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A few years ago this was an excellent option for students as interest rates were very low (4-5%). However, now, when the interest rates (Wall Street prime lending rate) are close to 7.5%, this loan is not as attractive as it used to be.
| Name of Bank | Loan Amount | Interest Rates | Repayment | | State Bank of India | Up to 20 lacs | 11.5% | 3-7 years | | Dena Bank | Up to 15 lacs | 12.25% | 3-7 years | | Punjab National Bank | Up to 15 lacs | 12.25% | 3-7 years | | United Bank of India | Up to 15 lacs | 10.75% | 5-7 years | | Indian Overseas Bank | Up to 15 lacs | 12.00% | 3-7 years | | Canara Bank | Up to 15 lacs | 11.75% | 3-7 years |
Disclaimer: The information in this table may not be accurate. Please check interest rates and repayment options with the respective banks.
 How to get an Indian bank loan: Our state and government banks may not have updated websites or a dedicated phone line for answering customer queries. So your best bet would be to personally visit all the banks you are considering. Study the interest charged and repayment options of the student loan very carefully before deciding on a bank. In most cases, you do not have to make any repayment till you complete your education. However, during this period the bank will still charge you simple interest on your loan. Once you complete your course you can start paying your loan. Most banks will give you 3-7 years to pay your loan back. Depending on your finances it is always better to divide your expenses in such a way that you and your family pay for the living expenses and other expenses and your tuition fees can be taken as a loan. This way you will have less of a burden when you graduate.
Eligibility of the loan: All Indian citizens, who plan to study in an accredited university and course and can show collateral security against the loan amount, are eligible to apply for a loan. Remember, some banks may even ask for collateral security, which is 15% higher than the loan amount. And some banks may have additional criteria so it’s best to check with individual banks before applying for an education loan.
Reality check: If you are an MBA student and are planning to attend a university where the total investment required is $100,000 or Rs.44 lacs, the maximum loan you can get is still Rs.20 lacs and hence you will have to shell out Rs.24 lacs on your own. The Indian education loan cannot be taken yearly, that is, you cannot take Rs.20 lacs for the first year and then again Rs.20 lacs for the second year (unless you managed to pay back the Rs.20 lacs in the first year itself). If you are an undergraduate student and are planning to attend a university in the US for a period of 4 years and need Rs.15 lacs per year, your total investment in your education would be Rs.60 lacs. In such cases, the maximum education loan of Rs.20 lacs can only cover 1/3 of your total education cost. Each student must analyse his or her funding requirements before deciding on an education loan.
What about private banks? Private banks are not known to offer student loans. However, some private banks such as HSBC Bank breaks the norm and offers student loans. HSBC offers a maximum of Rs.25 lacs as an education loan with “competitive interest rates and special discounts exclusively designed for HSBC customers,” states the HSBC website.
Are all students finding it easy to get state education loans for higher education? “I was made to run from pillar to post finding documents, getting wrong information and so on. The bank officials at this government bank were not at all helpful and eventually I let go of the idea of a loan and my father paid for my education,” says Rupesh Shah, a harried student who tried getting a loan.
Red Alert: RBI guidelines state that students who need up to Rs.4 lacs as an education loan need not provide any collateral security. Banks can give loans up to Rs.4 lacs by checking income tax papers, and other investments. In case your bank asks you for security for a loan of up to Rs.4 lacs you can approach the RBI to intervene.
Will student loans affect your visa? Visa officials have continuously stressed that student loans do not reflect negatively on your visa application. Therefore, if you can show how you plan to repay the loan after your education, you should have no problem in showing a loan as your source of funding during your visa interview.
Getting your student loan from a nationalized bank may not be easy. But if you start early, do your homework right and have your papers in order, you should have no problem in getting your student loan
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