Pursuing higher education, whether in India or abroad, can open the door to great career opportunities. However, the rising cost of tuition fees, accommodation, and other expenses often makes it difficult for students to fund their studies without financial help. This is where education loans play an important role. Before you apply for one, it’s essential to know your education loan interest rate and EMI so that you can plan your finances smartly and avoid any future burden.
An education loan is financial assistance offered by banks and Non-Banking Financial Companies (NBFCs) to students who wish to continue their studies. It covers tuition fees, travel expenses, hostel charges, examination fees, and even study materials.
Education loans are available for both Indian and international universities, and most lenders offer flexible repayment options, low-interest rates, and moratorium periods that allow you to start repaying only after your studies are completed.
Understanding your loan interest rate and EMI (Equated Monthly Installment) before applying helps you prepare for future repayments and manage your budget efficiently.
Here’s why this step is important:
Avoid Financial Stress: Knowing your EMI amount in advance helps you plan your post-study expenses and avoid unnecessary financial stress.
Compare Loan Offers: It allows you to compare different banks and NBFCs to find the best education loan interest rates available.
Plan Repayments Easily: You can choose a comfortable repayment tenure based on your expected income after graduation.
Transparency: You will know the exact total interest payable over the loan tenure, helping you make an informed decision.
The interest rate on an education loan depends on several factors, such as the borrower’s academic record, course type, university, and co-applicant’s income. The interest rate is usually floating, meaning it can change based on the RBI’s repo rate and market conditions.
The formula for calculating the EMI is:
EMI = [P x R x (1+R)^N] / [(1+R)^N – 1]
Where:
P = Principal loan amount
R = Rate of interest (per month)
N = Tenure in months
Instead of calculating manually, you can use a student loan EMI calculator available on bank websites to get accurate results instantly.
Let’s say you take an education loan of ₹10 lakhs at an interest rate of 10% per annum for a tenure of 10 years.
Using an online education loan EMI calculator, your monthly EMI will be around ₹13,215. The total amount payable will be approximately ₹15.85 lakhs, which includes ₹5.85 lakhs as interest.
This example clearly shows why it’s important to calculate EMI before applying — so you can plan repayments efficiently and avoid surprises later.
Education loan interest rates are not the same for every applicant. They depend on a few key factors:
Loans for premier institutions like IITs, IIMs, AIIMS, or globally recognized universities generally come with lower interest rates because they are considered less risky.
If you offer collateral (property, fixed deposit, or LIC policy), your loan becomes secured, and you are likely to get a lower interest rate.
A co-applicant with a stable income and good credit score helps you get better loan terms and interest rates.
Many banks provide a 0.5% to 1% concession in interest rates for female students under special schemes.
Schemes like Vidya Lakshmi Portal, Padho Pardesh, and Dr. Ambedkar Scheme provide subsidies and interest benefits to deserving students.
Bank/NBFC | Interest Rate (p.a.) | Loan Amount | Repayment Tenure |
|---|---|---|---|
State Bank of India (SBI) | 8.65% – 11.15% | Up to ₹1.5 Crore | 15 years |
HDFC Bank | 9.55% – 12.75% | Up to ₹45 Lakhs | 15 years |
Axis Bank | 9.99% – 13.70% | Up to ₹75 Lakhs | 15 years |
ICICI Bank | 10.25% – 12.50% | Up to ₹1 Crore | 10 years |
Bank of Baroda | 8.55% – 10.75% | Up to ₹1.25 Crore | 15 years |
Union Bank of India | 8.40% – 10.90% | Up to ₹1.5 Crore | 15 years |
Before applying, always check the latest education loan interest rate from the bank’s website or visit a financial consultant for personalized advice.
Using an education loan EMI calculator is the easiest way to plan your loan. Follow these simple steps:
Enter the Loan Amount – The total amount you wish to borrow.
Enter the Interest Rate – Use the bank’s latest education loan rate.
Enter Loan Tenure – Usually between 5 to 15 years.
Click Calculate – Instantly get your monthly EMI, total interest, and total payable amount.
With this tool, you can compare multiple banks and find out which offers the most affordable repayment option.
Here are a few smart tips to help you secure the lowest education loan interest rate:
Maintain a good credit score – Above 750 increases your loan approval chances.
Apply with a co-applicant – Preferably a parent or guardian with a stable income.
Opt for reputed universities – Lenders offer better rates for recognized institutions.
Choose a shorter tenure – Shorter repayment periods can help reduce total interest.
Compare multiple lenders – Use online calculators to compare and pick the best deal.
Look for government schemes – Many schemes provide partial or full interest subsidies.
Understanding your EMI and interest rate gives you complete financial control. Here’s how it benefits you:
Better budgeting – You can plan monthly expenses efficiently.
No surprises – You know exactly how much you’ll pay each month.
Informed decisions – Helps you compare banks and avoid high-interest loans.
Financial discipline – Encourages timely repayments and avoids defaults.
This simple step can save you a lot of stress and money in the long run.
Before taking a loan for your higher studies, always make sure to know your education loan interest and EMI before applying. It helps you plan your finances, compare different lenders, and choose the best loan that fits your budget.
With the right planning and tools like an education loan EMI calculator, you can focus on your studies without worrying about financial stress. Remember, an informed borrower is a smart borrower—so calculate, compare, and choose wisely!