Higher education is no longer simply about academics, it is a way to invest in a student’s future. Whether it means getting a management degree from a B-School, studying medicine, or getting an opportunity globally in the US, UK, Canada and Australia, the costs of education are increasing quickly. Organizing such a huge amount of funds upfront is not easy for many families; education loans are there to provide assistance during these difficult times, and not just financial assistance, but they help students focus on their studies and reduce the financial burden.
In 2025, the education loan market in India is fiercely competitive, with banks and NBFCs providing tailored solutions to meet the varied needs of students. From a public sector bank such State Bank of India (SBI) which is known for reliable services and government-backed schemes, to private banks i.e. ICICI and Axis which provide faster service and approvals, to NBFCs such as Kudos offering collateral free loans with large loan amounts, students have many options today. One of the most critical elements in choosing a loan, however, is the interest rate, since it directly impacts the monthly EMIs, total amount paid, and future financial commitments.
Even a .5% difference on education loan interest rate offered can put thousands of rupees into one lender’s pocket versus another for your whole loan tenure. This makes it important for students and parents alike to watch and compare lenders for the latest interest rates right before agreeing to a loan. Other factors in deciding the right loan provider are moratorium period, margin money, processing fees, repayment option, and other eligibility. After you consider the education loans available, you will be able to take advantage of them, while your studies in India or abroad don’t become a financial burden.
In this educational blog, we will provide you the latest education loan interest rates in 2025, with a comparison of SBI, ICICI, Axis Bank, and leding NBFCs. You should be able to make a decision by the end of this article on which bank or financial institution has the best deal for your education loan.
Overview of government banks vs. private banks vs. NBFCs
When it comes to funding higher studies, students today have options from government banks, private banks and Non-Banking Financial Companies (NBFCs). Each type of lender has its own strengths and weaknesses, and so it is wise to know these differences before applying for an education loan.
1. Government Banks (Public Sector Banks such as SBI, Bank of Baroda, Canara Bank, etc.)
- The policies of the Government of India make them more stable and secure.
- Generally lower interest rates than private banks and NBFCs.
- Most schemes have the government awarding interest subsidy to economically weaker sections (EWS).
- They provide longer repayment tenure so you won’t be loaded with heavy EMI.
2. Private Banks(ICICI, Axis, HDFC Bank, etc.)
- The banks are known for speedy processing of loans and quick digital application processes.
- They offer a range of custom products for both domestic or overseas education.
- They have higher probability of loan approval for students who are going to good universities.
- Some banks offer more flexible terms with step-up EMIs.
3. NBFCs
- They are known to offer education loans even without collateral up to high amounts, particularly for overseas studies.
- They can provide a more flexible repayment structure and customize emission until you find a repayment you can afford.
- Faster approval process with less paperwork.
- They serve as a useful tool if applying to courses offered by “new-age” institutions or universities that are not target market for banks.
Factors Affecting Education Loan Interest Rates
When students and parents apply for an educational loan, they must consider the interest rate. The interest rate is not universal, it varies depending on the following parameters set by banks and NBFCs. Each of the factors is pretty much straightforward for borrowers. Whether or not each of the factors is friendly toward the borrowers depends on things like negotiation savvy.
1. Type of Lender
Government Banks tend to provide educational loans through government-backed subsidy schemes with lower interest rates. Private Banks should offer you slightly higher interest rates while providing faster processing times for applications and available loan amounts. NBFCs provide flexibility, but borrowers can expect to pay higher interest rates above what is charged by banks.
2. Course to be Pursued and Place of Study
Loans for professional courses will attract lower interest rate loans than loans for returning students pursuing continuing education for general study (i.e., qualifications such as a BA or certificate. Loans for students studying at place of recognized authority (i.e., IIMs, IITs, Ivy League) will attract lesser interest rates if the schools are considered low-risk.
3. Loan Amount
Educational loans for lesser amounts will often have a higher interest rate. Larger amounts of money usually attract rates which are lower in relative terms.
4. Collateral Security
Loans which amount to collateral (secured loans) generally have reduced interest rates. Conversely, unsecured loans do not have as many redemption options and generally have higher interest rates attached.
5. Credit Profile of Co-applicant
The CIBIL score and repayment history of the co-applicant (parent/guardian) impact the rate to a large extent a good credit history can reduce the interest rate.
6. Repayment Tenure
Longer tenures will occasionally have marginally higher interest, as the lender is risk-exposed for a longer time.
For instance, shorter tenures can have lower rates.
7. Floating vs. Fixed Rates
Most education loans in India are floating rates, and will change with RBI policies and repo rate changes.
Fixed rates, if you get them, are likely to be higher in rates but stabalize your interest rate.
8. Government Policies & Subsidies
Some of the policies from the government, like the Interest Subsidy Scheme for Economically Weaker Sections (EWS) etc, or reduction for female candidates cut down the overall effective interest burden.
9. Country of Study
Education loans for study outside India will often carry a higher interest rate than for domestic education loans, primarily to account for currency fluctuation and risk.
