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Banks that offer the lowest interest rates on education loans

Strap: The ten cheapest education loan offers range from 6.95-8.65 percent, with state-owned majors Central Bank of India, Punjab National Bank and State Bank of India occupying the top three slots.

August 19, 2022 / 11:26 AM IST
Being floating-rate retail loans, all education loans sanctioned by banks after October 1, 2019 are linked to an external benchmark. In case of most banks, this is the repo rate, which means that education loans have become costlier since the Reserve Bank of India (RBI) started raising rates since May. Cumulatively, the central bank has hiked the key policy rate by 140 basis points so far. Moreover, the hawkish stance in the latest credit policy announcement means that both new and existing borrowers will have to brace themselves for even higher interest outgo in the months to come. Even now though, several lenders – primarily public sector banks - still levy interest rates under 8 percent on an education loan of Rs 20 lakh with a repayment tenure of seven years, as per BankBazaar.com data.
Being in a floating-rate retail loan, education loan sanctioned after October 1, 2019 have been linked to an external benchmark. In case of most banks, this is the repo rate, which means that education loans have become costlier since the Reserve Bank of India (RBI) started raising rates since May. Cumulatively, the central bank has hiked the key policy rate by 140 basis points so far. Moreover, the hawkish stance in the latest credit policy announcement means that both new and existing borrowers will have to brace themselves for even higher interest outgo in the months to come. Even now though, several lenders – primarily public sector banks - still levy interest rates under 8 percent on an education loan of Rs 20 lakh with a repayment tenure of seven years, as per BankBazaar.com data.
At 6.95 percent, Central Bank of India’s interest rate is currently the lowest, as per Bankbazaar’s data. The equated monthly installment for a Rs 20-lakh loan with seven-year tenure will amount to Rs 30,136.
At 6.95 percent, Central Bank of India’s interest rate is currently the lowest, as per Bankbazaar’s data. The equated monthly installment for a Rs 20-lakh loan with seven-year tenure will amount to Rs 30,136.
With an interest rate of 7.45 percent, state-run banking major Punjab National Bank (PNB) is second on the list of cheapest lenders. The EMI will work out to Rs 30,627.
With an interest rate of 7.45 percent, state-run banking major Punjab National Bank (PNB) is second on the list of cheapest lenders. The EMI will work out to Rs 30,627.
At 7.5 percent, SBI charges a marginally higher interest rate on such education loans. The EMI will amount to Rs 30,677. Two other government-owned banks – Union Bank of India and IDBI Bank – also charge the same rate of interest to their student customers.
At 7.5 percent, SBI charges a marginally higher interest rate on such education loans. The EMI will amount to Rs 30,677. Two other government-owned banks – Union Bank of India and IDBI Bank – also charge the same rate of interest to their student customers.
Indian Bank levies an interest rate of 7.9 percent on an education loan of Rs 20 lakh with a tenure of seven years. The borrower will have to pay an EMI of Rs 31,073.
Indian Bank levies an interest rate of 7.9 percent on an education loan of Rs 20 lakh with a tenure of seven years. The borrower will have to pay an EMI of Rs 31,073.
Indian Bank levies an interest rate of 7.9 percent on an education loan of Rs 20 lakh with a tenure of seven years. The borrower will have to pay an EMI of Rs 31,073.
Indian Bank levies an interest rate of 7.9 percent on an education loan of Rs 20 lakh with a tenure of seven years. The borrower will have to pay an EMI of Rs 31,073.
This state-owned bank charges interest at the rate of 8.25 percent. In this case, the EMI will amount to Rs 31,422.
This state-owned bank charges interest at the rate of 8.25 percent. In this case, the EMI will amount to Rs 31,422.
Canara Bank’s interest on an education loan of Rs 20 lakh with a repayment period of seven years is 8.3 percent. The EMI will be Rs 31,472.
Canara Bank’s interest on an education loan of Rs 20 lakh with a repayment period of seven years is 8.3 percent. The EMI will be Rs 31,472.
Bank of Maharashtra’s education loans are priced at 8.35 percent. The EMIs will work out to Rs 31,522.
Bank of Maharashtra’s education loans are priced at 8.35 percent. The EMIs will work out to Rs 31,522.
Punjab and Sind Bank, another public sector bank, offers an interest rate of 8.4 percent, with the EMI amounting to Rs 31,572.
Punjab and Sind Bank, another public sector bank, offers an interest rate of 8.4 percent, with the EMI amounting to Rs 31,572.
At 8.65 percent, this bank’s student borrower will have to pay an EMI of Rs 31,824.
At 8.65 percent, this bank’s student borrower will have to pay an EMI of Rs 31,824.
Interest rates on education loans for all listed (BSE) public and private sector banks have been considered for the data compilation. In case data was not available on a bank's website, the lender has not been considered. Data has been collected from respective banks’ websites as on August 18, 2022. Banks are listed in ascending order on the basis of interest rates – that is, the bank offering the lowest interest rate on education loan (irrespective of loan amount and tenure) is placed at the top and the one offering the highest rate at the bottom. EMI is calculated on the basis of interest rates for a Rs 20-lakh with tenure of seven years (processing and other charges are assumed to be zero for EMI calculation).
Interest rates on education loans for all listed (BSE) public and private sector banks have been considered for the data compilation. In case data was not available on a bank's website, the lender has not been considered. Data has been collected from respective banks’ websites as on August 18, 2022. Banks are listed in ascending order on the basis of interest rates – that is, the bank offering the lowest interest rate on education loan (irrespective of loan amount and tenure) is placed at the top and the one offering the highest rate at the bottom. EMI is calculated on the basis of interest rates for a Rs 20-lakh with tenure of seven years (processing and other charges are assumed to be zero for EMI calculation).
Preeti Kulkarni is a financial journalist with over 13 years of experience. Based in Mumbai, she covers the personal finance beat for Moneycontrol. She focusses primarily on insurance, banking, taxation and financial planning
first published: Aug 19, 2022 09:32 am
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