Education Loan interest rate is an important factor for applicants to decide if the loan scheme is worth the financial load or not. Interest rates of education loan have escalated in the recent times which has made education financing costly. Student loan interest rates keep changing frequently based on government policies. Most of the time, students are not aware of these changes. Lack of information about education loan interest rate subsidy schemes also prevents students from getting the benefits of government schemes.

Education Loan Interest Rate: Introduction

What is the importance of education loan interest rate?

Among all the key points to consider for education loan, the most important is selecting the right banking institution. Students emphasize over other features of student loans like loan tenure, student insurance, laptop and two-wheeler loans but in the end, it is the interest rate that matters the most. Check out the things to remember while considering interest rate of student loan for any bank.

Education Loan Interest Rate: Important points to remember

• Most student loan interest rates are base rate or MCLR based, so find the latest rates before applying.
• Education loan interest rates depend on your educational institution and course.
• Interest rate subsidies are applied for separately, they are not automatically applicable.
• The interest paid for student loan is deductible for tax benefits under section 80E of Income Tax Act.

Education Loan interest rate trend

What is the interest rate for education loan in India?

Students can find most of the education loan interest rate related information on official websites of the bank but that involves searching through numerous websites and compiling all the information. Generally, student loan interest rates are dependent on educational institution and courses, but they are also adjusted for girl children and minority applicants. The generic education loan interest rates are mentioned below:-

Common Education Loan Interest Rates in India
Study loan for domestic education	Min: INR 20,000 Max: INR 45,00,000 (45 lakhs)
Student loan for foreign education	Min: INR 1,50,000 Max: 1,50,00,000 (1.5 crore)
Study loan interest rate (domestic)	Min: 8.35% Max: 15.8%
Student loan interest rate (foreign)	Min: 9.7% Max: 16.2%

Education Loan Interest Rates of popular Indian banks

What is the best interest rate of education loan in India? What is the lowest education loan interest rate?

Both banking and non-banking financial institutions can provide loan to students of any amount at pre-set interest rates. A list of interest rates for the most popular student loan providers of the nation regarding both domestic and foreign education is listed below.

Bank Name (student loan scheme name)	Education loan interest rate
SBI (State Bank of India)	Domestic Study Loan Below ₹7,50,000 (7.5 Lakhs): 10.45% Above ₹7,50,000 (7.5 Lakhs): 10.70%
	IITs/IIMs/NITs/ISBs/Xaviers/other: 8.75% to 10.05%
	Study Abroad Loan Amount between ₹20,00,000 (20 Lakhs) to ₹1.5 Crore: 10.80%
PNB (Punjab National Bank)	Domestic Loan Below ₹7,50,000 (7.5 Lakhs): MCLR + 1.50% Above ₹7,50,000 (7.5 Lakhs): MCLR + 2.60%
	IITs/IIMs/NITs/ISBs/Xaviers/other Below ₹7,50,000 (7.5 Lakhs): MCLR + 0.60% to MCLR + 1.50% Above ₹7,50,000 (7.5 Lakhs): MCLR + 0.10% to MCLR + 2.60%
	Study Abroad Loan Below ₹7,50,000 (7.5 Lakhs): 10.03% Above ₹7,50,000 (7.5 Lakhs): 11.05%
Canara Bank	Domestic Study Loan Below ₹7,50,000 (7.5 Lakhs): MCLR + 2.00% Above ₹7,50,000 (7.5 Lakhs): MCLR + 1.80%
	Foreign student loan Below ₹7,50,000 (7.5 Lakhs): MCLR + 2.00% Above ₹7,50,000 (7.5 Lakhs): MCLR + 1.80%
Axis Bank	Domestic & Foreign Study Loan Below ₹4,00,000 (4.0 Lakhs): 15.20% From ₹4,00,000 (4.0 Lakhs) to  ₹7,50,000 (7.5 Lakhs): 14.70% Above ₹7,50,000 (7.5 Lakhs): 13.70%
HDFC Bank	Domestic & Foreign Student Loan Below ₹4,00,000 (4.0 Lakhs): 10.25% to 12.25% Above ₹4,00,000 (4.0 Lakhs): 10.25% to 15.00%
ICICI Bank	Minimum (Domestic/Abroad): MCLR + 2.4% Maximum (Domestic/Abroad): MCLR +4.65%

Education Loan Interest MCLR rates

What are MCLR rates? How do I know the actual education loan interest rate?

MCLR is the marginal cost of fund based lending rate which is used as the regulated interest rate at which banks can provide loan services. Student loans are based on these rates for most banks and that’s how students are able to keep track of the exact rates with the passing years.

MCLR rates are revised by the Reserve Bank of India on a monthly basis. Furthermore, IBA (Indian Banking Association) allows banks to revise their student loan interest rates every six month. So the additional spread that is charged above MCLR rates is what students need to know for selecting a study loan service.

MCLR rates for all the banks in India that provide study loans are listed below:

Did you know that you could repay your education loan using scholarships and fellowship awards?

Banks allow applicants to settle the margin payment of their student loan with scholarship awards. That’s how many students all over the nation are able to pay for their education (especially for study abroad).

Education Loan Interest Rate Tax Benefits and Subsidies

Student loans are not affordable for everyone, especially in the environment of rising interest rates. Still, in order to motivate students to pursue higher education with loans, subsidies and tax benefits are provided to applicants/co-applicants. These benefits help students repay their loans as early as possible, thereby, reducing the burden of interest payment. Such benefits also prevent student loans from turning into NPA (Non-Performing-Assets or bad loans) which keeps the education loan industry regulated.

What is an education loan interest subsidy?

