Know More About Education Loan for different countries
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Education Loans for Other countries

Updated on Nov 15, 2022
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In every loan transaction, the interest rate is crucial. In this scenario, obtaining an international education loan is no exception. The majority of loan applicants base their decision to borrow an education loan on the interest rate of the particular lender's overseas education loan.

The interest rate on an international education loan is frequently the main consideration for students when choosing a lender. However, it is important to know that the interest rates on education loans vary depending on various circumstances. This page seeks to throw light on these variables as well as provide a current list of the various types of lenders' education loan interest rates.

Banks and financial institutions employ the Marginal Cost of Funds-Based Lending Rate (MCLR) to calculate the interest rate.

Table of Contents

1 Marginal Cost of Funds-Based Lending Rate (MCLR)

Banks and financial institutions employ the Marginal Cost of Funds-Based Lending Rate (MCLR) to calculate the interest rate.

It is calculated by considering various factors, such as

  • Tenure premium

  • Funds' marginal cost of capital

  • Operational expenses

  • Other expenses

Although the MCLR is the foundation for all foreign education, loan interest rates are set by lenders (Banks, NFBCs).

The interest rates on most government bank education loans are computed using the MCLR plus spread formula. This spread refers to banks' premiums on top of the baseline MCLR value.

Government banks' interest rates on international education loans range from 9% to 10%. The ultimate education loan amount sanctioned by government banks might go up to INR 1.5 crore because they issue education loans on the basis of collateral security.

Now, let's ‌look at the private bank interest rates on international education loans.

  • Unsecured education loans are mostly provided by NBFCs and private banks in India.

  • Because these loans do not need any collateral, the interest rate on an education loan without collateral is greater than the interest rate on a government bank education loan.

  • The interest rate imposed by private banks and NBFCs on education loans varies based on several criteria.

  • One of them is the country of study chosen by loan applicants.

For the following nations, below is a summary of the expected education loan interest rate charged by NBFCs and private banks:

  • The United States: 11.5% to 12.75% 

  • Canada: 12% to 13%

  • Germany, the United Kingdom, France, Ireland, and other countries: 13% to 14.5%.

Overall, the interest rate for unsecured education loans from NBFCs and private banks can range from 11.5 percent to 14.9 percent. Foreign lenders are the next group of lenders to consider. Let's have a look at the interest rates they charge on student loans.

Foreign lenders have their own set of policies when it comes to school loans. The same may be said about their interest rates on overseas education loans. Foreign lenders' foreign education loan interest rates are based on something called LIBOR, or London InterBank Offered Rate. LIBOR values fluctuate approximately every two months, which impacts foreign lenders' final interest rates on overseas education loans. The rate of interest on a foreign education loan is also influenced by the difference in currency values.

2 Banks & Interest Rates

Bank

Interest Rates

Punjab National Bank

6.75% to 9.50% p.a.

Central Bank of India

8.50% to 9.00% p.a.

Canara Bank

6.90% to 8.90% p.a.

State Bank of India

6.85% to 8.65% p.a. .

Bank of Baroda

6.75% to 9.85% p.a.

IDBI Bank

6.75% to 8.75% p.a.

Bank of India

8.95% p.a. to 9.75%

Tamilnad Mercantile Bank

10.45% to 11.45% p.a.

HDFC

9.55% to 13.25% p.a.

UCO Bank

4.00% to 10.20% p.a.

Karnataka Bank

9.98% to 12.38% p.a.

Federal Bank

10.05% p.a. onwards

Karur Vysya Bank

10.60% to 11.60% p.a.

Tata Capital

10.99% p.a. onwards

Jammu and Kashmir Bank

RLLR + 1.50% to RLLR + 3.50% p.a.

Dhanalakshmi Bank

Contact the bank

Axis Bank

13.70% to 15.20% p.a.

Kotak Mahindra Bank

Up to 16% p.a.

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