Education loan: Check out best rates and tips to fetch concessions

Higher education is one of the key goals of every parent for their children. While most parents make sure to save enough for the goal, keeping education inflation in view it is not always possible. There could be a shortfall that you may have to meet by taking loan. A lot of public and private sector banks offer education loan at competitive rates. Needless to say, the interest rates will be cheaper at public banks but the process could be tedious. We have compiled a list of nine public and private sector banks offering best rates on education loan:

Public sector banks

Public banks such as Bank of Baroda, Union Bank and Central Bank are offering the lowest rates on education loan at 6.75%, 6.80% and 6.85%, respectively.

Private sector banks such as IDBI Bank, South Indian Bank and HDFC Bank are offering the lowest rates on education loan at 6.90%, 7.95% and 9.45%, respectively.

Things to keep in mind

Make a thorough comparison across banks. Enquire about additional concessions offered. For example, some banks reduce your rate if you make payments during the moratorium. “A prominent public sector bank gives a 1% concession in interest rate for the full tenure if the full interest is serviced during the moratorium (including the course duration). Some banks also give concessions to women and reserved category students,” says Adhil Shetty, CEO, BANKBAZAAR.com.

Besides, the more the prestige of an institute where the child is going, the lower could be the interest rates.

Note that interest rate is not the only criteria to make a comparison. Focus on margin money and other parameters. “When scouting for an education loan, compare them on interest rates, margin money requirement, processing fees, prepayment charges, loan terms flexibility and other charges that can have a bearing on the EMI amount. A student’s family total income will also be an important factor in determining the loan amount,” says Shetty.

Margin money is the amount that you will need to pay for the total education expense while banks take care of the rest as a loan. Explaining more about it, Shetty says that the margin money requirement differs for every bank. “Some institutes may have tie-ups with lenders, which may impact your decision as well.”

Common education loan portal

As you apply for education loan you must know about the government portal called Vidya Lakshmi managed by NSDL e-Governance. It is mandatory to login on this portal to apply for education loan, says NSDL e-Governance spokesperson.

As many as 39 public and private sector banks are registered with the portal, hosting about 130 education loan schemes. One can apply to three banks at the same time with a single application form. The NSDL e-Gov informs that 4,76,838 students registered on the portal so far this year and 1,88,389 students applied for the loan.

“The portal helps you compare various education loan offerings from different banks and also track your application. It is a great platform to apply for a loan from anywhere, anytime without physically visiting the bank and also for checking the status of your application,” says Shetty of BANKBAZAAR.com.

The NSDL e-Gov spokesperson advises Students / parents to carefully study the loan form and keep the information handy before starting to fill up the form. “They must carefully note down the access credentials for future use and duly fill in the details required in the Loan Application form. Upload the scanned copy of mark sheet and other documents as required. Choose the required bank scheme and if required apply to multiple banks. Keep monitoring the dashboard and furnish any further documents required by bank. Visit the bank branch with the original and any other documents required by the bank.”