Every year thousands of students have their dream of studying in India’s premier medical, engineering, and management colleges, but face one universal question: how to fund the high cost of education? In 2025, with the increasing cost of education, timely, inexpensive, and flexible education loans are in more demand than ever. Education Loans can vary with each bank, whether it is an MBBS seat at a reputed private college or a global MS course, selecting which bank to apply for the education loan with will significantly affect the financial journey going forward.
Let’s take Rohan for instance. He is a bright NEET aspirant, and he secured a seat in a top private college in Karnataka to study medicine. While his parents had some savings, they didn’t have ₹50 lakh total fee, which consisted of tuition fees as well as accommodation fees. In exploring their options for taking a loan, they were easily confused by the loan documents, terms and conditions, interest rates, co-applicant requirements, and timeline taken to approve loans. After receiving some right guidance, they ended up choosing to avail a loan from a relatively more trustworthy public-sector bank which introduced them to a low interest loan with tax benefits and now Rohan is studying MBBS without worry.
In this blog, we’ll compare the best banks for education loans in 2025, based on critical factors like interest rates, required documents, approval timelines, collateral rules, and repayment terms. Written from the perspective of an experienced education loan advisor who has helped over 1,000 students get their loans sanctioned, this guide will walk you through everything you need to know clearly, simply, and factually.
If you’re a student or parent facing similar worries, this is the only guide you’ll need to make a confident, informed choice in 2025.
Understanding the Landscape of Education Loans in 2025
Educational loans are not merely funds, they are commitments. The financial aspect of student loans does cause concern for both student and parent regarding interest rates, required collateral, debt repayment flexibilities, and time frames to process the application. In most cases, the responsibility has shifted to full, required, student loan documentation required by the RBI, in which all public and private banks must comply, 2025 marks a shift toward transparent terms, online application portals, and flexible repayment schedules.
Some key features every borrower should look for:
- Interest rates (floating vs fixed)
- Processing time and sanction period
- Moratorium period
- Collateral needs based on amount
- Tax benefits under Section 80E
- RBI’s 2025 circular asked banks to simplify documentation and speed disbursals, a clear win for borrowers.
Comparing Interest Rates Across Leading Banks
Interest rates dictate the total cost. As of 2025, the most competitive rates (annual, floating) are:
- SBI Student Loan: 8.10% to 10.60%
- HDFC Credila (tied with Kotak for abroad studies): 10.25% onwards
- Kotak Mahindra Bank: upto 16% (floating)
- Other leading banks (PNB, Canara, Axis): 9.00% to 13.50%
Here’s a quick comparison table:
| Bank | Rate Range (%) | Fixed/Floating | Special Offers |
|---|---|---|---|
| SBI | 8.10–10.60 | Floating | No collateral upto Rs.4 lakh, fast processing via Vidya Lakshmi |
| HDFC Credila (Kotak) | 10.25 onwards | Floating | Unsecured up to Rs.75 lakh, global acceptability |
| Kotak Mahindra Bank | upto 16 | Floating | Competitive for domestic studies |
| Other Private Banks | 9.00–13.50 | Mixed | Custom plans available |
Always ask your advisor to explain how each percentage point impacts your EMI over time. Even a small difference can change the final repayment amount dramatically.
Collateral and Loan Limits – What You Need to Know
In 2025, RBI maintains tiered collateral policies:
- Loans up to Rs.4 lakh: no collateral needed
- Rs.4 lakh to Rs.7.5 lakh: collateral required
- Above Rs.7.5 lakh: Bank may ask for property or fixed deposits as security
HDFC Credila allows unsecured loans up to Rs.75 lakh, rare among private lenders. SBI, on the other hand, has higher unsecured limits of Rs.4 lakh. Kotak Mahindra provides good flexibility, but they follow standard collateral procedures.
Before you apply, weigh your family’s asset liquidity. Having a loan secured without encumbering all your family’s assets can greatly help alleviating repayment pressure after graduation.
Eligibility and Co‑applicant Criteria
Each bank has similar basic criteria but differs in specifics:
- Academic Eligibility: Acceptance into authorized institutions via a recognized entrance process or through merit; US citizenship is required.
- Co-applicant: Usually parents or guardians. Co-applicant must meet age, income, credit history, existing debt (under 50% of several years income ratio). Age: The age of the student is normally not an issue; the co-applicant must follow the guidelines.
- Entrance Score: Medical degrees a qualifying entrance exam includes NEET, admission must guaranteed (admission triggers loan qualifying status).
HDFC Credila sometimes expect more favorable credit scores of the co-applicant, but allow loans to process faster than foreign loans; SBI prefers continuing income sources.
