Education Loan Interest Rates

Q: What is a study abroad loan interest rate?

A study abroad loan interest rate is the percentage charged on the borrowed amount for funding your overseas education.

The journey to study abroad comes with many challenges, and securing funds remains at the forefront of them. You can fund your education abroad in several ways — scholarships, financial aid, grants, and education loans for study abroad.

An education loan for study abroad is your best bet, as it typically covers all your study expenses. However, the interest rate matters most when securing a study abroad loan. A higher interest rate means you pay more over time, increasing the overall repayment burden, while a lower interest rate reduces the total cost of the loan.

Education Loan Interest Rates Comparison

Interest rate is the amount charged on your loan above the principal — the money you pay monthly in addition to repaying what you borrowed. Rates vary by lender type, collateral offered, institution ranking, and borrower profile. Here is what education loan interest rates for abroad study look like across lenders accessible to Indian students:

Lender	Interest Rate	Loan Amount	Notes
State Bank of India (SBI)	9.65% to 10.15%	Min INR 20 lakhs / Max INR 1.5 Crore	See full SBI guide
Bank of Baroda (BOB)	9.20% to 10.65%	INR 1.5 Crore (premier) / INR 60 lakhs (non-premier)	9.20% applies to Category A premier institutions with full collateral. Higher rates apply to non-premier institutions without collateral. See full BOB Baroda Scholar rates
Union Bank of India (UBI)	9.00% to 11.70%	Min INR 7.50 lakhs / Max INR 1.5 Crore	9.00% applies to Category A premier institutions with 100% collateral. Female students receive an additional 0.50% concession. See full Union Bank rates
Bank of India	Floating: 10.85% to 11.05% (RBLR + 1.70%) / Fixed: 12.20% to 12.40%	Up to INR 1.5 Crore	Both fixed and floating rate options available.
ICICI Bank	9.50% to 14.25%	Up to INR 3 Crore	Collateral free up to INR 1 Crore. See full ICICI guide
HDFC Credila (NBFC)	9%	Full cost with collateral / INR 45 lakhs unsecured	Specialised NBFC subsidiary of HDFC, distinct from HDFC Bank branch products. Apply via hdfccredila.com. See full HDFC Credila guide
Axis Bank	13.70% to 15.20%	From INR 50,000	Among the highest rates in this comparison. Verify current rate at axisbank.com before applying.
Bank of Maharashtra	Verify directly	Up to INR 20 lakhs	Overseas education loan rate may differ from domestic rate. Verify current overseas rate at bankofmaharashtra.in or your nearest branch before applying.

International Lenders Accessible to Indian Students

The lenders below are international NBFCs that Indian students can apply to directly, without a US cosigner or permanent residency status. They are a strong option for students who do not qualify for Indian bank loans, lack collateral, or are heading to universities not covered by Indian International Lenders Accessible to Indian Students

Lender	Interest Rate	Loan Amount	Cosigner Required	Coverage
Prodigy Finance	From 9.66% APR	Up to USD 220,000	No	1,500+ universities globally. See full Prodigy Finance guide
MPOWER Financing	9.99 APR	Varies	No	Select universities in the US and Canada
Leap Finance	From 8.45%	Varies	No	India-specific lender. Selected destination countries covered

US Domestic Lenders:

US lenders require a US citizen or permanent resident (green card) as a co-applicant for US cosigner student loan. They are listed here for reference only.

Earnest

Interest Rate:

Undergrad *

Fixed Rates (with Auto Pay discount): 2.79% – 16.49% APR
Variable Rates (with Auto Pay discount): 4.99% – 16.85% APR

Graduate

Fixed Rates (with Auto Pay discount): 2.79% – 14.30% APR
Variable Rates (with Auto Pay discount): 4.99% – 15.97% APR

Loan Amount: Full Cost of attendance covered

Eligibility: No-collateral with US-Cosigner

Sallie Mae

Interest Rate: From 3.45%
Loan Amount: Upto USD $175k
Eligibility: Flexible in-school repayment options

How is the Interest Rate Calculated on Education Loans?

Education loan interest is generally calculated daily and added monthly.

Step 1: Calculate Daily Interest

Divide the annual interest rate by 365.

