You have been accepted to study abroad. It is an incredible opportunity for personal and academic growth. But amidst the excitement, there is a crucial question: how to fund your dream?
Even though the interest rate is what most students focus on, comparing education loans is more complicated than just looking at the headline rate. Processing fees, collateral requirements, moratorium terms, and repayment flexibility all determine the true cost of your loan. Students using GradRight get up to 40% better loan rates by accessing competing offers from 18+ lenders in one place. Think of this guide as a roadmap: helping you compare education loan interest rates from the top banks and NBFCs in India, understand what drives those rates, and pick the loan that is the best companion for your academic journey.
Education Loan Interest Rates 2026 – Quick Reference
| Lender | Type | Interest Rate (Study Abroad) | Max Loan | Collateral |
| SBI (Global Ed-Vantage) | Public Bank | 8.40% – 10% p.a. | Rs 1.5 crore | Required above Rs 7.5L (Rs 50L waived for premier institutes) |
| Union Bank of India | Public Bank | 9% – 10.3% p.a. | Rs 1.5 crore | Required above Rs 7.5L |
| Bank of India | Public Bank | 8.40% – 10% p.a. | Rs 1.5 crore | Required above Rs 7.5L |
| PNB (Udaan) | Public Bank | 8.35% (premium) – 9.60% p.a. | Rs 2 crore | Required above Rs 7.5L |
| Canara Bank | Public Bank | 8.75% – 10.5% p.a. | Rs 1.5 crore | Required above Rs 7.5L |
| ICICI Bank | Private Bank | 10.25% – 13% p.a. | Rs 3 crore (secured), Rs 1 crore (unsecured) | Optional for premier institutes up to Rs 1 crore |
| IDFC First Bank | Private Bank | 11.75%+ p.a. | Rs 1 crore (unsecured) | Optional for strong profiles |
| Yes Bank | Private Bank | 11.25% – 12.75% p.a. | Rs 1.5 crore | Optional for select profiles |
| HDFC Credila | NBFC | 10.5% – 13% p.a. | Rs 1 crore+ | Optional for strong profiles |
| Avanse | NBFC | 10.5% – 13% p.a. | Rs 75 lakh (unsecured) | Optional |
| Auxilo | NBFC | 10.5% – 13% p.a. | Rs 85 lakh (USA, unsecured) | Optional |
| InCred | NBFC | 11% – 14% p.a. | Rs 1.5 crore (per website) | Optional |
| Tata Capital | NBFC | 11% – 13.5% p.a. | Rs 2 crore (secured) | Optional for Rs 75-85L |
| Prodigy Finance | International | ~12.15% APR (USD) | USD 220,000 | No – no Indian co-signer either |
| GradRight (18+ lenders) | Platform | 8.33%+ p.a. | Compare all | Competitive offers across all collateral categories |
Note: Rates above are as of June 2026 and are indicative. All floating rates change when RBI revises the repo rate. Always verify current rates directly with your chosen lender or compare live on GradRight.
Compare live interest rates from 18+ lenders on GradRight. Get competing offers in 48 hours, free. Compare Rates on GradRight
What to Look For When Comparing Education Loan Interest Rates
Beyond the headline interest rate, several factors determine the true cost of your loan. Here is what to evaluate for each offer:
1. Loan Term and Repayment Tenure
The loan term significantly influences both the monthly payment amount and the total interest paid over the life of the loan. The longer the term, the lower the EMI – but the higher the total interest. A 10-year loan versus a 15-year loan on Rs 30 lakh at 10% means roughly Rs 6-7 lakh additional interest with the longer term. Choose the shortest tenure where the EMI does not exceed 30-40% of your expected post-graduation take-home salary.
