Pursuing MBBS in India or abroad is a big dream for many students, but the rising cost of medical education often makes it difficult to manage without financial support. This is where education loans play an important role. Education loans are incredibly helpful because they can help pay tuition fees, living expenses, books, and other expenses associated with studies.
Two of the leading public sector banks in India, Bank of Baroda and Union Bank of India also offer education loan schemes to students who wish to pursue MBBS. Each of these banks has thousands of satisfied customers every year, but their loans can vary in terms of features, interest rates, margin money, and repayment options, among other things.
Choosing a bank is an essential process because even a marginal difference in interest rates/terms of repayment can impact your overall borrowing burden during repayment. In this blog, we will compare and contrast Bank of Baroda vs Union Bank education loans for MBBS studies, which should help you to decide which is the better fit for you.
What is MBBS Education Loan?
An MBBS education loan is a type of student loan that a student can avail to help with a medical aspirant’s journey to study for an MBBS degree both in India or abroad. A medical education involves tuition fees and other costs such as hostel fees, books, equipment, exams, and travel costs (overseas studies). Therefore, the loans are designed to cover the full range of costs involved in medical education.
Both banks and NBFCs are willing to provide an MBBS education loan, with repayment terms varying from institution to institution, with an option for a moratorium period before students begin repaying the loan amounts (which may be funded plus a moratorium period as agreed). Loan amounts may range from a few lakhs to over a crore depending on the proposed study (in India) or actual study expenses (abroad).
The loan can be a secured education loan or unsecured education loan depending on the loan amount. For loans with a lower value a secured loan may not be required, where as a higher value loan almost certainly will require collateral security, property or fixed deposit, or even a guarantor.
Overview of Bank of Baroda MBBS Education Loan – Baroda Medi Elite
Bank of Baroda introduces an exclusive education loan product called Baroda Medi Elite only for the brilliant medical students planning to study MBBS and similar courses in India. It assists students in meeting nearly every significant expenditure associated with medical education, in addition to offering exceptional assistance to help lessen the financial burden on students and their families.
Key Benefits
- Collateral-free loan of up to Rs.40 lakhs*
- Attractive interest rates starting from 7.45% per annum*
- Zero processing fees
- A prolonged repayment term of up to 15 years after the moratorium (course term + 1 year)
- Tax benefits as per Section 80E in the Income Tax Act
Eligibility
- Only Indian citizens are eligible.
- Students must possess a valid NEET rank, with a cutoff for UG courses of up to 65,000.
Loan Amount & Coverage
- Minimum loan amount: Rs.2 Lakhs
- Maximum loan amount: Rs.40 lakhs
- Cover tuition fees, hostel fees, examination/library/lab fees, books, instruments, uniforms, laptops, insurance premiums, and study tours/project expenses.
- Disbursement will be conducted as necessary to the institute, hostel, or vendor.
Interest Rates
- Institutions under PMVLS & BOB Premier Institutions:
- Category AA: 7.45% (BRLLR – 0.70%)
- Category A: 7.65% (BRLLR – 0.50%)
- All other institutions: 8.15% (BRLLR)
- Interest is charged at monthly rests during the moratorium, and servicing of interest is optional.
Margin Money
- Up to Rs.4 lakh: Nil
- Above Rs.4 lakh to Rs.7.5 lakh: 5%
- Above Rs.7.5 lakh: Nil
- Scholarships can be adjusted against the margin money.
Repayment Terms
- Repayment begins after the moratorium (course duration + 1 year).
- For loans up to Rs.7.5 lakh up to 10 years
- For loans above Rs.7.5 lakh up to 15 years
Security & Co-Obligation
- No collateral security required.
- Co-obligation of parents/guardians is mandatory, along with the assignment of the student’s future income.
Additional Features
- Nil processing charges (only PMVLP charges of Rs.200 apply).
- Insurance is mandatory, with assignment of a Group Credit Life Insurance Policy equal to the loan amount.
- Loan can be availed from a branch near the institute or the parent’s residence.
Overview of Union Bank MBBS Education Loan – Union Medicos
Union Bank of India’s Union Medicos Scheme is aimed at students studying MBBS, MD, and MS in India’s best medical colleges. The scheme, which offers significant loan levels, affordable rates, and flexible repayment options, is a top choice for future doctors. Key features:
Eligibility
- Students from India who secured admission to best medical colleges through entrance exams, included in the scheme.
- Courses covered are MBBS, MD, and MS.
Purpose of Loan
- Covers tuition fees, hostel/mess charges, books, caution deposits, admission acceptance fee, medical equipment, laptops/desktops (up to Rs.1 lakh), living expenses, and insurance premium.
Loan Amount (Quantum of Loan)
- Maximum loan: Up to Rs.2 crore.
Margin Requirement
- Up to Rs.4 lakh – Nil
- Rs.4–7.5 lakh – 5% (may be Nil if eligible under Credit Guarantee)
- Above Rs.7.5 lakh – 10%
- (Scholarships are treated as margin money and must be deposited in the loan account.)
Interest Rates
- Up to Rs.40 lakh (no collateral): EBLR + 1.00%
- Up to Rs.2 crore (50%–<100% collateral): EBLR + 0.75%
- With 100% collateral: EBLR
Repayment & Moratorium
- Repayment period: Up to 15 years (180 months) after moratorium.
- Moratorium: Course period + 1 year.
Security / Collateral
- Up to Rs.40 lakh: No collateral required.
- Above Rs.40 lakh: Tangible collateral security covering at least 50% of the loan + accrued interest.
- Interest concession of 0.50% if collateral covers 100% or more of the loan amount.
Co-Applicant/Guarantor
- Either parent or spouse must be co-applicant.
