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Top 5 Banks In India For Student Loans

Updated on Apr 15, 2021
Student loans

Student loans help finance academic pursuits that seem out of reach by borrowing from the government or a private lender such as a bank. Student loans are paid back with interest after graduation. Many successful personalities were able to climb the social mobility ladder through student loans. 

Student loans to study abroad have opened doors for many Indian students aspiring to expand their horizons and get new career opportunities along with having an experience of a lifetime. Getting an international degree also gives students great exposure and an edge in getting hired for high-paying jobs. 

Related Article: Top 6 Reasons Why Studying in the US is so popular

Several Indian banks offer different student loan schemes for pursuing higher education in India as well as abroad. Such loans are meant to cover tuition fees, hostel fees, and other related expenses while the students pursue their courses. 

Most banks have a list of permitted courses and institutions for which the loans can be availed. You can apply for a student loan if the course and the institution you are interested in are included in the bank's list.

Knowledge about education loans can help ambitious students attain good education, improve their job opportunities, and eventually have the capacity to pay back the loan successfully. Remember that loans are borrowings and need to be paid back. As the saying goes, "know before you owe."

Features of Best Student Loans

  • Higher loan amount 
  • Longer loan tenure
  • Accountability of transactions
  • Fast processing time 
  • No/low additional charges 
  • Longer moratorium period 
  • Flexible repayment options 
  • Interest rate subsidies
  • Tax benefit under section 80(E)
  • Low or no collateral security 
  • Scholarship adjustment with the loan
  • Additional features like part-payment, health cover, etc
  • Wider course and institution eligibility options 
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Student Loan in India for Studying Abroad at a Glance

One good news is that banking institutions in India that provide student loans are obligated to follow the Central Sector Interest Subsidy Scheme and other regulatory norms. This is necessary for the loans to be in the best interest of the student loan applicants.

Who Is Eligible For a Student Loan in India? 

Each bank lists out eligibility criteria for availing of student loans offered by them. 

Below is the general student loan eligibility criteria for Indian banks:

  • The applicant should be an Indian national 
  • Should have secured admission to eligible career-oriented courses in recognized institutions 
  • Should have attained the age of 18 years 
  • Good academic record 

Documents Required For Student Loans in India 

Documentation is paramount when applying for any loans. Most lenders will ask for the following documents: 

  • Admission letter from the education institution
  • Duly filled loan application form 
  • Detailed cost breakup of the course 
  • The academic record of the applicant (such as mark sheets, scholarship documents)
  • Age proof (such as birth certificate or matriculation pass certificate)
  • ID proof such as PAN card, Aadhar Card, Passport, and Driving License
  • Recent passport size photographs (applicant and co-applicants)
  • Address proof
  • Signature proof
  • Proof of income (of co-applicant) 
  • Documents for collateral security (when applicable)
  • Bank statements 

Top 5 Banks in India Offering the Best Student Loans to Study Abroad

STATE BANK OF INDIA (SBI)

The following loan schemes by SBI are student loans favoring international students.

SBI Student Loan Scheme 

  • Loan granted for Indian nationals who have secured admission in India or abroad for their higher education
  • The scheme offers loans for jobs oriented professional/technical Graduation Degree Courses/ Post Graduation Degree/ Diploma Courses like MCA, MBA, MS, etc offered by foreign universities 
  • You can also apply for a loan for courses such as Chartered Institute of Management Accountants (CIMA) and Certified Public Accountant (CPA). 
  • The expenses covered by the loan include tuition fees, fees for examination, library and laboratory fees, purchase of school supplies (uniforms, books, equipment), travel expenses, caution deposit, cost of two-wheeler up to Rs 50,000, expenses for project work, and study tours, etc. (total expense should not exceed 20% of the total tuition fees payable for completion of the course)
  • SBI Student Loan Scheme provide loan up to 7.50 lakhs for studies abroad 
  • No collateral security for loans up to Rs. 7.50 lakhs. Only a parent or a guardian as co-borrower is required
  • Maximum loan amount: Rs 30 lakhs with tangible collateral security
  • Processing fees: Rs 10,000 (+ taxes) for loans above Rs. 20 lakhs
  • Loan tenure: 15 years after commencement of repayment
  • Interest Rate: 9.30% p.a.
  • Margin: NIL for up to Rs 4 lakhs. For loans above Rs 4 lakhs, the margin is 5% for studies in India and 15% for studies abroad
  • Margin may be brought in on a year-to-year basis as and when disbursements are made on a pro-rata basis
  • Repayment starts after one year of course completion
  • Repayment through EMI. Interest can be paid off during the moratorium period

