Understanding Education Loans in India: Interest Rates, Calculators, Loan Process, and Required Documents

In a rapidly evolving world, education is the key to a brighter future. However, pursuing higher education often comes with a hefty price tag that not everyone can afford. This is where education loans in India play a crucial role. In this comprehensive guide, we will delve into the intricate details of education loans, including interest rates, loan calculators, the loan application process, and the necessary documents.

What is an Education Loan?

An education loan is a financial product designed to cover the cost of education-related expenses. It serves as a bridge between a student’s aspirations and their financial capabilities. These loans are typically offered by banks, non-banking financial companies (NBFCs), and government schemes.

Types of Education Loans

Education loans in India come in various forms, catering to the diverse needs of students. They can be broadly categorized into two types: secured and unsecured loans.

  • Secured Loans: These loans require collateral, such as property or fixed deposits, to secure the loan amount. They often come with lower interest rates.
  • Unsecured Loans: These loans do not require collateral but may have higher interest rates as a result.

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Interest Rates

The interest rate on an education loan is typically higher than the interest rate on other types of loans, such as personal loans or car loans. This is because education loans are considered to be riskier loans, as the borrower may not be able to repay the loan if they are unable to find a job after graduating.

The interest rate on an education loan will vary depending on the lender, the borrower’s credit score, and the terms of the loan. The current interest rates for education loans in India are as follows:

  • State Bank of India (SBI): 8.40% per annum
  • Punjab National Bank (PNB): 8.55% per annum
  • Bank of Baroda (BoB): 9.10% per annum
  • ICICI Bank: 9.50% per annum

Loan Calculator

There are a number of online education loan calculators available that can help you estimate the monthly repayments on your loan. These calculators typically take into account the loan amount, the interest rate, the repayment period, and other factors.

To use an education loan calculator, you will need to provide the following information:

  • Loan amount
  • Interest rate
  • Repayment period
  • Expected monthly income

Once you have entered this information, the calculator will estimate your monthly repayments. It is important to note that these are just estimates and your actual repayments may vary.

Loan Process

The loan process for an education loan typically involves the following steps:

  1. Apply for the loan with the lender of your choice.
  2. Provide the lender with the required documentation, such as your income statement, credit report, and educational transcripts.
  3. The lender will assess your application and decide whether to approve the loan.
  4. If the loan is approved, you will sign the loan agreement and receive the funds.
  5. You will begin repaying the loan according to the terms of the agreement.

Documents Required

The documents required for an education loan application will vary depending on the lender. However, some of the common documents that are required include:

  • Proof of identity (such as a passport or driver’s license)
  • Proof of address (such as a utility bill or bank statement)
  • Income statement
  • Credit report
  • Educational transcripts
  • Employment offer letter (if applicable)


The repayment period for an education loan typically ranges from 5 to 15 years. The monthly repayments will depend on the loan amount, the interest rate, and the repayment period.

You can repay your education loan in full or in installments. If you choose to repay the loan in installments, you will need to make monthly payments to the lender. The monthly payments will be calculated based on the loan amount, the interest rate, and the repayment period.

Repayment Options

There are a number of repayment options available for education loans. These options typically include:

  • Fixed monthly installments
  • Flexible monthly installments
  • Balloon payment
  • Graduated repayment

The best repayment option for you will depend on your individual circumstances. You should discuss your options with your lender to find the option that best suits your needs.

Government Schemes

The government of India offers a number of schemes to help students finance their education. These schemes typically provide interest rate subsidies or loan waivers to eligible borrowers.

Some of the government schemes for education loans include:

  • Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
  • Vidya Lakshmi Scheme
  • Dr. Ambedkar Interest Subsidy Scheme for Overseas Studies
  • Padho Pardesh Interest Subsidy Scheme for Overseas Studies


How do I calculate my EMI using an EMI calculator?

Using an EMI calculator is easy. Input the loan amount, interest rate, and tenure to get an estimate of your monthly installment.

What is the difference between fixed and floating interest rates?

Fixed interest rates remain constant throughout the loan tenure, while floating rates fluctuate with market conditions.

Are there tax benefits for education loans in India?

Yes, under Section 80E of the Income Tax Act, borrowers can avail of tax benefits on the interest paid on education loans.

Can I apply for an education loan without collateral?

Yes, unsecured education loans do not require collateral, but they may have higher interest rates.

What should I do if I face difficulties during the loan repayment process?

If you encounter challenges during repayment, reach out to your lender to discuss possible solutions and repayment options.