- Co-applicant’s income not considered, but minimum CIBIL score: 650 or -1.
Insurance
- Mandatory term life insurance in the name of the student.
- Policy should cover the full loan amount, course duration, moratorium, and repayment period.
- Premium can be financed under the loan.
Other Conditions
- NRI students not eligible.
- Loan can be availed even for subsequent years if not taken earlier.
Comparison: Bank of Baroda vs. Union Bank for MBBS Education Loan
When comparing the Baroda Medi Elite scheme from Bank of Baroda against Union Bank’s Union Medicos scheme for an MBBS, a student and parents would look at several areas including eligibility, rate of interest, margin, security, repayment, and what the expenses cover. Below is an overview of a comparison:
Eligibility & Scope
- Baroda Medi Elite scheme is for medical students in India who have obtained a NEET rank. (example: up to 65,000 for UG). Qualified students can apply for MBBS course in top institutes.
- Union Bank’s Union Medicos scheme also targets medical students (MBBS, MD, MS) in premier institutes, with admission through entrance exams as a basic eligibility.
Loan Amount / Quantum
- Baroda Medi Elite allows a maximum loan of Rs.40 lakhs.
- Union Medicos can go much higher: up to Rs.200 lakhs (Rs.2 crores) under certain conditions.
| Feature | Bank of Baroda (Medi Elite) | Union Bank (Union Medicos) |
|---|---|---|
| Maximum Loan / Quantum | Rs.40 lakhs | Rs.200 lakhs (Rs.2 crores) |
| Margin Money | Up to Rs.4L: Nil Rs.4 – 7.5L: 5% Above Rs.7.5L: Nil | Up to Rs.4L: Nil Rs.4 – 7.5L: 5% (can be Nil under Credit Guarantee) Above Rs.7.5L: 10% |
| Interest Rate Basis | BRLLR minus spread / category-based | EBLR + spread (varies by collateral) |
| Collateral / Security | Usually none required up to Rs.40 lakhs | No collateral up to Rs.40 lakhs; above that, tangible security needed (50%+) |
| Repayment Tenure | 10–15 years after moratorium | Up to 15 years (180 months) after moratorium |
| Moratorium Period | Course duration + 1 year | Course duration + 1 year |
| Processing / Fees | Nil processing fees (except minimal charges) | Nil processing fees |
| Expense Coverage | Tuition, hostel, books, equipment, laptop, deposits, etc. | Same coverage: all essential educational expenses |
| Eligibility Notes | Must be Indian, medical student, valid NEET rank (example up to 65,000 for UG) | Admission in premier medical institutes via exam; NRI students not covered under scheme |
Which MBBS Education Loan Is Better?
- If your required loan amount is within Rs.40 lakhs, both schemes offer strong features with zero collateral. Baroda tends to have simpler margin conditions and very student-friendly interest calculations.
- But if you need a very large loan (beyond Rs.40 lakhs, say for expensive PG or foreign medical studies), Union Bank offers much higher maximum quantum (Rs.200 lakhs) albeit with collateral and margin conditions.
- If minimizing upfront burden (margin) is important, Baroda’s margin policy is more favorable for many ranges.
- For someone who wants lower interest cost on secured large loans, Union’s concessional spreads for full collateral might make sense.
Note / Disclaimer: The data above is based on published schemes as of now and is subject to change. Always verify the latest terms, interest rates, margin money, and eligibility conditions directly with the banks before applying.
Tips for Applying for an MBBS Education Loan
- Examine loan options across various banks to compare the interest rates, amounts, and tenors.
- Keep important documents ready. Documents include the NEET result, admission letter, financial documents, and income proof.
- The co-borrower or co-applicant should have a good credit score for better chances of approval.
- Plan adequately for margin money which you are required by the bank.
- Know whether the interest rate is fixed or floating.
- Know the repayment terms, moratorium period, and any hidden charges.
- Before signing, read all the terms and conditions of your loan application.
FAQs: Bank of Baroda vs. Union Bank – Best Option for MBBS Education Loan?
Q. What is the maximum loan amount offered by Bank of Baroda for MBBS students?
A. Bank of Baroda provides a loan of up to Rs.40 lakhs to MBBS students under the Baroda Medi Elite scheme to study in India.
Q. How much loan can I get from Union Bank under the Union Medicos scheme?
A. Union Bank limits loan amount to Rs.2 crores depending on the collateral the borrower places and eligibility.
Q. Do Bank of Baroda and Union Bank provide collateral-free loans for MBBS?
A. Bank of Baroda has a limit of a no collateral loan of Rs.7.5 lakhs to MBBS students, while Union Bank allows unsecured loans of up to Rs.40 lakhs.
Q. What are the interest rates for MBBS loans in Bank of Baroda and Union Bank?
A. The Bank of Baroda interest rates starts from 7.45% depending on the rank of the institution, while Union bank links to EBLR and charges EBLR+1.00%.
Q. Which bank offers a longer repayment period for MBBS loans?
A. Both the Bank of Baroda and Union Bank provides up 15 years repayment after the moratorium period.
Q. Are processing fees charged by Bank of Baroda and Union Bank?
A. Bank of Baroda charges nil processing fees under Baroda Medi Elite, and Union Bank also offers zero processing fees for Union Medicos.
Q. Who can be the co-applicant in these education loans?
A. In both banks, parents or guardians can act as co-applicants. Union Bank also allows a spouse as co-applicant.
Q. Which bank is better for students planning to borrow higher amounts?
A. Union Bank may be more suitable as it allows loans up to Rs.2 crores with collateral, compared to Bank of Baroda’s Rs.40 lakhs limit.