In India, education is increasingly seen as the ladder to success. But for many families, the rising cost of quality education—whether in India or abroad—is a heavy financial burden. Fortunately, education loans provide a lifeline. Yet not all loans are created equal. While several banks and NBFCs offer education loans, the interest rates and repayment conditions vary drastically.
In this guide, we’ll break down:
- What makes a student loan “low-interest”
- The best low-interest education loan schemes in India (Govt + private)
- A comparison table of key options
- Eligibility criteria
- Tips to secure lower interest rates
📌 What Is a Low-Interest Student Loan?
A low-interest student loan is an education loan where the interest rate:
- Starts as low as 6.85% (in government schemes)
- Offers interest subsidies for economically weaker sections (EWS)
- Comes with longer moratorium periods (up to 1 year after course completion)
- In some cases, no collateral is required
These loans are offered by:
- Public Sector Banks (PSBs) like SBI, Canara Bank, Bank of Baroda
- NBFCs and private lenders (though interest is usually higher)
- Government-backed schemes like Vidya Lakshmi and CSIS
🏆 Top Low-Interest Student Loan Schemes in India (2025)
1. SBI Student Loan Scheme
- Interest Rate: Starts from 8.15% p.a. (with interest concession)
- Loan Amount: Up to ₹20 lakh (India), ₹1.5 crore (abroad)
- Collateral: Required above ₹7.5 lakh
- Moratorium: Course period + 1 year
- Concession: 0.5% for girl students
2. Central Sector Interest Subsidy Scheme (CSIS)
- Interest: Subsidized by the government during moratorium
- Eligibility: Parental income ≤ ₹4.5 lakh p.a.
- Applicable: Only for loans under IBA Model (banks like SBI, BoB, etc.)
- Loan Limit: Up to ₹10 lakh (India)
3. Bank of Baroda Baroda Gyan
- Interest Rate: Starts from 8.45% p.a.
- Loan Amount: Up to ₹80 lakh (abroad)
- Concession: 0.5% for girls
- Processing Fees: Nil for domestic education
- Repayment: Up to 15 years
4. Canara Bank Vidya Turant Scheme
- Interest Rate: From 8.25% p.a.
- Eligible Institutions: IIMs, IITs, NITs, IISc, AIIMS
- Loan Amount: Up to ₹40 lakh
- Moratorium: Course + 1 year
- Processing Fee: Nil
5. Tamil Nadu Government Education Loan Subsidy Scheme
- Eligibility: Students from TN studying in India
- Subsidy: 100% for first graduate students (EWS)
- Interest: Paid by TN Govt for eligible candidates
6. Punjab National Bank Udaan Scheme
- Target: Indian students pursuing studies abroad
- Interest Rate: 8.75% onwards
- Loan Amount: Up to ₹1 crore
- Security: Based on amount
📊 Comparison Table – Best Low-Interest Education Loans (2025)
| Scheme/Bank | Interest Rate (Approx.) | Max Loan | Collateral | Special Benefits |
|---|---|---|---|---|
| SBI Student Loan Scheme | 8.15% p.a. | ₹1.5 crore | Yes (above ₹7.5L) | 0.5% off for girls, govt subsidy applicable |
| CSIS by Govt of India | 0% during moratorium | ₹10 lakh | As per IBA norms | Full subsidy for EWS |
| BoB Baroda Gyan | 8.45% p.a. | ₹80 lakh | Yes (above ₹7.5L) | Nil processing fee (India) |
| Canara Vidya Turant | 8.25% p.a. | ₹40 lakh | Usually not needed | Fast-track for premier institutions |
| PNB Udaan | 8.75% p.a. | ₹1 crore | Yes (above ₹7.5L) | For overseas education |
| Tamil Nadu Govt Subsidy | NA | NA | Based on family income | 100% subsidy for eligible first graduates |
📝 Eligibility Criteria (Common to Most Banks)
- Nationality: Indian citizen
- Admission: Confirmed admission in recognized Indian/foreign institutions
- Age: Usually 18–35 years
- Academic Record: Good performance in previous qualifications
- Family Income: Below ₹4.5 lakh p.a. (for CSIS and some subsidies)
💡 Tips to Secure the Lowest Interest Rate on Student Loans
- Apply with a Co-applicant (parent/guardian with stable income)
- Check for Interest Subsidy Schemes like CSIS
- Maintain good academic record – helps with approval
- Choose Government/Public Sector Banks – lower base rates
- Apply early via Vidya Lakshmi Portal
- Negotiate if you have admission in top colleges (IITs, IIMs, AIIMS, etc.)
🎯 Government Portals to Explore for Student Loans
🔗 Vidya Lakshmi Portal (https://www.vidyalakshmi.co.in/Students/)
- Apply to multiple banks with one form
- Track status online
- Avail subsidies like CSIS
🔗 NSDL e-Gov (https://eservices.nsdl.com/)
- For PAN-linked financial services and verification
🏁 Conclusion
Choosing the right education loan can make or break your financial future. In 2025, Indian students have multiple low-interest loan options, especially through government-backed schemes and public sector banks.
If your family income is below ₹4.5 lakh and you plan to study in India, the Central Sector Interest Subsidy Scheme (CSIS) is your best bet.
For overseas education, SBI and PNB Udaan offer excellent large-ticket loans at relatively low interest.
Make sure you compare interest rates, check for processing fees, and understand moratorium conditions before signing on the dotted line.
📣 Pro Tip:
Always check your CIBIL score before applying. A higher score can help your co-applicant negotiate better rates—even on education loans!
Let me know if you want a personalized comparison of loans for a specific course or country!