Documents Checklist for MBBS Loans
Banks and portals require clear, correct paperwork. Here’s a common checklist:
- Application form
- Student ID, Passport, Aadhar
- Admission letter and fee structure
- Academic records (10th,12th, NEET score)
- Co‑applicant income proof (salary slip, Form 16, 2 yrs ITR)
- Address proof for student and co‑applicant
- Collateral documentation if required
Vidya Lakshmi Portal (govt‑backed) and SBI’s own portal allow both digital and physical submission. This saves time and reduces manual errors.
Comparing Approval & Sanction Timelines
Fast approval matters. Here’s what recent borrowers have seen:
| Bank / Lender | Average Approval Time | Remarks |
|---|---|---|
| SBI (via Vidya Lakshmi) | 7–14 days | Depends on document completeness and collateral |
| HDFC Credila | 10 days | Faster processing for select institutes |
| Kotak Mahindra Bank | 15 days | May vary based on applicant profile |
| Other Banks (ICICI, PNB, BOB, etc.) | 10–21 days | Varies by bank, loan amount, and security |
Disbursal Process – Tuition Vs Reimbursement
Disbursal usually happens in two alternative models:
- Direct Transfer: Funds are transferred direct to the college. This is the standard for SBI or HDFC Credila loans.
- Reimbursement: Students pay the fees and seek reimbursement from the bank with respective receipts.
With regards to foreign / overseas study loans, the disbursal is often staggered, with the loan being disbursed on receipt of fees for each semester. For MBBS in India, the disbursal is usually paid over two or three installments. At this stage verify the relevant student loan disbursal schedule in your sanction letter.
Moratorium & Repayment Terms
Most loans offer a moratorium period of until course completion plus 6-12 months or up to a residency period. The standard tenure is 5–15 years depending on amount and income.
Then there are hidden clauses, like processing fees for overdue interest. SBI and Credila only charge nominal service fees, Kotak may charge a foreclosure reason after 12 months, know it all before you sign.
How to Choose the Best Bank for MBBS Loan
Consider these factors:
- Total cost: Interest rate + processing + hidden charges
- Collateral flexibility
- Sanction speed
- Customer experience and grievance redressal
- Tax benefits clarity
Example: If you need ₹10 lakh, SBI might offer 8.5% interest, fast sanction, and no collateral. Over 10 years, EMI difference vs Kotak’s 12% could be ₹3,000 to ₹4,000 monthly, big savings.
Steps to Apply and the Ideal Action Plan
- Identify and choose your top 2-3 banks (SBI, Credila).
- Compare the interest rates and non-financial terms.
- Talk to a relationship manager as early as possible and clarify the hidden charges.
- Apply using Vidya Lakshmi or bank portals directly.
- Track your application and provide the required documents on time.
- You will receive a sanction letter and thoroughly read the terms.
- Then Agree to the loan, sign and request for disbursal.
Finding the right MBBS education loan in 2025 can make your dreams into realities. With no hidden costs, fixed interest rates, and quick disbursals, banks such as SBI and HDFC Credila stand out.
So what are you waiting for? Book a free consultation or WhatsApp us now for all the information to start your application process!
Disclaimer:
The information contained in this blog is intended to be general information and educational content only. Loan features, interest rates, processing duration and eligibility mentioned in this were taken from publicly available information hosted by official bank/finance websites e.g. RBI, Vidya Lakshmi Portal, GyanDhan as at the end of 2025. These can be subject to change based on the applicant’s profile, co-applicant income, collateral availabilty, type of institution that is lending to you, and bank’s or NBFC’s internal policies.
You must always verify the latest terms and conditions from the respective banks and/or financial institutions directly prior to making any decisions. This blog does not endorse, or promote, any lender specifically and is not offering you any professional financial or legal advice.
FAQs: Best Banks for Education Loan in 2025
Q. Which bank has the lower floating interest for MBBS loan?
A. SBI offers the lowest floating rates (8.10-10.60%) generally. So, they are a good option for MBBS.
Q. Can I take a loan above ₹7.5 lakh without collateral?
A. If you meet HDFC Credila’s credit eligibility, you can take upto ₹75 lakh unsecured loan even for overseas studies.
Q. How much time SBI takes to sanction loans?
A. SBI usually sanctions loans within 7-14 days of submission of all documents in the Vidya Lakshmi portal.
Q. Is there any tax benefit for education loan interest?
A. All interest paid is eligible for claim under Section 80E for maximum of 8 years, as evidenced from NSDL data.
Q. What documents are compulsory for obtaining MBBS loan?
A. The compulsory documents are: admission letter, NEET score card, identity/address proof, co-applicant income proof and collateral documents if needed.
Q. Is co-applicant needed for education loan?
A. In almost all cases. Co-applicant (usually parent) need to satisfy income, age, and credit history norms.
Q. What is the loan moratorium period?
A. Usually duration of the course and grace period of 6-12 months; you can start repaying after that.
Q. Can I prepay the loan early?
A. After the lock-in period (usually 12 months). SBI prepayment is flexible, Credila has minimum charges, Kotak charges 5% foreclosure.