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Student Loan Interest Rates for Indian Students Looking to Study Abroad

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Created on
January 31, 2023


What’s Inside

Student loan interest rates differ from one lender to the next. 

Let’s take a closer look.

Student loan interest rates as of January 2023

We’ve chalked down a list of some popular banks and institutions offering varying student loan interest rates for your easy reference.

How do banks calculate student loan interest rates?

All leading banks and financial institutions offer different rates of interest depending on the type of course being pursued, the location of the institute and whether it’s in India or abroad, and the loan amount borrowed.

Normally, these banks give a floating rate of interest on these types of loans. This means that the student loan interest rates on your EMI are calculated as per the “base lending rate” plus the standard premium rate, credit spread, markup etc.

And this base rate keeps changing depending on the repo rate set by the RBI, which is reviewed bi-monthly and basis changes on the rate; the floating interest rate fluctuates accordingly.

Having a rate set by the bank is crucial while taking out the loan as it affects the possibility of paying back the amount. Though you’re not required to pay EMI during the studying period or moratorium period, it’s advised that you pay at least the interest amount, as this will reduce your EMI burden, and you may get a concession on the principal amount depending on the bank.

Eligibility and documents required for a student loan

To get a student loan with good interest rates, the candidate should

  • Be an Indian citizen
  • Be above the age of 18
  • Have a copy of the admission letter
  • Have a guarantor with proof of income
  • Have all loan documents/agreement, sanction letter signed by the applicant and co-applicant
  • Have marks sheet or pass certificate
  • Sign Form A2 or signed by co-applicants for studies in overseas institute
  • Have collateral documents if any

Things to keep in mind when applying for a student loan

While you may have every boxed checked on the above list, it’s good to have these points at the back of your mind before you apply for the loan

  1. Borrowers are eligible for tax concessions under section 80E.
  2. You can get concessions on the principal amount if you have a good credit score.
  3. You can also get concessions on the principal amount if the interest amount is paid during the moratorium period.
  4. There are central government schemes like CGFSEL, Dr Ambedkar's central scheme on education loans, and Padho Pardesh Scheme that offer subsidies on interest charged on the loan amount.

In conclusion

Getting an education loan today is not arduous. Given the paradox of choice offered by banks and financial institutions, getting into the nitty-gritty of the loan details and selecting the right type of loan will be beneficial. Also, ensure that you do not take a loan amount which is beyond your means and may end up struggling to repay in the future.

Frequently asked questions

Are student loans interest-free?

No. Student loans attract interest but vary among banks and financial institutions. What you do get is tax benefit under section 80E which has no upper limit on the EMI you’re paying.

Do student loans get paid off?

This depends on your financial background conducted and the credit score that banks and financial institutions consider at the time of application. Depending on these factors, banks will take a call on whether you can pay off the loan or not. 

Do student loans stop after 25 years?

No. In India, student loans need to be repaid in full irrespective of the time taken.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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