Interest rates on floating-rate retail loans linked to the Reserve Bank of India’s (RBI) repo rate have been on the rise after the central bank hiked the key policy rate by 40 basis points on May 4. Moreover, the RBI is expected to hike the rate further – by as much as 50 bps according to some estimates – when it announces its June monetary policy review on Wednesday. And, this is just the beginning of a hardening interest rate cycle in the country. For students preparing for higher studies, particularly those aspiring to go abroad in August/September, this couldn’t have come at a worse time. However, at present, there are some banks – all of them government-owned lenders – that offer interest rates of under 7.3 percent, as per data from Bankbazaar.com
2/9
At 6.75 percent, this public sector bank offers the cheapest education loan in the country, as per BankBazaar. The EMI for a Rs 20-lakh education loan with a repayment tenure of seven years will work out to Rs 29,942.
3/9
Central Bank of India will charge an interest of 6.85 percent for a Rs 20-lakh study loan. The EMI for such a loan with a tenure of seven years will amount to Rs 30,039.
4/9
Amongst top ten lenders offering cheapest education loans, this government-owned bank is third – and the last - on the list of banks charging sub-7 percent interest rates. At 6.9 percent, your EMI will work out to Rs 30,088.
5/9
This state-owned banking major offers an interest rate of 7 percent on education loans. You will have to shell out an EMI of Rs 30,185 over the tenure of seven years.
6/9
Bank of Baroda and Punjab National Bank, both leading public sector lenders, will provide education loan of Rs 20 lakh with a repayment period of seven years at an interest rate of 7.15 percent.
7/9
India’s largest bank’s education loan will carry an interest rate of 7.25 percent. On a Rs 20-lakh loan with a repayment tenure of seven years, the EMI will work out to Rs 30,340. Two relatively smaller government-owned banks – Bank of India and Indian Overseas Bank – offer the same interest rate, as per BankBazaar data.
8/9
With an interest rate of 7.30 percent on education loans, this state-owned bank is the last on the list of ten cheapest lenders. The EMI on a Rs 20-lakh loan with a seven-year repayment tenure amounts to Rs 30,480.
9/9
A note on Bankbazaar.com's data: Interest rates on education loans for all listed (BSE) public and private sector banks have been considered for the data compilation. Banks for which data is not available on their websites have not been considered. Data collected from respective banks’ websites as on June 4, 2022. Banks are listed in the ascending order on the basis of interest rates i.e. bank offering lowest interest rate on education loans (irrespective of loan amount and tenure) is placed at top and highest at the bottom. EMI is calculated on the basis of interest rate mentioned in the table for a Rs 20-lakh loan with a repayment tenure of seven years; processing fee and other charges have been assumed to be zero for the purpose.
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