SBI Global Ed-Vantage Scheme

  • SBI Global Ed-Vantage is an overseas education loan to study full-time regular courses at foreign colleges/universities. The scheme covers Regular Graduate Degree/ Post-Graduate Degree/ Diploma /Certificate /Doctorate Courses in any discipline offered by foreign institutes/ universities in the USA, UK, Canada, Australia, Singapore, Japan, Hong Kong, New Zealand, and Europe
  • Under the SBI Global Ed-Vantage Scheme, SBI grants educational loans above Rs 7.5 lakhs up to Rs 1.5 Crores for foreign studies 
  • The expenses covered by the loan include tuition fees, fees for examination, library and laboratory fees, purchase of school supplies (uniforms, books, equipment), travel expenses, caution deposit, expenses for project work, and study tours, etc. (total expense should not exceed 20% of the total tuition fees payable for completion of the course)
  • Loan sanction prior to i20/Visa
  • Repayment through EMI up to 15 years
  • The simple interest rate for the course duration + Moratorium period 
  • Tax Benefit under section 80(E)
  • Interest rate: 9.30% p.a.
  • Scholarship/Assistantship to be included in margin
  • Processing Fee: Rs 10,000
  • Tangible Collateral security needed 

AXIS BANK

Axis Bank provides loans for technical or professional courses, job-oriented courses to students to study in India and abroad. 

Features of Axis Bank Student Loans:

  • Simple Documentation 
  • Quick Loan Disbursal 
  • Easy Repayment Options
  • Expenses cover tuition fees, hostel fees, purchase of books, school supplies, etc. 
  • Tax benefit under section 80(E)
  • Loan amount can go up to 75 lakhs
  • Loan Tenure:10-15 years
  • Interest rates: 13.70% - 15.20%
  • Processing Fees: NIL for up to 10 lakhs. And 0.75% of the differential loan amount for above 20 lakhs + GST (Non-Refundable fee)
  • Balance Transfer: Change your existing high-cost education loan and reduce monthly EMI
  • Door-Step Service 
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HDFC BANK

Features of HDFC Education Loan for Foreign Education:

  • 100% coverage of the entire cost of education and with no upper limit with collateral. While it is up to Rs. 20 lakhs for studies in India
  • 0% loan margin 
  • Expenses covered include fees for exam, library, and laboratory, purchase of books, equipment, computer, uniforms, travel expenses, insurance, caution deposit additional expenses for study tours, project work, thesis, etc.
  • Processing fees: up to 1.5% of the sanctioned amount + taxes
  • Unsecured loans are available up to Rs. 35 lakhs
  • Collateral Options: Moveable- Fixed Deposit with HDFC Bank; Immoveable- Flat, House, Land (Non-agricultural), Shop, etc. 
  • Get loan sanctioned before admission 
  • Loan tenure up to 15 years including moratorium period
  • Interest rates: 9.25%- 13.52%
  • Minimal and simple documentation
  • No hidden charges
  • Zero prepayment charges
  • Door-step service and web-enabled billing
  • Loans provided for over 950 professional courses at approved universities in 36 countries
  • Flexible repayment options 
  • Tax benefit under section 80(E)
  • Insurance cover for your loan 
  • Get preferential rates for top-ranked colleges and universities

ICICI BANK

ICICI bank provides one of the highest education loan amounts for pursuing higher education in India as well as abroad.

