Union Bank Education Loan Interest Rate: Calculation, EBLR, Rebates 

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Union Bank is one of the most preferable choices for education loans to study abroad. The bank provides education loans to students for UG and PG courses abroad under its dedicated schemes like Union Education Premier Abroad scheme, Union Education scheme etc. Union Bank education loan interest rate starts from 8.35% p.a depending upon several factors like the loan amount, type of loan, credit score, net monthly income etc. Let’s understand all the details about Union Bank’s education loan interest rate.

What is Union Bank Education Loan Interest Rate?

The Union Bank education loan interest rate ranges between 8% and 13% depending on the course, university, loan amount, repayment period etc. Also, the student loan interest rates Union Bank keeps revising in case you have taken the education loan on a floating rate of interest. Check the details of Union Bank Education loan interest rate below:

Name of the SchemeMaximum Loan Amount (INR)Rate of interest
Union Education Premier Abroad40 lakhs (without collateral)8.55% to 9.50%
Union Education Premier Abroad40 lakhs to 1.5 crore (with collateral)10.80%
Union Education – Study In India And AbroadNo restriction on the maximum amount of loan that can be sanctioned under the education loan scheme9.30% to 10.45%

Union Bank Education Loan Interest Rate Calculation

The interest rate for education loans is based upon the ongoing EBLR + specific spread fixed by the bank. EBLR stands for external benchmark lending rate. It refers to a system where the interest rates on loans offered by banks are linked to external benchmark rates. This is a mechanism adopted by banks or financial institutions to ensure transparency and efficiency in the transmission of monetary policy changes to the real economy. The final interest rate comes out by adding the spread with the EBLR.

For example, if the RBI’s policy rate is 7%, and the bank or lending institution applies a spread of 3%, the final interest rate on the loan would be 5%.

7% (EBLR) + 3% (Spread) = 10% (Final Interest Rate)

Union Bank Education Loan Interest Rate for Male and Female Students

The interest rate for Union Bank student loans for male students is slightly higher than the female students. The interest rate varies based on the loan amount, schemes like CGFSEL, and EBLR and the spread. Also, the education loan provided to all the students will be at a floating rate of interest. No fixed-interest rate loan is offered by the bank at present. Check the Union Education Loan interest rate below:

For Males
Loan Amount (INR)Rate of Interest
Up to 4 lakhEBLR + 3.25% = 10.45%
4 lakh to 7.5 lakhEBLR + 3% = 10.20%
Above 7.5 lakhEBLR + 2.10 = 9.30%
For Females
Loan Amount (INR)Rate of Interest
Up to 4 lakhEBLR + 2.75% = 9.95%
4 lakh to 7.5 lakhEBLR + 2.50% = 9.70%
Above 7.5 lakhEBLR + 1.60 = 8.80%

Note: *EBLR as on 11-12-2023 is 9.25%

Also Read: Applied for an education loan from Union Bank? Check all about Union Bank Education Loan Disbursement Process

Factors Affecting Education Loan Interest Rate

There are certain factors that affect the interest rates on education loans in India. The specific terms and conditions may vary among lenders, but here are some common factors that can affect education loan interest rates:

Base Rate/External Benchmark Rate

Education loan interest rates in India are often linked to a base rate or an external benchmark rate, such as the Marginal Cost of Funds Based Lending Rate (MCLR) or the Repo Rate. Changes in these benchmark rates can impact the interest rates on education loans.

Loan Amount and Tenure

The loan amount and tenure chosen by the borrower can affect the interest rate. Usually, the bank offers low interest rates on higher loan amounts. Smaller loan amounts may attract higher rates of interest. For example, if you have applied for an education loan of INR 6 lakh, Union Bank will charge a 10.20% interest rate per annum. However, you will get the loan at 9.30% if the total loan amount exceeds INR 7.5 lakhs.

Course and University

Another factor that determines the interest rate on an education loan is the type of course chosen and the university selected. Banks offer interest rate concessions to the applicants who secure admission to the top 100/200 universities in courses that have chances of generating higher income.

Collateral and Co-applicant

Providing collateral or having a co-applicant with a stable financial background can positively impact the interest rate. It reduces the risk for the lender, leading to potentially lower rates. Usually, the rate of interest on a secure loan is lower than that of an unsecured loan. This is because the bank senses more risk in an unsecured loan.

Also Read: Do you know credit score can also affect loan refinancing or balance transfer? Check this blog and understand credit scores and its impact on education loan refinancing

FAQs

What is the interest rate for Union Education Loan to study abroad?

Union Bank education loan interest rate varies between 8.5% to 11.5% based on the type of loan, loan amount and repayment period.

Is there any rebate in interest rate for female students?

All female students applying for an education loan from Union Bank will get a rebate of 0.5% in the interest rate.

How to apply for Union Bank education loan to study abroad?

You can visit the nearest branch of Union Bank to apply for an education loan. If you want to apply online for an education loan, you need to visit the Vidya Lakshmi portal Union Bank of India.

What are the factors that affect the interest rate?

The factors that affect the interest rate are fluctuations in EBLR, total loan amount, repayment period, credit score of the applicant, type of loan etc.

What is EBLR in Union Bank Education Loan interest rate?

In the context of banking and lending, EBLR (External Benchmark Lending Rate) means that the interest rates charged on loans are directly tied to an external benchmark, such as a policy rate set by the central bank. The idea is to make interest rate movements more responsive to changes in the broader financial market and economic conditions.

This was all about Union Bank’s education loan interest rate. Before applying for an education loan, it’s very important to carefully review the terms and conditions of the loan, compare interest rates, and understand the impact of different factors on the overall cost of the loan.

To know more about education loan interest rates, the loan application process, 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 Shekhar Suman

Shekhar is a versatile writer with a passion for sharing knowledge and creativity. With expertise in crafting informative blogs on study abroad and finance, Shekhar helps readers navigate the complexities of education and financial planning. Most of his writings blend the practicality of finance and the beauty of language, making a meaningful impact in both spheres. Beyond his professional pursuits, he finds solace in the writing Shayari.

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