Studying abroad is an exciting journey for students in the pursuit of finding an excellent career. However, not everybody can afford to study abroad easily. Hence, an education loan is one of the best options to make yourself a global citizen by studying abroad at a prestigious university. Public and private sector banks provide education loans to study abroad at affordable interest rates ranging from 8% to 15%.
The interest rate also depends upon the loan amount, credit history, university and the selected course. Read on to check all the major features of education loans from public and private sector banks and find out which is better.
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Difference between Private and Public Bank Education Loan
All those banks whose majority of stakes are with the government are called public sector banks. The largest public sector bank in India is the State Bank of India (SBI). The private sector banks are the banks whose majority of equity i.e. more than 50% is owned by an individual or a group of individuals. Usually, the public sector banks provide education loans at a low rate of interest in line with the guidelines of RBI.
Private sector Banks vs Public Banks
Check some major differences between private and public bank education loans:
| Factors | Public Sector Banks | Private Sector Banks |
| Loan Amount | Up to INR 1.5 crore | Need-based Finance |
| Repayment Period | Up to 15 years | 6- 8 years |
| Credit History and score | High Credit Score is required | Approval with average credit score |
| Interest Rate | Low (8% – 12%) | High (12% – 16%) |
| Schemes and Offers | Available based on the Government’s policy and schemes | Not usually applicable |
| Margin Money | Higher | Low or Zero Margin |
| Collateral | Required above INR 7.5 lakhs | Higher amount without collateral (up to INR 1 crore) |
| Processing Time | Up to 72 hours after the loan sanction | 24-48 hours |
Education Loan from Top Public Banks
There are a lot of public sector banks that provide education loans at cheaper interest rates to students studying abroad. Some of the major banks providing education loans to study abroad are the State Bank of India (SBI), Union Bank, Indian Bank, etc. All these banks provide loans as per the guidelines of RBI and IBA (Indian Banks’ Association) model education loan scheme. Check the features of education loans from public sector banks below.
SBI Education Loan to Study Abroad
SBI is the largest government bank in India and is one of the most preferred choices for education loans to study abroad. The bank offers education loans for overseas studies under the SBI Global Ed-vantage education loan scheme. Other SBI education loan schemes are also offered but the maximum amount is less. Students can get loans up to INR 1.5 crore with repayment periods of up to 15 years under the global ed-vantage scheme. Check the major features of the loan below:
- SBI Global Ed-vantage loan can be approved prior to visa approval
- The processing fee will be only INR 10,000 for one application
- The bank will charge simple interest during the moratorium period
- The applicable interest rate will be 11.15% floating. Female students can claim a rebate of 0.5% in the interest rate
Also Read: Checking on credit reports? Check out all about RBI Guidelines on Credit Reports and make informed decisions.
Union Bank Education Loan to Study Abroad
Union Bank is one of the renowned public sector banks in India. The bank provides education loans under the Union Education Premier Abroad scheme. The bank provides the loan as per the IBA Model Education Loan scheme. You can get an education loan from INR 7.5 lakh to INR 1.5 crore from Union Bank. Union Bank education loan interest rate is less and easily affordable. Check the major features of the loan below:
- No margin money is required for loan amounts up to INR 40 lakh
- In the case of a secured loan, if a minimum of 100% collateral security is offered then the margin shall be NIL
- An amount of INR 10,000/- will be deducted from the loan amount for processing charges.
- In all other cases, 15% margin money and a minimum 50% collateral security of the net loan amount shall be obtained from the borrower.
Bank of Baroda Education Loan to Study Abroad
Bank of Baroda is a major market player in India when it comes to education loans for abroad studies. The bank offers both secured and unsecured education loans to students under the Baroda Scholar Education Loan scheme. Check some of the important features of Baroda Scholar loan to study abroad:
- Bank of Baroda will charge only a 1% Processing Charge with an upper limit of not more than INR 10000
- The fees will be recovered upfront for loan amounts above INR 7.50 Lakh and it will be refunded on availment of the loan (first disbursement) for premium institutions
- Students will get a free debit card for international use along with the loan. You can also apply for Bank of Baroda Forex cards.
