Education is important, but studying in a good college can be expensive. That’s why many students in India take education loans to pay for their studies. But before taking a loan, it’s important to know Which bank has lowest interest rate on education loan in India. A low interest rate means you will pay less money in return.
Also Check: How Much Education Loan Can I Get to Study Abroad?
🔍 What is an Education Loan?
An education loan is money that a bank gives you to pay for your studies. You can use this money to pay:
- College/University fees
- Hostel or accommodation charges
- Books and laptop
- Travel expenses (for studying abroad)
You have to repay the loan with interest after completing your course. Some banks also give you a moratorium period, during which you don’t have to repay the full EMI.
🏆 Which Bank Has Lowest Interest Rate on Education Loan in India?
As of June 2025, the Bank of India (BOI) offers the lowest education loan interest rate in India.
✅ Lowest Rate Bank: Bank of India (BOI)
- Scheme: Star Vidya Education Loan
- Interest Rate: Starting from 8.25% per annum
- Loan Amount: Up to ₹20 lakhs for studies in India and abroad
- Processing Fee: Nil for most cases
- Repayment Period: Up to 15 years
- Moratorium: Course period + 1 year
📊 Example: Education Loan EMI & Total Repayment Comparison
Let’s assume:
- Loan Amount = ₹5,00,000
- Loan Tenure = 10 years (120 months)
- Type of EMI = Monthly
- Moratorium = Ignored for now (for easy calculation)
- No processing fee added
We’ll compare three banks:
| Bank Name | Interest Rate (p.a.) | Monthly EMI | Total Amount Payable | Total Interest |
| BOI | 8.25% | ₹6,145 | ₹7,37,400 | ₹2,37,400 |
| SBI | 9.55% | ₹6,523 | ₹7,82,760 | ₹2,82,760 |
| Axis Bank | 13.70% | ₹7,430 | ₹8,91,600 | ₹3,91,600 |
📌 Let’s break down Bank of India’s EMI calculation
Using the EMI formula:
Where:
- P = Principal loan = ₹5,00,000
- R = Monthly interest rate = 8.25% ÷ 12 = 0.6875% = 0.006875
- N = Number of months = 10 × 12 = 120
Now plug in the numbers:
So you pay ₹6,145 × 120 months = ₹7,37,400
Total interest paid = ₹7,37,400 – ₹5,00,000 = ₹2,37,400
💡 Conclusion
- With BOI, you pay ₹2.37 lakh interest.
- With SBI, you pay ₹2.82 lakh interest.
- With Axis Bank, you pay ₹3.91 lakh interest.
🟢 That means BOI helps you save:
- ₹45,000 compared to SBI
- ₹1,54,000 compared to Axis Bank
📊 Comparison with Other Banks
| Bank Name | Interest Rate (Approx.) | Loan Features |
| BOI | 8.25% (Lowest) | Star Vidya Loan, No fee, 15-year term |
| SBI | 8.50% – 10.65% | Up to ₹50 lakh, 15-year repayment |
| PNB | 8.55% – 12.35% | For domestic & abroad, 15 years |
| IDBI Bank | 9.30% – 11.50% | No fee for Indian colleges |
| Canara Bank | 9.75% – 10.25% | Vidya Shrestha scheme available |
| Axis Bank (Private) | 13.70% – 15.20% | Quick approval, higher charges |
| Bajaj Finance (NBFC) | 10.25% – 13% | Private lender, fast process |
🧮 Why Lower Interest Rate Matters?
Let’s compare with a simple table:
| Bank | Interest Rate | EMI for ₹5 Lakh (10 yrs) | Total Payment |
| BOI | 8.25% | ₹6,145 | ₹7.37 lakh |
| SBI | 9.55% | ₹6,523 | ₹7.82 lakh |
| Axis Bank | 13.70% | ₹7,430 | ₹8.91 lakh |
👉 As you can see, the higher the interest rate, the more you repay.
🎯 Things to Remember Before Taking an Education Loan
Here are a few things students should check:
- Interest Rate – Always compare and choose the lowest.
- Processing Fees – Some banks charge fees, some don’t.
- Loan Limit – Check how much the bank can lend.
- Moratorium Period – Helpful to delay repayment until after studies.
- Repayment Tenure – Longer tenure means smaller EMI.
- Collateral – For loans above ₹7.5 lakh, banks may ask for a guarantee or property.
- Government Subsidy Schemes – Like Padho Pardesh and CSIS for interest relief.
📄 Documents Required for Education Loan
To apply for an education loan, you usually need:
- Admission letter from the college
- Fee structure
- ID and address proof
- Income proof of parents/guardian
- Bank statements
- PAN card
💡 Tips for Students
- Maintain a good credit score if you are applying after graduation.
- Choose public sector banks (like BOI, SBI, PNB) for lower interest rates.
- Use online tools to calculate EMI.
- Keep track of special government schemes for financial help.
📌 Conclusion
If you are planning to take an education loan in India, the Bank of India (BOI) is currently offering the lowest interest rate starting at 8.25% per annum. Other banks like SBI and PNB also offer good options with flexible repayment and no processing fees.
Always compare the interest rates, read the loan terms carefully, and choose the option that suits your budget and future plan.
A little research now can save you thousands of rupees later!