Ultimate Guide to Choosing the Right Lender for Education Loan

✓ Lenders of Education Loan

✓ Secured Education Loan

Speak with a Financial officer

Due to high number of loan requests from your region, we are not accepting any new applications at the moment. We believe in offering quality service to our customers.

Sorry for the inconvenience caused.

What is the first thing that comes to mind when you think about borrowing an education loan? If your answer is ‘finding the right education loan lender’, then you're on the right track. 

Finding a reliable education loan lender can be a challenging process, given the attractive terms offered by numerous education loan lenders; both private and public. If you're having trouble picking on an education loan provider, this article should answer all of your questions and will help you make a decision.

So, what we mean when we say "right education loan lender" is that education loan schemes from a lender that best suits your requirement. There are several factors that are to be considered while finalizing an education loan lender. 

Most students often commit the mistake of only looking at the education loan interest rate and then deciding on the education loan lender. Since interest rates are floating in nature, they may change in the future depending on the lenders' policies. The first factor that you must consider is which type of education loan to borrow. 

Want to take your education to new heights? Let Wemakescholars be your rocket fuel

Which type of Education Loan to go for?

You may know that there are two different types of education loans in India which are- 

The first step towards a successful education loan process is determining the type of loan you wish to fund your higher education with. This mainly depends on your financial requirements and whether or not you have collateral to pledge to take a loan against it.

When to go for a secured Education Loan?

A secured education loan requires students to pledge acceptable collateral security to get a loan against it. The value of this asset has to be greater than the education loan amount you need. If you have collateral, then it is better to consider a secured education loan from a Government bank to fund your higher education.

Also read: What are The Benefits of a Government Bank Education Loan?

However, you should know how are collateral value for education loans. Since a lot of students get confused when terms like loan margin, fair market value, etc are thrown at them when they directly try to approach these government banks for an education loan. 3

This is when the services of WeMakeScholars come in handy. So, if you are someone who is confused about the education loan terms of collateral education loans, do get in touch with the WeMakeScholars team.

When to opt for an education loan without collateral?

Now, if you are someone who doesn’t have any assets to pledge as collateral, or are not able to manage even a third party’s assets for the same purpose, you may consider funding your studies with the help of an unsecured education loan. 

Private banks and NBFCs are the two main lenders in India that offer unsecured education loans for abroad studies. Government banks too offer unsecured education loans but only up to 7.5 lakhs which are not enough for education abroad. 

Education loan Lenders

As you may know by now that there are basically two preferable options for students i.e, secured education loans from Government banks and unsecured education loans from private lenders. Following are the top education loan lenders from different sectors-

Government banks

Private banks


The State Bank of India (SBI)

Axis Bank


Bank of Baroda (BOI)



Punjab National Bank (PNB)



Canara Bank

HDFC Bank 


These are the lenders renowned for their student-friendly education loan schemes. We've covered the schemes covered by these lenders in our previous articles which you should go through and link to which are given below.

Now that you know the types of loans, their lenders, and schemes, let us take a look at some of the important aspects of a typical education loan scheme that you should consider before finalizing the lender.

Don't let student loan debt get you down. Wemakescholars can help you turn that frown upside down

Education loan lender: Interest rates

Every applicant considers the interest rates offered by education loan lenders before everything else. Sometimes, it is the only factor that is taken into account by students and their guardians alike while zeroing in on an education loan lender. You should always consider the interest rates offered by education loan providers when you begin your education loan journey. This is one of the basic parameters of a typical education loan scheme.

Government banks offer lower interest rates for abroad education loans that fall in the range of 8.5% to 10%. The interest rates charged by private lenders are in the range of 10% to 13.5%.

Education Loan processing fees

Although this aspect of the education loan process is seldom the talking point of discussions, processing fees are a very important part of the education loan process. Education loan lender decides the education loan processing fees depending on the services opted for by loan applicants. Government banks have a fixed processing fee while those of NBFCs and private banks differ. 

