The easiest way to obtain higher education in India or overseas without disrupting your savings is by availing education loan. An education loan is a loan taken to pay tuition costs, hostel fees, and other associated expenditures for following a particular educational course in an organization. Banks provide student loans from certain institutions for undertaking pre-specified courses in India and overseas and also publish a list of approved courses and institutions for which they offer education loans to the parents or guardians. Currently, in India Indian Overseas Bank (IOB)'s most costly loan offer on the top ten cheapest education loans ranking comes at an interest rate of 7.25 percent, which is far lower than the 9.55 percent of HDFC Bank.
Public sector banks such as Union Bank of India currently offer the lowest interest rate in the education loan starting from 6.8 percent for a seven-year for a loan amount of Rs 20 lakh respectively. The Central Bank of India, Bank of India and Bank of Baroda offer a mere five basis points higher i.e. 6.85 percent interest rate than what the Union Bank bid on education loan in the table below. After that in the table followed by India's largest commercial giants i.e. State Bank of India (SBI) and Punjab National Bank (PNB) bid 6.9% for seven-year tenures of Rs 20-lakh on education loans respectively.
|Sr No.||Banks||ROI per annum in %|
|2||Central Bank of India||6.85|
|3||Bank of India||6.85|
|4||Bank of Baroda||6.85|
|5||Punjab National Bank||6.90|
|6||State Bank of India||6.90|
|9||Bank of Maharashtra||7.20|
|10||Indian Overseas Bank||7.25|
For those repaying education loans, tax deductions under section 80E are applicable. Deductions are valid for eight years or before the interest is entirely reimbursed whichever comes first. On the basis of interest rates, banks are classified in increasing order, i.e. banks with the lowest interest rate on education loans (loan amount up to Rs 20 lakh) are classified at the top and the highest at the edge. The table considers the lowest rates provided by banks on loans up to Rs 20 lakh for a tenure of seven years. For the sake of EMI calculation, processing and other charges are considered to be zero respectively.