2. Fixed vs Floating Interest Rate
A fixed interest rate stays constant throughout the loan tenure regardless of RBI policy changes – providing EMI certainty but typically starting higher than floating rates. A floating interest rate changes with the RBI repo rate (via MCLR or RLLR) – meaning your EMI can go down when rates fall, but also up when rates rise. Most Indian education loans are floating. PNB is one of the few public banks offering both fixed and floating options. If you want EMI stability for budget planning, fixed rate is worth the premium. If you believe rates will trend down, floating is better.
3. What the Loan Covers
Not all education loans cover the same expenses. Before comparing rates, confirm what each loan covers:
- Tuition fees (always covered)
- Living expenses – accommodation, food, utilities (most lenders cover this)
- Travel / passage money (most cover one-way international travel)
- Books, equipment, laptop (most cover if required for course)
- Health insurance (required in USA, UK etc. – confirm coverage)
- Country-specific requirements: GIC for Canada, Blocked Account for Germany
A loan covering only tuition forces you to arrange separate funding for living expenses – often at higher cost. Always choose a loan that covers the full cost of attendance.
4. Processing Fee and Other Charges
Processing fees directly add to your total borrowing cost. Comparison:
| Lender Category | Processing Fee |
| Public banks (SBI, Union Bank) | Nil or nominal (SBI: nil; BOI: Rs 10,000-20,000 refundable on disbursement) |
| Private banks (ICICI) | Applicable + GST (approximately 0.5-1%) |
| NBFCs (Avanse, Auxilo, Tata Capital) | 1-2% + GST (non-refundable in most cases) |
| International lenders (Prodigy Finance) | 4.2% admin fee added to principal |
On a Rs 30 lakh loan, a 1% processing fee is Rs 30,000 upfront. A 2% fee is Rs 60,000. These are not refundable at most NBFCs – factor them into your true cost comparison alongside the interest rate.
5. Moratorium Period and Interest During Study
The moratorium is the period when you are not required to make principal EMI repayments – typically course duration + 6-12 months. However, interest continues to accrue during this period. How lenders handle this matters:
- Simple interest during moratorium: interest accrues but does not compound – best for borrowers
- Compound interest during moratorium: interest on interest – significantly increases total cost
- Pay-during-moratorium discounts: SBI, PNB, and others offer 0.5-1% rate concessions if you pay simple interest during the study period
6. Prepayment Terms
If your salary is strong, you may want to prepay your education loan. Prepayment terms vary significantly:
- SBI: Zero prepayment penalty at any time
- ICICI Bank: Zero prepayment charges for floating rate loans
- NBFCs: Typically 1-3% prepayment penalty within a specified period – check your specific agreement
Zero prepayment penalty is a meaningful advantage if you plan to repay early or if your income grows faster than expected after graduation.
Also Read: Education Loan EMI Calculator – Calculate Your Monthly Payment
5 Factors That Affect Your Education Loan Interest Rate
| Factor | How It Affects Your Rate |
| Collateral vs no-collateral | Secured loans (with property/FD) have rates 1.5-3% lower than unsecured loans from the same lender. The single biggest rate driver after lender type. |
| Co-applicant CIBIL score | 750+ CIBIL score can reduce rates by 0.5-1% even on secured loans. Below 700 may result in higher rate or rejection at some lenders. |
| University ranking and institution type | Top-100 global universities get better rates. IIM/IIT admits get specially discounted products at several lenders. Unranked or less-recognized universities may face higher rates or rejection. |
| Loan amount | Larger loan amounts may carry slightly higher rates due to increased risk. Some lenders have explicit rate tiers by amount. |
| Lender type | Public banks: 8.33-10.5% (lowest, but slower and stricter). Private banks: 10-13%. NBFCs: 10.5-14% (fastest and most flexible, but priciest). International lenders: 12-14% APR in USD. |
Why Education Loan Rates Differ Between Banks
Lenders compute the rate of interest on education loans using your principal amount, chosen tenure, and their base lending rate. The base rate is either:
- MCLR (Marginal Cost of Funds-Based Lending Rate) – internal bank rate, changes quarterly or monthly based on RBI guidance
- RLLR (Repo Linked Lending Rate) – directly tied to RBI’s repo rate, changes when RBI changes repo rate (currently 6.25%)
- SBI MCLR (1-year): approximately 8.55% (2026). Add 0.85-1.85% spread = 9.40-10.40% for various SBI products.
