Canara Bank Education Loan Interest Rate: A Complete Guide

Canara Bank education loan interest rates start from 9.25% and go up to 10.35% under different schemes. The scheme you opt for, the loan amount, collateral-based or unsecured, and the university listing - all of these factors play an important role in determining your interest rates. There are two main schemes under which Canara Bank provides education loans for studying abroad; they are the IBA Model Education Loan Scheme, which is a template scheme of IBA (Indian Banks’ Association), and the Education Loan Scheme for Pursuing Masters Degree. In this article, you can find the eligibility criteria, approximate interest rates, and loan amounts for these schemes.

Note: The interest rates mentioned are indicative and subject to change. The final interest rate also depends on individual profiles and the bank’s discretion.

You can visit the Canara Bank education loan page to learn more about the schemes. 

IBA Model Education Loan Scheme

This is a template scheme designed by the Indian Banks’ Association (IBA). Canara Bank has personalised this scheme for Indian nationals and NRIs with a valid Indian passport. No prepayment penalty is levied under this scheme, and to know the maximum education loan amount and the interest rate, you can check the table below.

Note: The interest rates mentioned are indicative and subject to change. The final interest rate also depends on individual profiles and the bank’s discretion.

Education Loan Scheme for Pursuing a Master's Degree

This is Canara’s scheme for Indian students who want to pursue master’s degrees abroad at top universities. To qualify for this scheme, students are required to take at least one of these competitive exams; the minimum scores are listed below.

• GRE - 300+

• GMAT - 650+

If the collateral value is more than the total expenditure, then you can get your sanction for the entire total expenditure. This is best for courses that require sanction for more than 1 crore. In case your total expenditure is more than the collateral value, then you can get a loan up to 1 crore. In both of these scenarios, the interest rate remains between 9.50% and 10.35%.

RLLR + CRP Explained

RLLR stands for Repo Linked Lending Rate; it is an external benchmark rate used by Canara Bank. RLLR remains the same for every borrower on a given date and cannot be personalised. The only cause of fluctuation is when the RBI Monetary Policy Committee changes the repo rate. These changes can happen during the bi-monthly MPC meeting.

CRP stands for Credit Risk Premium; this is the spread that is applied to the RLLR. CRP can be personalised, and it moves up or down based on collateral, the scheme under which you apply, loan amount, and co-applicant's profile. 

Simple Interest During Moratorium: What It Costs You

The education loan interest during the moratorium period at Canara Bank is accrued as simple interest. If you do not pay it before the moratorium period ends, then the interest is added to the principal and later results in higher EMIs. After the moratorium period ends, you are charged compound interest. Hence, it's always recommended to pay off accrued interest during the moratorium if your financial situation allows.

Dr. Ambedkar Central Sector Scheme - Under this scheme, students belonging to Other Backward Classes (OBCs) and Economically Weaker Sections (EWS) get up to a full interest rate subsidy during their education loan moratorium period. This scheme is only applicable for students who are aiming to pursue Master's programmes, PG diplomas, M.Phil, and PhD. To apply for the Canara Bank education loan subsidy schemes, you can visit the nearest bank branch and get more details.

Note: Fresh applications under this scheme have been paused for now. Hence, students should confirm current application availability directly from the Ministry of Social Justice and Empowerment or the lending bank before applying.

• Scheme - There are two study abroad schemes under which a student can apply for an education loan. Each consists of different eligibility criteria and interest rates. Depending on a student’s profile, he/she can qualify for a particular scheme, which influences the interest rate applied to their education loan.

• Institute category - To qualify for the ‘Education Loan Scheme for Pursuing a Master's Degree’, a student has to get admission in a top university abroad. Canara Bank has a curated list of ‘Top Universities’ that it uses to determine which university qualifies for this master’s loan.  

• Collateral - Collateral and its value also act as a determining factor for the interest rates. When an asset is pledged at the bank, the risk of not being able to recover the loaned amount significantly reduces. This is why secured loans have lower interest rates. To negotiate a lower interest rate, a student can try approaching banks with collateral.

• Co-applicant - A co-applicant with a good credit profile is a compulsory factor to get any education loan. It is well observed that a co-applicant with a better repayment history gets a faster and better deal from the banks.

Read: Co-Applicant's Eligibility Criteria for an Education Loan

Example 1 - IBA Model Education Loan Scheme (no collateral)

Loan amount: ₹7,50,000

Rate of interest: 8.60% (lowest ROI of the tier)

Course duration: 2 years

Moratorium period: Course duration + 1 year = 3 years before EMI starts

Repayment tenure: 10 years

Interest charged during moratorium: Accrues as simple interest, not mandatory to pay. When left unpaid during the moratorium, after it ends, the unpaid portion is added to the capital, where it starts compounding.

Scenario A - Interest unpaid during moratorium starts capitalising and adds to EMI.

• Total interest payable (in 10 years): ~₹6,54,440

• EMI over 10 years: ~₹11,704/month

• Total payment (interest+principal): ~₹6,60,600

Scenario B - Full interest paid during moratorium.

• Total interest payable (in 10 years): ~₹5,58,388

• EMI over 10 years: ~₹9,602/month

• Total payment (interest+principal): ~₹5,58,388

Difference: Paying interest during moratorium saves roughly ₹1.22 lakh over the loan’s life.

Example 2: Education Loan Scheme for Pursuing Masters Degree 

Loan amount: ₹30,00,000

Rate: 10.10%

Course duration: 2 years

Moratorium period: Course duration + 1 year = 3 years

Repayment tenure: 15 years

Interest during moratorium: Accrues as simple interest, not mandatory to pay. When left unpaid, after the moratorium, the unpaid portion is added to the capital, where it starts compounding.

Scenario A - Interest unpaid during moratorium (starts compounding)

• Total interest payable (in 15 years): ~₹42,36,583

• EMI over 15 years: ~₹40,203/month

• Total payment (interest+principal): ~₹72,36,583

Scenario B - Full simple interest paid during moratorium

• Total interest payable (in 15 years): ~₹35,17,698

• EMI over 15 years: ~₹32,422/month

• Total payment (interest+principal): ~₹65,17,698

Difference: Paying interest during the moratorium saves roughly ₹7.18 lakh over the loan's life. 

You can calculate your EMI using the education loan calculator for Canara Bank.

Disclaimer: Figures shown are an illustrative best-case scenario based on the lowest sanctioned interest rates observed. All interest rates are floating and subject to revision.

Here is the full comparison table of Canara Bank education loan interest rates and other banks. To help you choose the best option for your study abroad journey. 

Note: The interest rates mentioned are indicative and subject to change. The final interest rate also depends on individual profiles and the bank’s discretion.

Canara Bank interest rates are determined by RLLR, which is fixed, and CRP, which can be personalised according to the borrower’s profile and requirements. The loan amount you require and the university you get admitted to determine the scheme that is best for you at Canara Bank. In this article, you can find the schemes, their eligibility criteria, interest rates, what determines your EMI, and concessions that can be availed.