For many Indian students, higher education—especially in prestigious Indian or foreign institutions—comes with a heavy financial burden. As tuition fees, living expenses, and other academic costs rise sharply, education loans have become an essential tool to bridge the financial gap. However, with numerous banks, NBFCs, and government schemes available, choosing the best low-interest student loan schemes in India can be overwhelming.
In this in-depth article, we bring you a complete breakdown of the most affordable student loan options available in 2025. We’ll explore low-interest education loan schemes, government-backed subsidies, interest rates, eligibility criteria, repayment terms, and key benefits—all with credible insights from BusinessesColumn.com.
For a detailed comparison, don’t forget to check out: Best Low-Interest Student Loan Schemes in India.
🎓 Why Indian Students Need Education Loans More Than Ever
The increasing cost of professional education in India and abroad has made it nearly impossible for average middle-class families to fund higher education without external financial help.
Here’s why student loans in India are gaining importance:
- Rising tuition fees for engineering, medical, MBA, law, and international courses.
- Escalating living costs in Tier-1 cities and foreign destinations like the USA, UK, and Australia.
- Competitive interest rates and government subsidies have made loans affordable.
- Tax benefits under Section 80E of the Income Tax Act.
🏦 Types of Student Loan Schemes in India
Student loans can be broadly divided into two categories:
- Bank Education Loans (Public and Private Sector)
- Government Subsidy Schemes
Let’s now look at the best low-interest education loan options in India, available in 2025.
🌟 Top Low-Interest Student Loan Schemes in India (2025)
1. Vidya Lakshmi Education Loan Portal
Launched by: Ministry of Finance, Government of India
Interest Rate: As low as 7.0% – 10.5% (varies by bank)
Loan Amount: Up to ₹7.5 lakh (without collateral), ₹20–30 lakh+ (with collateral)
Repayment: Starts after course + 1-year moratorium
Features:
- Centralized portal to apply to 30+ banks
- Compare schemes and track loan status
- Used by SBI, Bank of Baroda, Punjab National Bank, Canara Bank, and others
Best For: Students applying for Indian or foreign institutes who want to explore and compare multiple loan options in one place.
✅ Apply via Vidya Lakshmi Portal
2. SBI Student Loan Scheme
Bank: State Bank of India
Interest Rate (2025): ~8.15% to 10.05% (with concessions for girls)
Loan Amount: Up to ₹7.5 lakh (without collateral), up to ₹1.5 crore (with collateral)
Tenure: Up to 15 years
Key Benefits:
- No processing fee for loans up to ₹20 lakh
- 0.50% interest rate concession for girl students
- Coverage includes tuition, living expenses, travel, insurance, and equipment
Best For: Students joining reputed institutions like IITs, IIMs, or foreign universities.
3. Bank of Baroda Education Loan – Baroda Gyan / Scholar Scheme
Interest Rate: Starting from 7.85% onwards
Loan Amount: Up to ₹80 lakh (based on institution)
Special Features:
- No margin money for loans up to ₹4 lakh
- Extended repayment tenure (up to 15 years)
- 0.50% concession for female students
Best For: Students applying to top institutions in India or abroad with or without collateral.
4. Punjab National Bank Udaan Scheme
Target Group: Indian students pursuing higher studies abroad
Interest Rate: As low as 9.15%
Loan Amount: Up to ₹1 crore
Special Benefits:
- No processing charges for select courses
- Covers all major expenses including tuition, travel, living, insurance
- Moratorium period = Course duration + 1 year
Best For: Students heading to foreign universities with moderate interest rates and full expense coverage.
5. Axis Bank Education Loan
Interest Rate: ~9.70% – 13.00%
Loan Amount: Up to ₹75 lakh
Features:
- Collateral-free loans up to ₹40 lakh for select institutions
- Quick disbursal and minimal documentation
- Flexible repayment tenure up to 15 years
Best For: Students needing fast processing and flexible repayment options for overseas education.
