usually higher.

So, which bank is best for an abroad education loan?

There isn’t one universal winner.

What matters is whether you prioritize interest cost, approval speed, or collateral requirements.

When you compare government banks with private banks, the education loan processing time is a con for the former. Recently, the government has given public sector banks a push to expedite the process of loan disbursement. 

“The finance ministry has directed public sector banks to process education loan applications within 15 days of submission.”

—Dheeraj Tiwari, Senior Assistant Editor, Economic Times, July 2025

This will help to shift the usual image of public banks being slow and cumbersome in the loan approval process.

Next, a quick look at the key players students actually consider.

Key players in the education loan market

You’ll find that in your search for education loans for studying abroad, a handful of banks and NBFCs consistently stand out. 

Here are the main names Indian students actually compare, with several available through GradRight’s platform:

Public Sector Banks 

1. State Bank Of India (SBI): SBI Global Ed-Vantage.

• Loan Amount: Up to ₹1.5 crore for study abroad.
• Tenure: Up to 15 years.
• Moratorium: Course period + 6 months.
• Interest: Starts ~8.5–9.5% (may vary).
• Quick Fact: For studies at recognized universities abroad only; allows co-applicant.

1. Bank Of Baroda: Baroda Scholar.

• Loan Amount: Up to ₹1.5 crore for top 200 universities (₹60 lakh for others).
• Tenure: Up to 15 years.
• Moratorium: Course duration + 12 months.
• Interest: Usually 9–10.5%.
• Quick Fact: Special terms for high-ranked international institutions.

1. Punjab National Bank (PNB): PNB Udaan.

• Loan Amount: Up to ₹1 crore for study abroad.
• Tenure: Up to 15 years.
• Moratorium: Course + 12 months.
• Interest: Around 9.2–10.5%.
• Quick Fact: Full tuition + living + travel for eligible students.

1. Union Bank Of India: Union Education Loan.

• Loan Amount: Up to ₹1.5 crore for approved courses abroad.
• Tenure: Up to 15 years.
• Moratorium: Course period + 12 months.
• Interest: Around 9–10.3%.
• Quick Fact: Includes full cost of study and living expenses.

1. Canara Bank: Vidya Turant.

• Loan Amount: Up to ₹1.5 crore for select foreign universities.

• Tenure: Up to 15 years.

• Moratorium: Course + 12 months.

• Interest: 9–10.5% (depends on profile/institute).

• Quick Fact: Fast-track loan for students with admission to top global schools.

Private Banks 

1. HDFC Bank: HDFC Credilla.

• Loan Amount: Up to full cost of education (tuition, living, travel; no formal upper cap).
• Tenure: Up to 15 years.
• Moratorium: Course + 6 months.
• Interest: Usually 11–13.5% (customized per profile/institute).
• Features: Digital process; custom EMI plans.

1. ICICI Bank: Education loan for international studies (no product label)

• Loan Amount: Up to ₹1 crore.
• Tenure: Up to 10 years.
• Moratorium: Course + 6 months.
• Interest: 11–12.5% (profile-based).
• Fast sanction for top global universities.

1. Axis Bank: Education loan (no product label)

• Loan Amount: Up to ₹75 lakh (sometimes higher for select cases).
• Tenure: Up to 15 years.
• Moratorium: Course + 12 months.
• Interest: 11–13.5%.
• Notable for digital processing and support for STEM/management degrees.

NBFCs And Digital Lenders

1. Avanse Financial Services: 

• Loan Amount: Up to 100% of education cost (no strict cap).
• Tenure: Up to 15 years.
• Moratorium: Course + 6 months.
• Interest: 12–14% (profile, course, and university affect rate).
• Provides loans without collateral for top universities.

1. InCred:

• Loan Amount: Up to ₹1 crore (profile-based, sometimes requirements are more).
• Tenure: Up to 15 years.
• Moratorium: Course + 6 months.
• Interest: 11.5–14% (customized).
• Collateral-free loans for top schools and high-potential profiles.

1. Auxilo:

• Loan Amount: Up to 100% of total cost of attendance (no strict upper cap).

• Tenure: Up to 15 years.

• Moratorium: Course + 6 months.