Example:

Annual interest rate = 10%
Loan amount = ₹50,000

Daily interest rate:

0.10 ÷ 365 = 0.000274

Daily interest:

₹50,000 × 0.000274 = ₹13.70

Step 2: Calculate Monthly Interest

₹13.70 × 30 = ₹411 per month

Annual interest:

₹411 × 12 = ₹4,932

Most Indian education loans use floating interest rates linked to:

RBI Repo Rate
MCLR benchmark

This means your EMI can increase if interest rates rise.

Fixed or Floating Education Loan Interest Rat

Floating education loan interest rates are usually lower initially, but they fluctuate with RBI policy changes.

Fixed rates remain stable throughout the loan tenure.

Type	Advantages	Disadvantages
Floating Rate	Lower starting rates	EMI can increase
Fixed Rate	Predictable repayment	Usually higher initially

Students who want stable monthly budgeting often prefer fixed rates, while borrowers seeking lower initial EMIs choose floating rates.

How to Reduce Your Education Loan Interest Rate for Abroad Study

You can reduce your foreign education loan interest rate using several strategies:

Improve Your Cosigner Profile: Banks heavily evaluate the financial strength of the cosigner.

Choose Premier Universities: Many banks provide discounted rates for top-ranked institutions.

Offer Collateral: Secured loans usually receive lower interest rates than unsecured loans.

Compare Multiple Lenders: Interest rates vary significantly between public banks, private banks, and NBFCs.

Shorten Your Loan Tenure: Shorter repayment periods reduce total interest paid.

Collateral vs Non-Collateral Abroad Education Loans

Loan Type	Interest Rate	Approval Speed	Risk
Collateral Loan	Lower	Slower	Property pledged
Non-Collateral Loan	Higher	Faster	No asset risk

Students without property assets often prefer international lenders such as:

These lenders typically do not require collateral or a cosigner.

Key Factors Influencing Education Loan Interest Rates

Several factors influence education loan interest rates for study abroad. Here is how each one affects what you will pay:

Credit Score: A higher credit score leads to lower interest rates. A low score leads to higher rates or outright rejection. For first-time borrowers, the cosigner or coborrower’s credit profile is assessed in place of the applicant’s.

Type of Interest Rate (Fixed or Variable) Fixed rates remain constant throughout the loan tenure, making monthly payment planning straightforward. Variable or floating rates fluctuate with market conditions — they are currently lower than fixed rates but will change with every RBI Monetary Policy Committee decision.

Benchmark Rate (MCLR or Repo Rate) Public bank rates are directly linked to the RBI Repo Rate or the bank’s MCLR. When the RBI raises rates, your EMI increases. When rates fall, your EMI reduces. Private NBFCs such as HDFC Credila set their own internal benchmark rates independently of the RBI cycle.

Cosigner or Coborrower A cosigner with a strong credit and income profile can lead to lower interest rates and higher approval likelihood, particularly for private bank and NBFC loans.

Loan Amount and Repayment Tenure Larger loans or longer repayment tenures may attract higher rates as the lender’s risk increases. Shorter tenures typically mean higher monthly payments but lower total interest paid.

University Category Some banks — notably Bank of Baroda and Union Bank of India — offer lower rates for students admitted to premier institutions. An admission to a top-ranked QS university can directly lower your interest rate by 0.50% to 1.00%.

Frequently Asked Questions

Which bank offers the lowest education loan interest rate for study abroad in India?

HDFC Credila offers rates from 9%, the lowest among Indian NBFCs. International lenders like Prodigy Finance offer rates from 9.66% % APR in USD, and US lenders are giving as low as 2.84%.

What is a study abroad loan interest rate?

An Education Loan interest rate is the percentage of the loan charged on the amount for borrowing, which is ultimately added to your monthly payments.

How is the education loan interest rate calculated?

Education loan interest is calculated by dividing the annual rate by 365 to arrive at a daily rate, then multiplying that by the loan principal.

Can my Education Loan interest rate change?

Yes. If you have a floating rate loan, the default structure for most Indian public sector bank loans — your rate will change whenever the bank’s MCLR or the RBI Repo Rate is revised.

Is a floating or fixed rate better for a study abroad loan?

Floating rates are currently lower but will change with RBI decisions, which occur four to six times a year. Fixed rates offer EMI certainty, which helps with long-term budgeting.

How do I get an education loan for abroad studies without collateral?

Several lenders offer collateral-free options. HDFC Credila offers up to INR 45 lakhs without collateral. International NBFCs such as Prodigy Finance, MPOWER Financing, and Leap Finance require neither collateral nor a cosigner, making them well-suited for students who lack property assets or a creditworthy guarantor in India.