6. ICICI Bank Education Loan
Interest Rate: ~9.75% onwards
Loan Amount: Up to ₹1 crore
Features:
- Covers both undergraduate and postgraduate courses
- Digital application process
- Special insurance plan bundled
Best For: Students who prefer private banking experience with wide institute coverage.
7. HDFC Credila Education Loan
Type: NBFC (specializing in education loans)
Interest Rate: Starting from 11%
Loan Amount: Customized (up to ₹1 crore+)
USP:
- Tailor-made loan offerings
- Higher education loan without upper limit for top global universities
- Loans disbursed even before visa application
Best For: Indian students applying to Ivy League or top foreign universities needing large funding.
🛡️ Government Subsidy Schemes on Education Loans
1. CSIS – Central Sector Interest Subsidy Scheme
Target: Students from economically weaker sections (EWS)
Income Limit: Parental income below ₹4.5 lakh/year
Benefit: Interest subsidy during course period + moratorium (no need to pay interest)
Eligible Courses:
- Technical/professional undergraduate and postgraduate courses in India
- Loans taken under the Indian Banks’ Association (IBA) model
Best For: Families with low annual income seeking full interest support during study years.
2. Padho Pardesh Scheme (Discontinued in 2022)
Note: This scheme for minority students studying abroad has been discontinued. New applicants may instead explore Merit-cum-Means Scholarships or state-level support schemes.
3. Dr. Ambedkar Central Sector Scheme
For: OBC and EBC category students
Benefit: Interest subsidy on loans for foreign studies
Condition: Annual income ≤ ₹8 lakh
Best For: Socially disadvantaged students aspiring for foreign education.
💡 Additional Tips for Students & Parents
1. Compare Total Cost
Don’t just look at interest rates. Consider processing fees, moratorium interest, loan margin, and collateral requirements.
2. Choose Moratorium-Friendly Options
Look for schemes that offer interest subsidies or deferred payments until after graduation.
3. Negotiate for Lower Rates
If your profile includes admission to a top-ranking institute, some banks may offer negotiated interest rates.
4. Apply for Scholarships
Combine your loan with merit scholarships to reduce your funding burden.
5. Take Term Insurance
Always secure an education loan with term insurance so that your family isn’t burdened in case of an unfortunate event.
📊 Education Loan EMI Example
Loan Amount ₹20 Lakh
Interest Rate 9.5%
Tenure 10 years
EMI ~₹26,000/month
Total repayment = ₹31.3 lakhs
Early repayment or prepayment helps save interest.
Use bank EMI calculators or consult a loan advisor before finalizing.
📌 Required Documents for Education Loan
- Admission letter from institution
- Academic certificates (10th, 12th, graduation)
- Income proof of parents/guardian
- KYC documents (Aadhaar, PAN, passport)
- Fee structure & living expense estimate
- Passport & visa (for overseas studies)
- Collateral documents (if applicable)
💬 Role of BusinessColumn.com in Empowering Students
At BusinessesColumn.com, we aim to simplify finance and loan topics for Indian families. Our article on Best Low-Interest Student Loan Schemes in India is a one-stop guide to help you compare loans and make informed financial decisions.
We regularly update our platform with:
- Loan eligibility calculators
- Bank-wise interest rate comparisons
- Tips to save interest on student loans
- Scholarship options for Indian students
✅ Final Thoughts
Pursuing your dream education—whether in India or abroad—should never be restricted due to financial constraints. With multiple low-interest student loan schemes and government-backed subsidies now available, it’s entirely possible to fund your academic goals without burdening your family.
Begin your loan planning early, compare options carefully, and align repayment terms with your future income potential.
For expert tips, calculators, and guides, visit BusinessColumn.com and explore our latest article on Best Low-Interest Student Loan Schemes in India.
Disclaimer: Interest rates and features are indicative and may vary by bank, course, or applicant profile. Always confirm with the lending institution before applying.