Federal Bank Education Loan Interest Rate: Know It All Here

Federal Bank Education Loan Interest Rate

Federal Bank is an Indian private sector bank that aims to provide education loans under various schemes like Federal Special Vidya Loan and Fed Scholars. However, education loans to study abroad are offered under the Federal Special Vidya Loan category. The bank provides financial assistance of up to INR 20 lakhs to study-abroad aspirants at interest rates ranging from 10.72% to 15.32%. Interest rates are subject to change from time to time as the bank provides floating rates education loans. 

Let’s have a look at Federal Bank education loan interest rates in detail.

Federal Bank Education Loan Interest Rate

Federal Bank education loan interest rates range from 10.72% to 15.32%. The interest rate varies based on the amount of loan taken, collateral security mortgaged, creditworthiness, and many other factors. 

Federal Bank provides education loans at floating rate of interest which are subject to revisions every quarter. The interest rates are directly linked to the RBI’s repo rate. 

  • As per the official website of the Federal Bank, the effective interest rate on education loans is 12.55% (Repo-rate+ 6.05%) onwards

Recommended Read: Planning to take an education loan from Karnataka Bank? Check out all the details about Karnataka Bank education loan interest rates

Federal Bank Interest Rates Calculation 

The interest rates are calculated based on the bank’s MCLR (Marginal Cost of funds-based Lending Rate) and adding the Spread to it.

  • Education Loan Interest Rate =  MCLR + Spread

MCLR is the minimum interest rate which is computed by taking operating costs and tenor premium. Spread is the difference between the lending rate and the deposit rate of the banks. It is decided in consideration of their internal policy and RBI guidelines. 

However, the federal bank education loan interest rates are calculated as the sum of the repo rate and the spread. As a result, the effective interest rate is 12.55% as the current repo rate is 6.50% and the bank’s spread is 6.05%. 

Factors Affecting Education Loan Interest Rates

An individual taking a study-abroad education loan might wonder about differences in interest rates. This is true as education loan interest rates vary based on different factors. These include the amount of loan taken, university/ course chosen, collateral pledged, repayment period and most importantly creditworthiness of the applicant. 

Let’s find out how these factors affect interest rates. 

  • The amount of loan taken significantly decides the education loan interest rates. A higher amount of loan taken for a longer period of time means higher risk for the lender. Thus, interest rates are high. 
  • The course and country chosen also decide interest rates. Countries and courses that have higher chances of employment and better career prospects allow lenders to provide discounts on education loan interest rates. 
  • Another factor is the creditworthiness of the applicant/ co-applicant. If they have an excellent credit score, banks provide lower interest rates. This is because banks feel confident about timely payments. 
  • Collateral-free education loans have high-interest rates as pleading security with the lender reduces their risk.  
  • Education loan interest rates are also influenced by the economic conditions in the country. Political instability and inflation can lead to higher interest rates on education loans. 

Recommended Read: RBI lays important guidelines for aspiring students planning to study abroad. Read out this blog to find out more about RBI guidelines for education loans.

More about Federal Bank Education Loans

In this section, we will brief you about Federal Bank education loans to study abroad. Students can easily apply through the Vidya Lakshmi Portal from Federal Bank. Loans can availed under the Federal Special Vidya Loan Scheme. The maximum amount provided by the banks is INR 20 lakhs. 

Quantum of FinanceUp to INR 20 lakhs
Interest Rates10.72% to 15.32%; 12.55% (Present)
Repayment PeriodThe moratorium period+ 15 years
Moratorium Periodcourse period + one year
Collateral Up to INR 4 lakhs- NIL
INR 4 lakhs to 7.5 lakhs- guarantor  required
Above INR 4 lakhs- Security required 
Margin MoneyUp to INR 4 lakhs- No Margin is applicable
For Studies Abroad above Rs 4 Lakhs – 15%

FAQs

What is the Federal Bank education loan interest rate?

The Federal Bank Education Loan interest rates range from 10.72% to 15.32% p.a. Education loans are provided at floating rates which are subject to revision every quarter.

What is the current interest rate on Federal bank education loans? 

As per the official website of the Federal Bank, the effective interest rate on education loans is 12.55% (Repo-rate+ 6.05%) onwards

Can I choose between fixed and floating interest rates for a Federal Bank education loan?

Federal Bank provides education loans at floating interest rates, which are subject to revision every quarter. An applicant can’t avail of education loans at fixed interest rates from the Federal Bank.

How are Federal Bank Education loans calculated?

The federal bank education loan interest rates are calculated as the sum of the repo rate and the spread. As a result, the effective interest rate is 12.55% as the current repo rate is 6.50% and the bank’s spread is 6.05%.

What are the factors affecting education loan interest rates?

Factors that affect education loan interest rates are loan amount and tenure, choice of country and course, credit score, collateral provided, and economic conditions.

This was all about the Federal Bank’s education loan interest rates. Make sure to compare the interest rates provided by different lenders and then apply for education loans. 

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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About Shubhika Garg

Hey there! I'm Shubhika- a proud graduate in English Literature and Language from Delhi University. My journey as a content writer transitioned from online teacher into the world of words. Stepping into the domain of blogs and articles, I discovered my passion for writing growing deeper and stronger. Having said that, I have experience of writing for diverse industries in automobile, technology, ed-tech, finance and mental-health; crafting details to help you find the solution to what you are looking for. Join me as I invite you all explore and learn together.

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