Here are the features for ICICI bank student loans:

  • The loan amount is up to Rs. 50 lakhs for studies in India and up to Rs 1 crore for overseas studies
  • Margin: NIL for premier institutes and for loans up to Rs 20 lakhs
  • Loans above Rs 20 lakhs attract a 5%-15% margin, that can be FD/scholarship/initial fee paid to the institute 
  • No collateral required for education loans up to Rs 20 lakhs (for UG courses) and Rs. 40 lakhs (for PG courses at select institutions)
  • Pre-Visa loan disbursal for international students
  • Preferential forex rates for international loan disbursements 
  • Loan tenure: Up to 8/10 years for UG course period + 6months
  • Up to 10/12 years for PG course period + 6 months
  • Flexible repayment options
  • Interest rates: Secured loans starting at 10.50% p.a. and unsecured loans starting at 10.75% p.a.
  • Processing fees: 1% of loan amount + applicable taxes 

Punjab National Bank (PNB)

PNB Udaan is an education loan scheme offered by Punjab National Bank for students who have secured admission at reputed universities abroad. 

Features of PNB Udaan Loan: 

  • Eligible courses: Graduation (job-oriented professional/technical courses)
  • Post-graduation (MCA, MBA, MS, etc). Courses conducted by CIMA, London, CPA in the USA, etc. Degree/Diploma courses like aeronautical, pilot training, shipping, etc. 
  • Here is a list of permitted Foreign Universities and Institutes
  • The expenses covered by the loan include tuition fees, fees for examination, library and laboratory fees, purchase of school supplies (uniforms, books, equipment), travel expenses, caution deposit, expenses for project work, and study tours, etc.
  • Loan amount: Need-based finance subject to repaying capacity with margin
  • Loan tenure: 15 years
  • Interest rates: 7.80%-9.55%
  • Moratorium period: Course period + 1 year
  • Zero Prepayment charges
  • Upfront processing fees: 1% of the loan amount (Minimum: Rs, 10,000; The processing fee is refundable post the first disbursement)
  • Collateral security: Only for loans above Rs. 7 lakhs. Parent/Guardian as co-borrower
  • Margin: NIL for up to 4 lakhs and 15% for above Rs. 4 lakhs
  • Scholarship/ assistantship be included in margin.
  • Margin may be brought in on a year-to-year basis as and when disbursements are made on a pro-rata basis
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Refinancing Of Student Loans 

Student loans can be of tremendous help when you have limited financial resources for pursuing higher education. The challenge comes when you have to repay the borrowed amount along with interest. For huge loans, the EMIs are not a small amount of money, and not paying it on time can hurt your credit rating. There is also the risk of falling into debt. 

Once you have completed your education and are earning a decent income, you can negotiate your loan terms in your favor to reduce the burden of repayment and maximize your potential savings. You can do this by refinancing your student loan which is paying off your existing student loan using another loan with a lower interest rate. Lowering the interest rate will save you money over the long term.

Refinancing is also possible even before you finish your studies. Based on the career prospects and earning potential after completing the course for which you took the loan, you could be able to refinance your existing secured loan with an unsecured loan.  

Several banks and private lenders provide refinancing student loans.

With each passing year, the cost of education keeps increasing. Barack Obama, the former president of the United States is said to have paid off his student loan in his 40s just before getting elected as a senator.

Applying for loans is not an easy task. You have to do research, check if the course and institution you are going to study are on the bank's list, figure out how much financing you need and how much you need to arrange on your own.

You also need to compare various student loan options based on the loan amount, tenure, interest rates, have the documents ready, and apply on time. And hope that the loan gets approved and disbursed without any trouble. 

However, the benefits you get from such financial help far outweigh the efforts you put into a student loan application.

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