Education Loan: In today’s times, getting a good education has become more expensive than ever. While getting a child admitted to a prestigious college is a moment of pride for a family, the cost of higher education is rapidly increasing. Including tuition fees, hostel fees, books, and other expenses, higher education now costs anywhere from lakhs to ₹1 crore or more. Therefore, most families resort to education loans to fund their children’s education. This is a solution that can help your child’s dreams come true.
Education Loans
Public and private banks, as well as NBFCs (non-banking financial companies), offer education loans. These loans have a unique feature: they offer a moratorium period after the completion of the course. This means that the student does not need to pay EMIs (equal monthly installments) until they find a job. This facility brings great relief to students and their parents, as they do not have to bear the burden of immediate repayment.
PM Vidyalakshmi Scheme
The Government of India has launched the Pradhan Mantri Vidyalakshmi Scheme (PM Vidyalakshmi Scheme) to support meritorious students. This is a significant initiative that provides collateral-free education loans to students enrolled in 860 top educational institutions (QHEIs) across the country.
Benefits under this scheme are based on annual family income and also offer interest subsidies. This facility is available at all scheduled banks, regional rural banks (RRBs), and cooperative banks. It is crucial to thoroughly compare interest rates before taking an education loan to ensure the most affordable rate for both students and their parents.
Tax Benefits
An additional and significant benefit of taking an education loan is the tax deduction on the entire interest paid on the education loan under Section 80E of the Income Tax Act. This tax benefit significantly reduces the financial burden of the loan.
If you or your child is planning to take out a loan for higher education, it’s wise to carefully consider the interest rate, moratorium period, and tax benefits before making a final decision. Choosing the right bank can significantly ease the financial burden of education.
Education Loan Rates for Different Banks (2025)
Education loan interest rates vary from bank to bank. State Bank of India (SBI) charges an annual interest rate of 7.15% to 10.15%, while HDFC Bank charges an interest rate of 10.50%. ICICI Bank offers interest rates between 9.00% and 10.25%.
Punjab National Bank (PNB) offers education loans at an interest rate of 8.55%. Bank of Baroda (BoB) offers rates ranging from 7.10% to 9.95%, and Canara Bank offers annual interest rates between 7.10% and 10.35%. Generally, interest rates at public sector banks are slightly lower than those at private banks, providing education loan borrowers with a cheaper financing option.