Education Loan Interest Rates This Year: Major Banks Compared

Education Loan Interest Rates This Year: Major Banks Compared

Education loan interest rates moved up in October this year, and a lot of the figures still circulating online were written before that. A family comparing lenders today needs education loan interest rates that match the current rate cards, plus an understanding of why two students at the same bank can be offered different rates. Here is what the main lenders publish, how the rates are built, what government schemes can lower, and how a small difference in the rate changes the cost of a loan.

What decides education loan interest rates this year?

Most bank education loans in India are floating, which means the rate rises and falls with a benchmark set by the lender. The benchmark follows the Reserve Bank of India (RBI) repo rate, the rate at which the central bank lends to banks. On 7 October 2026 the RBI raised the repo rate by 25 basis points, a basis point being one hundredth of a percentage point, to 5.50 percent, according to its policy announcement.

Banks passed the increase on within about a week. State Bank of India (SBI) lists its external benchmark rate at 8.15 percent, made up of the repo rate of 5.50 percent plus a spread of 2.65 percent. Bank of Baroda's repo-linked lending rate was set at 8.15 percent from 8 October 2026, and Canara Bank's repo-linked rate at 8.25 percent from 9 October 2026. On top of the benchmark, each bank adds its own margin, which depends on the scheme, the institution, the amount and whether collateral is offered.

Education loan interest rates are therefore a sum of two parts. The benchmark is common knowledge and moves with the RBI. The margin is individual, and it is where your profile, your college and your security make the difference.

How do the main lenders compare?

The table below shows the starting or published education loan interest rates found on lender pages in late October this year. They are the lowest points on a range, not what every borrower gets, and they change without notice.

Several things stand out. Education loan interest rates for the same type of student differ by about one to two percentage points across lenders. Secured loans are cheaper than unsecured ones at the same lender. And select institutions, such as top-ranked colleges, get much lower rates than the general category.

What do SBI, Canara Bank and Bank of Baroda charge?

Public sector banks usually quote lower education loan interest rates than private lenders because their funds cost less. SBI's rate card, effective 15 October 2026, links every education loan to the external benchmark, and all of its rates float for the whole life of the loan.

Beyond the table, SBI lists a concessional 7.00 percent for students admitted to a named list of premier institutes, including all Indian Institutes of Technology and Indian Institutes of Management, valid until 31 December this year. It also gives girl students a 0.50 percent concession on its Student Loan and on general-category Global Ed-Vantage loans.

One caution applies to SBI and to every bank. A headline figure on a home page tile can differ from the rate card for education loans, and in SBI's case the tile shows a number that matches no row on the card. Always go by the scheme-wise table and ask the branch which row applies to you.

Canara Bank's retail lending rate page shows its Vidya Turant loan at 9.00 percent with a co-borrower and 9.60 percent without one, and 8.35 percent for a short list of premium institutes. Its master's-abroad loans range from 10.60 to 11.10 percent depending on how much of the loan is covered by collateral.

The same page notes a 0.50 percent concession for girl students and another 0.50 percent for servicing interest promptly during the course period. These small concessions are easy to miss, yet over a long loan they lower the total cost by more than they seem to.

The pattern in public bank education loan interest rates is a floating rate built on a benchmark, with lower rates for approved institutions and higher rates where the bank has no security or no co-borrower to rely on.

Bank of Baroda's retail loan rates page states a benchmark of 8.15 percent from 8 October 2026, and education loans are priced as a spread over it. The spread varies by scheme and by institution type, so ask the branch for the exact figure for your course.

What do private banks and NBFCs charge?

Private lenders publish fewer fixed education loan interest rates and more starting points, so read each figure as the lowest rung of a ladder.

HDFC Bank's education loan page says rates for Indian education start from 10.50 percent, with a nil processing fee up to ₹7.5 lakh and 1 percent above that. It also lists nil prepayment charges. Its loans go up to ₹1.5 crore, with up to ₹50 lakh available without collateral at select institutes.

ICICI Bank publishes indicative rates and describes them as subject to change. For Indian courses at select engineering and management institutes it shows secured loans from 8.50 percent and unsecured from 9.25 percent. For other institutes, the figures are 9.00 and 9.75 percent, and for medical courses 8.75 and 9.50 percent. For study abroad, the figures are 9.00 percent secured and 10.25 percent unsecured, with limits of up to ₹3 crore.

