Zero Interest Education Loans: Guide To Get the Best 0 Interest Education Loan

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Picture of Shivani Mani

Shivani Mani

Lead, Student Success - FundRight

Time and again, research studies reveal the biggest reason why students give up on their study abroad dreams – cost. 

Source: Institutional Barriers to Study Abroad Participation – Oklahoma State University

No wonders, then, that every student will jump at the mention of a zero interest education loan. 

But do such loans exist? Can you get an education loan at 0 interest? If so, how do you get such a loan?


What is a zero interest education loan?

When you hear about zero interest education loans, it might seem like a dream come true. The idea suggests a loan where you borrow money for your education and return only what you borrowed, with no extra charges. However, it’s essential to clarify what this really means.

  • Firstly, it’s crucial to state outright: a zero interest education loan, in the pure sense where a lender gives you money and asks for only the principal amount back without any interest, doesn’t exist. 
  • However, the concept isn’t entirely off the table when you consider the possibility of reducing your interest to the point where it feels like you’re not paying any extra at all. This involves strategic planning to minimize the interest charges on your education loan.


Is a zero interest loan a reality?

While the straightforward answer to getting an education loan at 0 interest directly from a lender is a no, there’s a silver lining. The real question shifts to how you can effectively manage an education loan to mimic the effects of a zero interest scenario. 

To achieve the ‘net effect’ of education loan at 0 interest, you need to 

  1. Understand the interest rate market
  2. Employ strategies to lessen the impact of interest payments on your loan

In the next section, we will compare the best education loans provided by different banks and NBFCs.

Compare the best education loans provided by different banks and NBFCs

We must clarify that none of the options we discuss will directly offer a zero interest education loan. The idea here is to arm you with knowledge about the current interest rates for education loans for studying abroad.

Knowing the average interest rates available in the market is a crucial first step. It sets a benchmark for what you can expect, and helps you gauge how much extra you might end up paying on top of your principal loan amount. 

Bank/NBFC Interest Rate Range Loan Amount Range
State Bank of India 8.30% to 11.50% Up to INR 1.5 Crore
Punjab National Bank 8.55% to 11.25% Up to INR 1 Crore
Bank of Baroda 9.10% to 12.45% Up to INR 80 Lakhs
ICICI Bank 9.50% onwards Up to INR 2 Crore
Bank of India 8.25% to 11.60% Up to INR 1 Crore
Bank of Maharashtra 9.20% to 11.05% Up to INR 20 Lakhs
Central Bank of India 8.30% to 11.25% Up to INR 50 Lakhs
Axis Bank 13.70% to 15.20% Up to INR 40 Lakhs
Kotak Mahindra Bank Up to 16.00% Varies
Canara Bank 7.30% to 9.30% Up to INR 40 Lakhs
Mpower Finance Starts from 8.00% Up to $100,000
Prodigy Finance Variable Up to 100% of tuition fees


Now that we have a sense of the current rates, the next step is to explore options that can effectively reduce the cost of borrowing. This can mean finding ways to cover the net interest outflow or funding your education without the need to pay interest.


How to get a zero-interest education loan?

Again, we must highlight that there is no education loan at 0 interest. You can either get a loan at a lower interest rate, or fund your education in a way so you don’t need a loan. 

Let’s understand both these approaches. 

How to obtain a cost-effective student loan?

When it comes to finding a student loan that won’t break the bank, knowledge and negotiation are your best friends. Here’s how to start:

  1. Compare the Best Student Loans for Studying Abroad on FundRight

The first step in securing a cost-effective loan is to compare your options. FundRight is a platform that simplifies this process, and stands out for several reasons. 

