Planning to Take an Education Loan for Higher Studies? Here’s What You Should Know About 2025 Interest Rates

November 13 2025

Planning to Take an Education Loan for Higher Studies? Here’s What You Should Know About 2025 Interest Rates

As more students aim to study beyond India’s borders, understanding how an education loan for higher studies works is more crucial than ever. Indian banks now tie interest rates to external benchmarks and recent figures indicate that the interest rates of education loan 2025 span a wider range than before, particularly affecting those seeking financing for study abroad.

Rising Cost of Education and the Role of Education Loans in India

The cost of higher education in India has increased sharply, making quality learning more expensive. Tuition fees, hostel charges and study materials can quickly become a burden. For many middle class families, an education loan is the most practical way to support their children’s academic goals.

Rising Education Costs in India

Today, studying in India or abroad can cost anywhere from a few lakh rupees to over ₹1 crore, depending on the institution and course. With rising expenses, banks and financial institutions now offer various education loan options that cover tuition, accommodation, travel and other essentials.

Moratorium Period: Pay After You Study

A key benefit of an education loan for higher studies is the moratorium period, which lets students start repayment only after finishing their course or getting a job. This helps reduce financial pressure during studies.

PM Vidyalakshmi Scheme

The Prime Minister Vidyalakshmi Scheme (PM Vidyalakshmi) helps students from lower income families get collateral free education loans for top 860 institutions (QHEIs). Eligible applicants may also receive interest subsidies and easing repayment.

Tax Benefits

Under Section 80E of the Income Tax Act, borrowers can claim tax deductions on the entire interest paid for up to eight years, reducing the financial load on families. In short, education loans make quality learning more accessible by offering flexibility, government support and tax benefits, helping students pursue their dreams without financial stress.

Compare Interest Rates Before You Apply

Before taking an education loan for higher studies, always compare interest rates offered by different banks and NBFCs. Even a small difference in rates can affect your total repayment. Here are the indicative interest rates of education loan 2025:

State Bank of India (SBI): 7.15% – 10.15% per annum
HDFC Bank: 10.50% per annum
ICICI Bank: 9.00% – 10.25% per annum
Punjab National Bank (PNB): 8.55% per annum
Bank of Baroda (BoB): 7.10% – 9.95% per annum
Canara Bank: 7.10% – 10.35% per annum

Government banks usually offer lower study abroad education loan interest rates than private ones, making them a better option for affordable education financing.

Choosing the Right Loan

Interest rate isn’t the only factor to consider. Check the following before applying:

Moratorium period: How long you can delay repayment after studies.
Processing fees & hidden costs: These differ across banks.
Collateral needs: Some banks may require security for higher loan amounts.
Repayment tenure: Longer terms reduce EMI but increase total interest.
Subsidy options: Students under the PM Vidyalakshmi Scheme may get interest benefits.

Conclusion

Choosing the right education loan for higher studies requires careful consideration of both immediate and long-term financial impact. Understanding the interest rates of education loan 2025 and comparing offers across major banks can help students plan effectively.

For personalized support and guidance on financial planning, Berakah Elite Pvt Ltd, trusted study abroad consultants in Ernakulam, provides expert assistance in identifying suitable universities, loan options and repayment strategies. With the right guidance and informed preparation, your academic journey abroad can be both achievable and financially sustainable.

Author : Biju Thomas

I’m Biju Thomas, founder and CEO of Lawson Travels in Dallas. Since 1997, I’ve led our team in helping over a million people reach more than forty thousand destinations worldwide. With deep experience in both travel management and education consultancy, I work to make every journey seamless and well-informed.