• Interest: 12–14%.

• Quick, mostly digital approvals for study abroad.

Choosing a lender can feel overwhelming even when you have adequate information. 

That’s why GradRight offers expert guidance to students like you who are confused over a public bank vs. private bank education loan for abroad. 

Through GradRight, students can compare education loans from 15+ major banks and NBFCs, including those listed above.

The numbers speak for themselves: By 2023, GradRight had already processed over US $225 million in loan approvals for more than 5,200 students. Today the numbers continue to grow exponentially.

You can also opt for similar guidance from GradRight experts. Reach out to us whenever you want. The best part? It’s a free service.

Public banks vs. private banks vs. NBFCs: Real-world comparison

Now that we had a look at the key players in the education loan market, let’s see how they stack up:

Takeaways:

• For Lowest Total Cost: Public sector banks like SBI or Bank of Baroda are usually best.
• For Speed Or No Collateral: private banks and NBFCs like HDFC, ICICI, or Avanse can help—but with higher costs.

Remember that interest rates and terms change from time to time. Always refer to the latest data from lenders when comparing public vs. private bank education loan interest rates.

I’ve seen students getting an upper edge when they had their loans processed through our GradRight platform. 

In a GradRight and Prodigy Finance collaboration, students who had opted for a loan from the latter immediately became eligible for a scholarship. Students saw themselves winning over their doubts of making it to overseas education. 

One such student, Sai Sree Meka, is now pursuing her master’s in computer science at the University of Georgia. Raised by her grandparents, she comes from a humble background. She had applied for a loan via GradRight and subsequently received a scholarship along with a low-interest loan.

“I tried everything, but nothing worked out. I thought I had zero options. (The scholarship) is not a small amount for me.”

—Sai Sree Meka, MS Computer Science, University of Georgia, 2023

Now, how does all that we have discussed so far boil down to your decision making? Let’s see in the next section. 

Your checklist for selecting the best fit bank for a study abroad loan

Here’s a checklist for you to pick the best bank for an abroad education loan in India:

Main Priority

• Lowest Interest Rate: If your goal is the lowest interest rate, public banks (like SBI and Bank of Baroda) are usually best.
• Fast Approval: For fast approval and a smoother digital process, private banks (HDFC, ICICI, and Axis), or NBFCs like Avanse, are often better.

Collateral Requirement

• No Collateral: Public banks usually only go up to ₹7.5 lakh, unless you’re highly meritorious or covered by special schemes.
• Higher, No-Collateral Loan Need: Private banks may go up to ₹20–40 lakh for top universities. NBFCs sometimes offer ₹50 lakh+ unsecured at higher rates. 

Timeline To Funds

• Funds Not Urgent: Public banks are fine for longer processing timelines.
• Funds Needed Urgently: Private banks and NBFCs can disburse within days.

Paperwork Tolerance

• • Okay With Paperwork: Public banks require more documents and sometimes branch visits.

• Digital Preference: Private banks and NBFCs handle most things online. There is less hassle.

Subsidy Eligibility

• Eligible For CSIS Or Vidya Lakshmi: Only public banks offer these government subsidies, making your effective cost much lower if you qualify.

This was an official update by the Ministry of Finance on education loans given by PSBs:

“PM Vidyalaxmi… enables loans through banks to meritorious students so that financial constraints do not prevent any youth of India from pursuing quality higher education.”

—Ministry of Finance, PIB Delhi, December 2025

Target University Or Country

• Top Admit In US, UK, Canada, etc.: Some lenders give better rates or bigger loans for elite global universities. Always check specific eligibility.

The bottom line is that your choice of the best university is the one that fits your demands. Decide based on your top need: cost, speed, paperwork, or loan size. 

Final thoughts

When it comes to public bank vs. private bank education loans for abroad, every choice has a trade-off.

A public bank might save you over ₹5 lakh in interest for the same degree. However, you should be willing to wait for weeks and manage the paperwork. 

A private bank or NBFC could get your loan approved before your university deadline. But you’ll pay more for that speed, especially if you need a collateral-free loan.

There’s no shortcut. 

Run the real numbers, compare actual offers side by side, and see which provider genuinely fits your situation.