Non-banking financial companies (NBFCs), which are lenders regulated by the RBI but without a banking licence, often price unsecured loans a little higher than public banks. Credila's rates and charges page shows a floating rate from 9.95 percent for secured loans and a processing fee of 1.25 percent plus taxes, and it reserves the right to change rates at any time. It does not publish an unsecured rate, so you must get a written offer.

How do government schemes lower education loan interest rates?

The central government's PM-Vidyalaxmi scheme works in two ways. It gives banks a 75 percent credit guarantee on loans up to ₹7.5 lakh, and it offers an interest subvention, meaning the government pays part of the interest for eligible families. The scheme's explainer from the Press Information Bureau says families with income up to ₹8 lakh get a 3 percent interest subvention on loans up to ₹10 lakh, and families with income up to ₹4.5 lakh get full interest support.

The scheme also caps the rate, which makes it the clearest way to bring education loan interest rates down. Loans under it are priced at no more than the bank's benchmark plus 0.5 percent. On SBI's rate card, PM-Vidyalaxmi loans carry 7.15, 7.45 or 8.65 percent depending on the institution category, which is well below its general education loan interest rates.

These benefits apply only to students at designated institutions in India, and the interest support is limited to one lakh fresh students a year. A student at an unlisted college or one studying abroad will not qualify, which is why the general rates in the table above matter for most borrowers.

How much do education loan interest rates change your monthly payment?

Education loan interest rates look small on a monthly basis and large over the life of the loan. The table shows a ₹20 lakh loan repaid in equal monthly instalments (EMIs) over 10 years, calculated on a fixed rate with the full amount paid out on day one and no moratorium interest. These are illustrations, not quotes.

Moving between education loan interest rates of 9.00 and 11.00 percent adds about ₹2,215 to the monthly instalment and about ₹2.66 lakh to the total interest. That is the cost of a two-point gap, and it is why spending a week to compare offers pays for itself.

Because education loan interest rates float, a future repo rate hike would raise these numbers, and a cut would lower them. Ask whether your lender changes the EMI or the tenure when the rate moves.

How should you compare offers beyond the headline rate?

The lowest of the advertised education loan interest rates is rarely the one you receive, so compare on terms that decide the real cost.

Is the rate floating or fixed?

SBI states that its education loan rates float for the whole loan period. Check whether any fixed-rate option exists and how often the rate can reset.

What are the fees?

Processing fees range from nothing to 1.25 percent or more. SBI charges nothing on Student Loans up to ₹10 lakh and 0.50 percent on Global Ed-Vantage loans, with a minimum of ₹10,000 and a maximum of ₹50,000, plus goods and services tax (GST). Add these to the interest to find the total cost.

How is interest treated during the moratorium?

The moratorium is the repayment holiday covering the course and a period afterwards. Interest usually builds during it, so ask whether simple or compound interest applies and whether paying it early earns a concession, as Canara Bank offers.

Is there a concession you qualify for?

Girl students, students at premier institutes and families eligible for PM-Vidyalaxmi can lower the rate. Ask the lender to show the concession on the sanction letter.

Questions families ask

Are education loan interest rates the same for everyone at a bank?

No. The rate depends on the scheme, the institution category, the loan amount, the collateral and sometimes the co-borrower. Two students at the same bank can receive different offers.

Will education loan interest rates fall again?

No one can say. Floating rates follow the repo rate, which the RBI reviews at its policy meetings. If the repo rate falls, floating-rate loans should become cheaper over time.

Can I switch to a cheaper lender later?

Often yes. SBI lists takeover rates for loans above ₹10 lakh. Compare the new rate against the fees and any charges at the old lender before moving.

Is the interest on an education loan tax deductible?

Interest can be deducted under Section 129 of the Income-tax Act, 2025, which replaced Section 80E, for up to eight consecutive years. Whether you can use it depends on your tax regime.

FundMyCampus is an education loan advisory platform founded by an alumnus of the Indian Institute of Management Bangalore. It is not a bank, and it says it does not charge students any fee. Its free EMI (equated monthly instalment) calculator, eligibility checker and loan comparison tool, along with 12 or more banking partners, let families set several offers side by side.

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