Education loan interest rates for studying abroad
Every lender publishes a band, and almost nobody is offered the bottom of it. The rate you are actually quoted is decided by four things, and understanding them is worth more than another hour comparing advertised floors.
The four things that move your rate
| Factor | Why it matters |
|---|---|
| Security | A secured loan is cheaper than an unsecured one, usually by a wide margin |
| The co-applicant | Their credit score and documented income, not yours, carry the credit decision |
| The institution | Most lenders keep preferred lists, and the preferential pricing sits there |
| Lender type | PSU banks price lowest, private banks in between, NBFCs highest — in exchange for speed |
A student with collateral, a salaried co-applicant and an admission to a well-known university sees a very different band from a student with none of those — at the same lender, on the same day.
Fixed against floating
- Floating rates move with a benchmark, usually the repo rate. Most Indian bank education loans are floating.
- Fixed rates do not move, and are usually higher at the outset. The international lenders commonly lend fixed.
- Over a repayment that may run fifteen years, the difference between the two is a judgement about rates you cannot make confidently — so the question to ask is which you could afford if it moved against you.
Comparing two offers honestly
- Get both in writing, in the same fortnight, so the credit enquiries sit together.
- Compare the rate and its basis — fixed, or floating against what.
- Add the processing fee as an amount, not a percentage.
- Ask whether interest during the moratorium is paid or capitalised. Capitalised interest is repaid with interest on top for years.
- Check prepayment terms if you expect to repay early.
The headline rate is often not the cheaper loan. Capitalised moratorium interest on a long course can outweigh a half-point difference several times over.
Interest rates — FAQs
2 questions
There is no single answer — it depends on security, co-applicant and institution. Compare written offers from one PSU bank and two NBFCs rather than comparing published floors.
Advertised floors go to the strongest applications. Ask the lender which factor is pricing you above it; sometimes adding security or a stronger co-applicant moves it.
Not sure which lender fits? A counsellor compares what you would actually be offered across all twelve — free, and with no application.
Sources
Checked against these sources on 1 October 2026.