Education loans gets cheaper starting at 6.8 percent
Education loan rates have been heading southwards since 2020. As the Reserve Bank of India (RBI) slashed repo rates by 115 basis points cumulatively in March and May last year, interest rates nose-dived across loan categories, particularly home loans.
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Education loan rates have been heading southwards since 2020. As the Reserve Bank of India (RBI) slashed repo rates by 115 basis points cumulatively in March and May last year, interest rates nose-dived across loan categories, particularly home loans.
Given that average Indian families spend nearly one-third of their annual incomes on kids' higher education, the education financing options are as important as home loans. Pandemic or not, cost of higher education – be it in India or abroad – is only go up. Data shows that the number of Indian students obtaining education loans has grown from 2.98 lakh in 2016-17 to 3.09 lakh in 2019-20.
Expectedly, public sector banks are leaders in this space, disbursing over 70 percent of total education loans, followed by non-banking financial companies. This includes dedicated education loan companies such as HDFC's subsidiary Credila and Avanse. Public sector banks also offer the cheapest loans, with rates starting at as low as 6.8 percent for a Rs 20-lakh loan with a tenure of seven years. State Bank of India's (SBI) rates have dropped marginally by 5 basis points over the last two months.