The variation between banks comes from: (1) their cost of funds (public banks borrow cheaper than NBFCs), (2) their risk appetite and internal assessment of education loan repayment data, (3) whether they offer government-subsidized products (public banks only), and (4) their competitive positioning in the education loan market.
Public Banks vs Private Banks vs NBFCs: Rate and Feature Comparison
| Feature | Public Banks | Private Banks | NBFCs |
| Interest rate range | 8.33% – 10.5% | 10% – 13% | 10.5% – 14% |
| Max collateral-free | Rs 7.5L standard; Rs 50L (SBI premier) | Up to Rs 1 crore (ICICI premier) | Rs 40L – 1.5Cr depending on lender |
| Processing fee | Nil to nominal | 0.5-1%+ | 1-2%+ (non-refundable) |
| Processing speed | 15-25 working days | 7-15 working days | 3-7 working days |
| Government subsidy eligible | Yes (CSIS, PM-Vidyalaxmi) | No | No |
| Prepayment charges | SBI/ICICI: nil | Varies | 1-3% typical |
| Section 80E benefit | Yes | Yes | Yes (if Indian registered NBFC) |
| Best for | Students with collateral, time, eligible for subsidy | Faster processing, higher unsecured limits | Fastest approvals, most collateral-free options |
Compare rates across all three lender types simultaneously. 18+ lenders, 48 hours, free on GradRight. Compare Education Loan Rates on GradRight
How GradRight Helps You Compare Interest Rates
For a quick education loan comparison, you need to list each lender’s rates alongside fees and tenures – and then filter by what matters most to your profile. GradRight shows the education loan interest rates of all partner banks and NBFCs side by side, so you can filter by lowest EMI, best interest rate percentage, or most flexible terms.
Students using GradRight get up to 40% better loan rates because lenders on the platform compete for your profile. The reverse-bidding model means you do not have to negotiate with a single bank from a position of weakness – multiple lenders compete simultaneously, and the best offer wins.
- Submit one profile – 15 minutes – to receive competing offers from 18+ lenders
- Compare interest rates, EMI, processing fees, collateral requirements, moratorium terms, and currency type on one dashboard
- Expert advisors help you understand complex terms, calculate true total cost, and negotiate better deals
- Apply without triggering multiple CIBIL hard inquiries – one profile, multiple competing offers
Also Read: GradRight vs Traditional Education Loan Process
Section 80E Tax Benefits on Education Loan Interest
Under Section 80E of the Income Tax Act, both students and co-applicants can claim tax deductions on the interest paid on education loans. Key points:
- The full interest paid on your education loan is deductible from your gross taxable income – no upper limit on this deduction
- Available for up to 8 consecutive years starting from the year you begin repayment
- Applies to both domestic and international education loans from Indian banks and NBFCs
- Available only under the old tax regime (not the new default tax regime under Section 115BAC)
- Applicable only to Indian scheduled banks, approved charitable institutions, and financial institutions – not to international lenders like Prodigy Finance or MPower
For a student repaying Rs 4 lakh in interest annually in the 30% tax bracket, Section 80E saves Rs 1.2 lakh per year in tax – a meaningful benefit that reduces the effective cost of the loan significantly.
Related Education Loan Guides
Education Loan Providers in India – Top Banks, NBFCs
SBI Education Loan for Study Abroad
ICICI Bank Education Loan for Study Abroad
Education Loan EMI Calculator
Education Loan Without Collateral
GradRight vs Traditional Education Loan Process
Step-by-Step Education Loan Guide for Study Abroad
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