NBFCs and private banks charge a certain percentage of the total education loan amount sanctioned as processing fees. This percentage falls in the range of 0.9% to 2% of the total loan amount sanctioned.

Education Loan repayment policies

Another factor that is highly underestimated by loan applicants is the policies of education loan lenders regarding the repayment of abroad education loans. Repayment is one of the primary things that should be considered by every education loan applicant before deciding to borrow a loan to fund their studies.

The education loan repayment policies of government banks are more feasible for students who do not have financially stable co-applicants. Government banks grant a moratorium period on education loan repayment. This is one of the highlights of government bank education loans. Interest charged during the moratorium period can be paid along with the EMI, later.

The repayment policies of NBFCs and private banks require students to begin their education loan interest payment a month from the date of their first disbursement of the education loan. So if you are opting for an education loan without collateral, do keep this point in mind.

Looking for a partner to help you fund your education? Look no further than WeMakeScholars

Education Loan Insurance

Education loan insurance is another aspect that is often overlooked by students. More often than not, many applicants fail to understand the importance of education loan insurance. Most education loan lenders, especially private lenders, require students to purchase education loan insurance. 

An education loan insurance issued by the lender ensures that in the wake of an unfortunate event, for e.g, the candidate facing a medical issue or death, the burden of the education loan repayment does not fall on the family. If something of the sort happens, the education loan insurance money can be used against repayment to the lender. 

Government banks offer an additional waiver on their interest rates when students purchase education loan insurance. NBFCs and private banks have made it mandatory for students to purchase education loan insurance.

Education loans acceptability in embassies

A few countries do not accept unsecured education loans as sources of funding. This is especially true about Australia and New Zealand where the embassy of these countries usually does not accept unsecured education loans as sources of funding for the student visa process. 

If you are planning to borrow from a private lender, do check whether an education loan from your respective lender is considered to be acceptable by that country’s embassy. Proceed with the application process only after confirming the same.

All of the factors mentioned above are significant in the decision-making process of choosing an education loan lender. So do keep these in mind when you decide to borrow an education loan to study abroad. 

Or better yet, you can simply connect with WeMakeScholars, and your assigned financial officer will suggest to you the best lenders for you as per your requirement. The service provided by us is completely free of cost for students. So, what are you waiting for? request a callback now!

Education Loan FAQs

  • How do I determine the loan amount I need for my education?

    To determine the loan amount, you need to calculate the total cost of your education, including tuition fees, accommodation, travel, books, and other expenses. You can also consider your family's financial contribution towards your education and other sources of funding if any. For a more clear idea, you can talk to our Financial Officers they will provide you with all the necessary details required for you.

  • Can I apply for an education loan for studying abroad?

    Yes, you can apply for an education loan for studying abroad. However, the loan amount, interest rates, and repayment period may differ from those for studying in India. You may also need to provide additional documents, such as visa and travel documents, and the loan processing time may be longer. It is important to check with the WeMakeScholars beforehand and understand the terms and conditions of the loan.

  • Is it better to opt for a secured or unsecured education loan?

    Choosing between a secured or unsecured education loan depends on your financial situation. A secured education loan requires collateral, such as property, fixed deposit, govt. bonds, and LIC policies which can help you get a lower interest rate and higher loan amount. However, if you do not have collateral, you can opt for an unsecured education loan, which may have a higher interest rate and lower loan amount. But you have to get the exact details beforehand from our team to get the best deal for yourself.

  • What documents do I need to submit while applying for an education loan?

    The documents required for an education loan may vary from lender to lender. Typically, you may need to submit your admission letter, mark sheets, income proof, identity proof, address proof, and other documents as required by the lender.

  • Is it necessary to have a co-applicant for an education loan?

    Having a co-applicant may be necessary for an education loan depending on the lender's policy. A co-applicant is someone who guarantees to repay the loan if the borrower is unable to do so. We suggest students to add co-applicant because they can increase their chances of getting approved for a loan and may also get you a better interest rate.