Latest Education Loan Interest Rates 2025
Here’s a quick comparison table of the Latest Education Loan Interest Rates in 2025 for key providers, based on the most recent and reliable data:
| Provider | Interest Rate (Starting From) | Remarks |
|---|---|---|
| State Bank of India (SBI) | 8.15% p.a. | Base rates vary by scheme: Student Loan (9.15–10.15%), Scholar Loan (7.15–7.90%), Global Ed-Vantage (8.65–9.15%) |
| ICICI Bank | 10.25% – 14.00% | Broad range depending on applicant profile and scheme |
| Axis Bank | 11.00% – 13.00% | Floating rates aligned with credit/loan structure |
| HDFC Credila (NBFC) | 9.95% p.a. (secured); 11.25% (unsecured) | Floating rates; additional 1–1.5% for fixed-rate loans |
| Avanse (NBFC) | 10% – 11% | Competitive NBFC rates for study abroad need |
| Bank of Baroda | 8.15% – 10.70% | Varies by category, with lower rates (e.g., ~8.70%) for premier institutes |
Note:
- SBI’s interest rates vary with their various schemes: for instance, under Scholar Loan, they can start below 7.15%, and Global Ed-Vantage loan rates are in the 8.65-9.15% range.
- HDFC Credila’s secured-loan rates begin at 9.95% p.a., while unsecured loan rates are higher at 11.25%, with fixed-rate pricing options too.
- Bank of Baroda has tiered pricing depending on the case (Premier Institutions abroad at 8.15% beginning any borrower up to 10.70% as a general case).
- Avanse has among the most competitive rates among NBFCs at around 10% plus.
In 2025, SBI highlighted as a lender with some of the lowest interest rates, especially under designated schemes like Scholar Loan or Global Ed-Vantage. HDFC Credila, Avanse, covered on financing abroad without collateral and as a prescribed lender, and others are acknowledged as alternate options. ICICI and Axis Bank are still viable lenders for those desiring faster processing, though they have higher interest rates than other lenders like SBI & Avanse, and Bank of Baroda provides more of a tiered scheme for pricing for those that can access and be assessed at the top tier institutions.
Disclaimer: The education loan interest rates and charges mentioned above are indicative and subject to change as per the policies of respective banks and NBFCs. Applicants are advised to verify the latest details directly with the bank, NBFC, or a certified education loan counsellor before making any decision.
How to Choose the Best Education Loan in 2025?
Selecting the right education loan for your situation in 2025 will involve thorough consideration over several factors, as the cost of overseas education is slowly increasing with uncertainty as to what it will continue to rise; it is essential that students and parents to look past just the interest rate and look at the overall cost of the loan, its flexibility, affordability, and general financial long term impact. Below are a few points that will assist students and parents in selecting the right loan:
Compare Interest Rates and Processing Fees
While interest rates vary between government banks, private banks, and NBFCs, it is important to always compare the effective cost of borrowing versus only comparing the advertised rate of interest.
- Loan Amount and Coverage
Ensure loan covers all tuition fees, living expenses, travel, exam fees, and insurance.
NBFCs tend to sanction a higher loan amount with a lesser margin money, than private banks, but banks offer the lowest overall cost of borrowing.
- Collateral and Non-collateral Loans:
Generally, Government banks will only allow loans with collateral for larger amounts, and whilst NBFCs and private banks will provide loans with little or no collateral. Often, NBFCs will approve loans quicker than Government banks.
- Repayment Flexibility
There should be a moratorium period and time for repayment (or holiday period after studying) as this will not put pressure on beginning repayment. Flexibility of repayment tenures (up to 15 years) will also assist students in reducing their monthly EMI burden.
- Consider Subsidies & Tax Benefits
Check if you are eligible for government interest subsidy schemes. Additionally, education loans provide tax benefits under Section 80E of the Income Tax Act.
- Look at Speed & Ease of Processing
NBFCs and private banks usually have quicker approval and disbursement processes compared to public sector banks, which may involve more documentation.
- Customer Support & Global Tie-ups
Some lenders have tie-ups with foreign universities and offer doorstep services, forex benefits, and insurance coverage. Strong after-loan support can make a big difference while studying abroad.
FAQs: Latest Education Loan Interest Rates 2025
Q. What are the current education loan interest rates in 2025?
A. In 2025, education loan interest rates generally range between 8 and 13%. Government banks typically provide lower rates of around 8 or 9% as difference, with NBFCs and private banks charging slightly higher interest rates, but providing faster, more convenient services.
Q. Do interest rates vary for India and abroad education loans?
A. Rates for loans for study in India may offer lower interest rates, whereas the loans for study abroad may have slightly higher rates because they tend to be higher amounts, and therefore lenders face greater risk on those loans.
Q. Are education loan interest rates fixed or floating?
A. In 2025, most education loans will be floating rates that are tied to the Repo Rate or MCLR, which will mean that the EMI due may change if the RBI changes their policy on any floating rate loan. Some lenders such as certain NBFCs are offering fixed rate options.
Q. Which banks offer the lowest education loan interest rates in 2025?
A. Public sector banks like SBI, Canara Bank, Bank of Baroda will generally have the lowest rates, especially when the loan is secured with collateral.
Q. Are there any special discounts on interest rates?
A. Many banks are offering a 0.5% concession for female students, and sometimes concessional rates for students who are into top universities and premier institutions.
Q. Do NBFCs charge higher interest than banks?
A. NBFCs generally charge 10%–13% interest rates, but these lenders provide quicker processing times, higher loan amounts, and collateral-free loans, which is why some students select them instead.
Q. Is there a difference in interest rate for collateral vs. non-collateral loans?
A. Loans that are backed by collateral will have lower interest rates than loans that are not subtotalled back by collateral; it is up to the lenders risk preferences.
Q. Are education loans eligible for tax benefits on interest?
A. You can claim the interest paid on education loans under section 80E of the income tax act for the interest that you pay on education loans, it is fully deductable for up to 8 years.