Also Read: Planning to study abroad? Check out all about the different types of HDFC Bank Forex Cards for international students
Education Loan from a Private Bank
There are a lot of private banks in India that have dedicated schemes for study-abroad loans at affordable rates. Also, private banks provide unsecured loans of higher amounts and processing time is usually very fast and easy. Most of the process can be executed through the online mode of the bank. Some of the major private banks in India offering education loans are Yes Bank, ICICI Bank, Axis Bank, HSBC Bank etc. Check all the details on top private banks offering education loans to study abroad below.
HDFC Bank Education Loan
HDFC is one of the oldest private banks in India and has a good track record in financial services. One can apply for an education loan from HDFC with or without collateral. The bank offers up to INR 50 lakh in education loans without collateral. The interest rate for HDFC Bank education loans ranges between 11% to 15% (subject to vary). The bank also offers preferential rates for top-ranked colleges and universities. HDFC Bank education loan disbursement process is also very easy and quick. Check more features below:
- HDFC offers pocket-friendly EMI offers for loan repayment
- There are a wide range of collateral accepted like residential Property, HDFC Bank fixed deposit, select debt mutual funds, insurance policies and NSC / KVP
- You can also avail education loan insurance from HDFC Life. Credit Protect is the scheme exclusively for insurance of your education loan
- Students can also apply for HDFC Bank Personal Loan for Education if they want less amount of loan without collateral.
Yes Bank Education Loan
Yes Bank is another major private sector bank operating in India. It offers easy education loans to study abroad at 12% to 13% interest rate (as of March 11, 2024). This interest is slightly lower than other private sector banks. You can get an INR 1.5 crore education loan from the bank under Yes Bank education loan to study abroad and INR 40 lakh personal loan for education or Yes Bank education loan without collateral as well. Check the major features below:
- The processing fee for an education loan from Yes Bank will be 2% only
- The repayment period is up to 15 years for study-abroad loans
- The loan amount covers all major expenses like tuition fees, accommodation costs, laboratory fees, laptops etc.
ICICI Bank Education Loan
ICICI Bank is a renowned private-sector bank in India and one of the most preferred choices for education loans to study abroad. You can apply for unsecured loans of up to INR 1 crore at affordable interest rates. The minimum age to apply for an education loan from ICICI Bank is 16 years and the maximum age limit is 35 years. ICICI Bank Education Loan disbursement process is very fast and is initiated within 24-48 hours after approval. Check the major features of ICICI education loan to study abroad below:
- The maximum amount for a study abroad education loan from ICICI is INR 2 crore
- For the collateral, you can mortgage property i.e. a house or a flat, fixed deposit, and any existing ICICI Bank home loan for cross-collateral
- The bank will sanction education loan even before the confirmation of admission to a university abroad subject to terms and conditions and the required eligibility criteria
FAQs
There are a lot of banks that provide education loans at low interest rates and better repayment terms. You can apply for an education loan to study abroad from SBI, Bank of Baroda, Union Bank, Punjab National Bank etc, ICICI Bank, Yes Bank etc.
Both the banks have their own merits and limitations. Always compare the terms and conditions of the different banks and then finalise the lender.
Usually, the government banks provide education loans with low rates of interest as theft are directly managed by the Reserve Bank of India and are bound to follow the guidelines.
Public sector banks are the banks whose majority of the equity (more than 50%) is owned by the government whereas the private sector is owned by an individual or a group of individuals.
It depends on the bank and the type of loan and interest rate offered by the bank. Usually, private banks sanction large amounts of loans without collateral so the interest rate is slightly higher.
This was all about the difference between education loans from public and private banks in India. Always compare the terms and conditions and the interest rate on loans of different banks before finalising the one.
To know more about education loans, the best bank accounts for students, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience.
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