Subsidy on study loan means a benefit which allows students to compensate the expenditure done to repay the loan. Various government policies and private bank schemes provide interest rate benefits to student loan applicants. Education loan subsidy is generally provided in the form of interest rate compensation as per the norms of the Central Government and RBI. This subsidy means a complete/partial-compensation/cashback of interest paid during the course duration of the applicant.

Education Loan Interest Rate Subsidy: List of Government Schemes

Central Sector Interest Subsidy (CSIS)

Provided by: Ministry of Human Resource and Development, Government of India

Subsidy eligibility:

• Indian students pursuing professional/technical education are eligible for this subsidy scheme.
• Family income of the applicant from all sources should not be more than ₹4.5 Lakh per year.

Benefits:

• Collateral free study loan up to ₹7.5 Lakh (750000)
• Total subsidy on education loan interest paid for the course duration/moratorium period

Dr. Ambedkar Central Scheme of Interest Subsidy on Education Loan for Overseas Studies (ACSIS)

Provided by: Ministry of Social Justice and Empowerment, Government of India

Subsidy eligibility:

• Students pursuing their studies abroad at recognised universities/colleges/institutions can avail this subsidy.
• Students need to be enrolled in Master’s programmes at foreign institutions. Only students belonging to OBC (Other Backward Classes) or EBC (Economically Backward Class) can avail this subsidy.
• Maximum family income for OBC applicants is ₹6 Lakhs per year and for EBC applicants is ₹2 Lakhs per year.

Benefits

• Complete subsidy on education loan interest paid for the duration of course
• Students would need to commit their salary post course completion towards the repayment of study loan instalments

Padho Pardesh – Scheme of Interest Subsidy on Educational Loans for Overseas Studies

Provided by: Ministry of Minority Affairs, Government of India

Subsidy eligibility:

• Students enrolled in Master’s programmes or above in International Universities/Colleges/Institutions are eligible for this subsidy.
• Only students from minority communities (like Parsi, Jain, etc.) can avail this scheme.
• Maximum family income allowed for applicants is ₹6 Lakhs per year.

Benefits

• Complete subsidy on education loan interest paid for the duration of course
• Students would need to commit their salary post course completion towards the repayment of student loan instalments

Education Loan Interest rate subsidy application

How to apply for education loan interest subsidy?

Education loan interest subsidies are additional offerings provided by the banks as per the Central Government guidelines. There are other subsidy schemes as well which are provided under special circumstances to loan applicants based on different parameters. These parameters might include education loan interest rate subsidy for girls, subsidy for disabled applicants, subsidy for minorities, etc.

Key points to remember while applying for education loan interest rate subsidy:-

• Interest rate subsidy on student loan is not automatically applicable on every study loan. If the applicant is eligible for such benefits then they need to apply separately for the subsidy.
• Interest rate subsidy for student loans is generally based on income and the category to which the student belongs. Students need to be ready with income certificate and caste/minority certificate approved by requisite government authority.
• Only government issued proof of income and caste/religion are accepted. Salary slips, IT returns, Form 16, membership certificates of religious communities are not applicable.
• Interest rate subsidy is not a waiver of any kind. Students will have to pay the interest with their study loan EMIs (Easy-Monthly-Installments) and if their application is accepted, they are provided with a reimbursement.

Steps to apply for Education Loan interest rate subsidy

1. Check the eligibility criteria for education loan interest subsidy that you wish to apply for
2. Collect the income certificate (mandatory) and minority/caste certificate (if required) from the appropriate government authority
3. Visit the home branch of the bank where study loan has been applied from
4. Ask for a student loan subsidy form
5. Fill and submit the form along with required documents
6. Track your subsidy application with bank officials

Did you know that you could apply for education loans that cover examination charges (like SAT exams, LSATS, GRE, GMAT, TOEFL, IELTS etc.) and expenses of research studies as well? Many banks provide students’ expenses which exceed the conventional limits of just tuition fees. To find more details about such education loan facilities visit the website of Buddy4Study EduLoans.

Tax Benefits of Interest Paid on Education Loan

Study Loan applicants and co-applicants can avail tax benefits on interest paid. The interest, thus, paid on loan can be deducted from the total taxable income of one individual (applicant or co-applicant) who is paying the EMIs of the education loan. Some peculiar points related to tax benefits on education loan interest rate are:

• Education Loan interest tax benefit can only be claimed for a duration of 8 years
• If the loan is paid before 8 years then the benefit cannot be claimed for remaining duration
• The deduction is capped to the total limit of section 80E deduction
• Education loan interest tax benefit can only be claimed by the EMI paying applicant
• If an interest subsidy is already being claimed then tax benefit cannot be claimed

How to apply for Tax benefits of education loan interest u/s 80E of Income Tax?

The process to avail the deduction for interest paid against student loan is no special. The deduction can only be claimed by an individual and not a corporation or business. The process goes just like claiming any other deduction under income tax returns. The short steps to avail this tax deduction are:

• Collect an interest payment certificate from the respective bank branch of the student loan

1. This Interest certificate can also be downloaded from the bank’s official website if the applicant has internet banking availed
2. It should only include the details of interest paid for the current financial year
3. Should be authorized by bank stamp or seal

• Declare the interest amount paid while filing for income tax return under Section 80E deductions
• Attach the copy of interest certificate along with your ITR documents.

Now that you know about the education loan interest rates, all that remains is for you to gather information about eligibility criteria for education loan and repayment process. Proper information about student loan application process also helps in getting the loan within a short period of time. Students can check out all these information including details of domestic and international scholarships at Buddy4Study. The financial needs and limitations cannot be the factor to stop one from attaining better education. With numerous financing options available and a good academic effort students can achieve the kind of glorious career they aspire for. At Buddy4Study we know that will all this information and a little diligent effort students can achieve their academic and career dreams. Happy learning!