  • By creating your profile on FundRight, you tap into a platform where India’s top 15 lenders compete to offer you the best loan terms. 
  • This reverse bidding system ensures you receive offers within just one day, and the competition among lenders means you’re likely to get an offer that suits your needs perfectly. 
  • It’s not uncommon for students to save up to 23 lakhs through this process. 
  • Once you shortlist offers, a dedicated FundRight financial advisor will work with you to negotiate even better terms, potentially reducing your interest rates further.
  1. Government Subsidies and Special Schemes: In India, government subsidies for studying abroad can significantly reduce the cost of your loan. For example:
  • Gujarat Government Education Loan: Offers a 100% subsidy for economically weaker students from Gujarat, providing up to Rs. 15 lakh.
  • Vidya Lakshmi Education Loan: Available for UG, PG, and doctoral programs, offering up to Rs. 30 lakh.
  • Education Loan Scheme of NBCFDC: Supports students from backward classes with loans up to Rs. 20 lakh.
  • Padho Pardesh Scheme: A subsidy scheme for minority students pursuing postgraduate studies abroad, offering up to Rs. 20 lakh.
  • Dr. Ambedkar Central Sector Scheme: Provides subsidies for minority students for PG and doctoral programs.

Note: While you can find even more scholarships, there is no zero percent interest education loan India.

How to fund your education without the need for a loan?

Sometimes, the best way to manage education costs is to minimize the need for loans in the first place.

  • Scholarships and grants

Scholarships and grants are essentially free money for your education. Imagine if you require 1 crore for your education, and you secure scholarships totaling 80 lakhs; you’d only need a loan for the remaining 20 lakhs.

Government-Related Scholarships

The Ministry of Education facilitates scholarships for students studying abroad through the Sakshat Portal. 

Notable schemes include:

  • Commonwealth Master’s Scholarship – United Kingdom
  • Brunei Darussalam Scholarship
  • Chulabhorn Graduate Institute Scholarship
  • Slovenian Government Scholarship 

External scholarships

  • Inlaks Shivdasani Scholarships: Cover full tuition, living expenses, and health allowance up to US$100,000 for studies in the UK, US, or Europe.
  • Charles Wallace India Trust Scholarships: For arts professionals seeking postgraduate education in the UK.
  • Chevening Scholarships: Offers a range of scholarships for Indian students for postgraduate studies in the UK.
  • Commonwealth Scholarships for Developing Commonwealth Countries: For master’s and PhD levels in the UK, focusing on technology, economy, or society development.

University-specific scholarships

  • GREAT Scholarships India: Worth a minimum of £10,000 towards tuition fees for a one-year postgraduate course in the UK.
  • Imperial College Future Leaders Scholarship: Supports 30 Indian master’s students in various faculties, with half reserved for female students.
  • UCL India Excellence Scholarship: Offers £5,000 for one year to Indian students with exceptional academic records pursuing postgraduate studies in the UK.

Other options 

  • Part-Time Work: Depending on your study destination’s work policies for students, part-time work can help fund your living expenses or even part of your tuition, reducing the total loan amount needed.
  • Crowdfunding: Platforms like GoFundMe allow students to raise funds for their education from people around the world willing to support their academic journey.
  • Family and Savings: Using savings or getting support from family can also be a way to reduce the amount you need to borrow.

FAQs: Zero Interest Education Loans

Can I get a completely zero interest education loan in India?

No, a zero interest education loan does not exist. However, strategies like government subsidies can effectively reduce the interest burden.


What is the best way to compare education loans for studying abroad?

Use FundRight to compare and obtain competitive offers from top lenders, potentially saving significantly on your loan.


What role do repayment options play in managing education loan costs?

Choosing the right repayment plan can help manage the financial impact of an education loan, potentially lowering the total interest paid.


How do I find government subsidies for my education loan?

Start by researching schemes like the Central Sector Interest Subsidy Scheme (CSIS) or others specific to your state. Your target university might also have information on potential subsidies.

Are there ways to reduce the interest rate on my education loan even further?

Yes! Consider part-time work to make prepayments, negotiate with your lender (FundRight can help with this!), and explore loan refinancing options after graduation. While this isn’t the same as getting education loan at zero interest (which is impossible), this does make your education more easily fundable.

Picture of Shivani Mani

Shivani Mani

Shivani, aka 'Sheen' brings in 15+ years of experience in banking & finance. An IIM-A alumna, she actively interacts with students & provides actionable solutions to their study abroad funding issues.

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