Parents try their best to fund their children’s education needs through savings. If parents haven’t able to accumulate enough to meet the rising education costs of their children’s higher studies, then they can opt for education loans. Education loans are offered for tenures of seven to eight years. Depending on banks for education loans and check whether you are eligible for lower interest rates with better terms. An education loan is a sum of money borrowed to finance higher education-related expenses. Education loans are granted to cover the cost of tuition, books and supplies, and living expenses while the borrower is in the process of pursuing a degree
Union Bank of India which is a public sector lender offers the lowest interest rate in the education loan currently, starting at 6.8 % for Rs 20 lakh education loans with 7-year tenures, Central Bank of India with, Bank of India and Bank of Baroda charging 6.85% interest rate on education loans for Rs 20 lakh education loans with 7-year tenures. The State Bank of India (SBI), Punjab national bank, IDBI charges 6.9% for the same loan amount and 7-year tenure. Bank of Maharashtra charges 7.05% interest, Indian bank charges 7.15% interest, Indian overseas bank charges 7.25% interest. The most expensive loan offer on the top 10 cheapest education loans list is from Indian Overseas Bank and HDFC Bank, Axis Bank, and ICICI Bank charging 9.55 %, 9.70 %, and 11.25 % respectively. The interest that you pay as part of your monthly equated monthly installment qualifies you for an income tax deduction under Section 80E of the ITA. Processing fees vary from bank to bank.
BankBazaar site has considered education loan interest rates for all listed Bombay stock exchange public and private banks for the data compilation. Banks for which data is not available on their websites are not considered. Data collected from respective banks’ websites as of Dec 17, 2020. Banks are listed in ascending order based on interest rates i.e., the bank offering the lowest interest rate on education loan is placed at top and highest at the bottom. The lowest rates offered by the banks on loans up to rupees twenty lakh are considered in the table. Equated monthly installment, excluding GST, is calculated based on the interest rate mentioned in the table for rupees twenty lakh loan with tenure of 7 years. Processing and other charges are assumed to be zero for equated monthly installment calculation.
