Education Loan Interest Rate Comparison 2026 is an important topic for Indian students, as the cost of higher education continues to rise every year. For courses like Engineering, Medical, MBA, or Study Abroad programs, education loans have become an essential financial support system. In 2026, both public sector banks and private banks are offering education loans, but there are significant differences in interest rates, processing fees, and loan terms.
In this article, we provide a detailed All Banks Education Loan Interest Rate Comparison 2026 to help students choose the lowest interest education loan and save a substantial amount of money in the long run.
Education Loan Interest Rates 2026: Overview
In 2026, education loan interest rates are mostly linked to RBI benchmarks such as the Repo Rate, MCLR, or other external benchmark rates. Banks determine the final interest rate based on factors like course type, loan amount, institution ranking, and the credit profile of the co-applicant.
- Female students may receive an interest rate concession of 0.25% to 0.50%
- Students admitted to premier institutes like IITs, IIMs, and NITs often get lower interest rates
- The moratorium period generally includes the course duration plus 6 to 12 months
Typically, public sector banks offer education loans at interest rates starting from 7% to 9%, while private banks and NBFCs charge higher rates ranging from 9% to 15% or more.
Public Sector Banks Education Loan Interest Rate 2026
Government banks are considered the most trusted and affordable option for education loans. These banks usually offer lower interest rates and charge minimal or zero processing fees.
| Bank Name | Starting Interest Rate (p.a.) | Interest Rate Range | Key Features |
|---|---|---|---|
| State Bank of India (SBI) | 8.15% | 8.15% – 11.15% | Loan up to ₹50 lakh, concession for female students |
| Punjab National Bank (PNB) | 7.00% (Fixed) | 8.20% – 10.75% | Repayment tenure up to 15 years |
| Bank of Baroda | 8.50% | 9.15% – 11.15% | Baroda Gyan education loan scheme |
| Canara Bank | 8.60% | 9.25% – 11.35% | Vidya Turant fast-track processing |
| Union Bank of India | 8.75% | 8.75% – 11.00% | Education loan up to ₹1.5 crore |
| Bank of Maharashtra | 7.60% | Up to 10.50% | Lowest interest rates for loans up to ₹20 lakh |
Public sector banks generally provide education loans up to ₹7.5 lakh without any collateral. Additionally, the processing fee is usually zero, making these loans highly beneficial for students.
Private Banks & NBFCs Education Loan Interest Rate 2026
Private banks and NBFCs are known for faster loan approvals and flexible loan terms, but their interest rates are higher compared to public sector banks. These options are especially popular among students planning to study abroad.
| Bank / NBFC | Starting Interest Rate | Interest Rate Range | Remarks |
|---|---|---|---|
| HDFC Bank | 9.00% | 9.00% – 13.75% | Zero processing fee for studies in India |
| ICICI Bank | 9.50% | 10.25% – 13.75% | Loans for both domestic and overseas education |
| Axis Bank | 9.58% | 13.70% – 15.20% | MCLR-based interest rates |
| Kotak Mahindra Bank | 11.50% | Up to 16% | Higher rates for larger loan amounts |
| NBFCs (Avanse, InCred, etc.) | 8% onwards | Up to 20% | Processing fee up to 3.5% plus GST |
Factors Affecting Education Loan Interest Rate
- Loan amount and availability of collateral
- Credit score and income of the co-applicant
- Type of course and ranking of the institution
- Gender-based concessions for female students
Interest is usually charged after the completion of the moratorium period. The EMI is calculated using the standard formula:
EMI = [P × R × (1+R)N] / [(1+R)N − 1]
Where P = Loan Amount, R = Monthly Interest Rate, and N = Total Number of Months.
Tax Benefit on Education Loan
Under Section 80E of the Income Tax Act, borrowers can claim a full tax deduction on the interest paid on education loans. There is no upper limit on this deduction, and it can be claimed for a maximum period of 8 years.
Most banks do not charge any prepayment or foreclosure penalty on education loans, which helps borrowers save money over the long term.
How to Choose the Best Education Loan in 2026
While choosing an education loan, students should compare not only the interest rate but also processing fees, repayment tenure, and moratorium period. In 2026, public sector banks like SBI, PNB, and Bank of Maharashtra are considered the best options for the lowest interest education loans.
To apply for an education loan, students need an admission letter, fee structure, KYC documents, and income proof of the parent or co-borrower. Final loan sanction is issued only after document verification.
In conclusion, checking the Education Loan Interest Rate Comparison of All Banks in India before applying for a loan in 2026 is extremely important, as the right decision can provide significant long-term financial benefits.
Also Read: Education Loan for Abroad Studies 2026: Interest Rates, Eligibility & Best Banks