Karnataka Bank Education Loan for Studying Abroad

Karnataka Bank education loans for Indian students are offered under a scheme known as KBL PEAK. Under this scheme, you can get a loan amount of up to ₹2 crore with collateral and up to ₹40 lakh for collateral-free loans. The interest rates range from 9.77% to 13.77% p.a. The maximum repayment tenure is 15 years, and there are no prepayment or foreclosure charges levied by the bank. 

This guide covers Karnataka Bank's education loan interest rates, eligibility, documents, margin money, repayment, and more.

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

Karnataka Bank education loans for abroad are offered under the KBL PEAK scheme. To learn more about the scheme, you can read the information below.

KBL PEAK (India + Abroad)

This is Karnataka Bank’s flagship scheme under which they provide education loans for domestic and international universities. This scheme has various benefits; key benefits include no prepayment charges, a girl student concession, and no margin for premium institutes. During the moratorium, the interest charged is simple, and only interest payments are required during the moratorium. The maximum loan amount for secured loans is ₹2 crore, and for unsecured loans it is ₹40 lakh. For both, the interest rate starts at 9.77%. 

Karnataka Bank has a wide list of collateral that it accepts for its education loan; they are mainly divided into two types: liquid/financial assets and immovable assets. You can find the list of acceptable collateral below:

Liquid/Financial Assets

These are the liquid/Financial assets accepted by Karnataka Bank:

Immovable Assets

These are physical assets that are accepted by Karnataka Bank for providing an education loan. 

Note: Collateral is only required for loans above ₹40 lakh.

The Karnataka Bank education loan interest rate starts at 9.77% for secured and unsecured loans and can go up to 13.77%. Unlike most banks that only offer a floating rate of interest, Karnataka Bank offers both fixed and floating rates of interest to the borrower. 

During the moratorium period, Karnataka Bank calculates simple interest on the amount that is disbursed. Interest is charged only on the amount disbursed, not the full sanctioned loan amount. All the simple interest accrued during the moratorium period has to be paid before the repayment tenure starts to avoid compounding. 

How the Rate Is Calculated (MCLR + Spread)

MCLR stands for Marginal Cost of Funds-Based Lending Rate. It is the minimum interest rate below which banks are not allowed to provide loans. MCLR is the benchmark rate that Karnataka Bank follows to calculate your interest rates.

Interest rates are decided by two factors: the benchmark rate and the spread rate, both of which are set by the bank. The benchmark rate is a set percentage that changes periodically, whereas a spread rate can be personalized based on the student’s and co-applicant’s profile. Both of these percentages together make up your final interest rate that banks offer you. 

What Decides Your Interest Rate

The final Karnataka Bank education loan interest rate for each student offered under KBL PEAK can vary depending on the student's and co-applicant's profile. Factors such as the university of choice, course, co-applicant's credit profile, loan amount, and whether the loan is secured or unsecured determine the applicable interest rate. The final rate of interest is decided by Karnataka Bank based on the student’s profile and its terms of lending.

The loan amount for a Karnataka Bank education loan can go up to ₹2 crore for secured loans and up to ₹40 lakh for unsecured loans, for both institutions in India and universities abroad. The final loan amount can vary based on various factors such as the co-applicant’s income and CIBIL score, the university you choose to go to, and the total expenditure of your education. Here is the list of all the expenditures covered under your Karnataka Bank education loan. 

• Academic Expenditure - Includes tuition fees, exam fees, books, lab charges, equipment charges, and any academic expenditure specified by the university.

• Living Expenditure - Rent, hostel charges, food and grocery charges, basic clothing, Wi-Fi and phone bill, and household appliances are covered under this category. 

• Miscellaneous Expenditure - Insurance, flight charges, public transit charges, and curriculum-related charges are also provided by the banks.

Margin Money Requirement

Not every bank sanctions the loan for the entire total expenditure requested by students. There is a small portion of the total expenditure that the student has to pay from their own pocket. It is not a fee you pay to the bank but instead a portion of your total expenditure that you agree to pay from external funds and not your loan. Fortunately, at Karnataka Bank, the margin money for an education loan is zero for premium institutions, which means for premium universities you can get 100% of your required loan amount without having to pay anything from your own pocket.

Repayment is an essential part of the loan process. How your repayment journey is going to look is something banks explain to you while you are taking your education loan. Here are a few terms used by banks during your loan process; understanding them helps in making better financial decisions.

Moratorium Period

The education loan moratorium period is also known as a grace period or repayment holiday, in which the student does not have to pay any EMI. During this period, simple interest is calculated on your disbursed amount, and only the accumulated interest has to be paid to the bank. The moratorium tenure offered by Karnataka Bank for courses shorter than one year is course duration + 6 months. For courses with a duration of over a year, the offered moratorium period is course duration + 18 months (1.5 years).

Repayment Tenure

The education loan repayment tenure refers to the period after your moratorium period ends, during which your EMIs start and continue until your entire borrowed loan amount is repaid. Unlike the moratorium period, where simple interest is charged, during the repayment tenure, you are charged compound interest.

The maximum repayment tenure offered by Karnataka Bank to repay the borrowed amount is 15 years. On a set date each month, you are required to pay EMI, which consists of accrued interest and a portion of your principal loan amount. This, in the long run, clears the loan amount. 

Prepayment and Foreclosure Charges

Prepayment is divided into two types: partial prepayment (Part-Payment) and full prepayment (Foreclosure). In partial prepayment, you pay a lump sum over your regular equated monthly installments (EMI), which entirely goes towards your principal. This reduces your EMIs as the principal reduces. Foreclosure or full prepayment refers to paying off the entire pending loan amount in a single go and closing your loan. In both scenarios, the bank loses future interest income, which makes them levy a prepayment/foreclosure charge. But for Karnataka Bank, this charge isn't applicable; they do not levy any prepayment or foreclosure charges, making it easier for applicants to prepay their loan.

Karnataka Bank Education Loan EMI Calculator

To understand your repayment entirely, you need to first understand how your EMI works. Here is an example that is going to help you understand how your EMI works.

Let's imagine you take up a loan of ₹20 lakh under KBL PEAK for a 2-year course at 10.5% p.a. with a repayment tenure of 10 years (excluding moratorium). As specified by Karnataka Bank, you pay full simple interest during the moratorium period (12 months).

Disclaimer: Figures shown are illustrative examples only. Actual figures may vary based on applicable loan terms and conditions. 

Calculating your EMI for your future education loan is a great way to understand what your repayment journey is going to look like and how much financial burden you can bear. This gives you a clear picture of all the calculations that are done to derive your final EMI.

Student Eligibility Criteria

To qualify for a Karnataka Bank education loan, you need to meet the following conditions:

• You must be an Indian citizen.
• You must have a confirmed admission offer from a recognized institution in India or abroad. Under KBL PEAK, both are covered.
• You must apply with a co-applicant, usually a parent, guardian, or spouse.
• The co-applicant needs a stable income and a healthy credit profile. Their income and CIBIL score influence your loan amount and interest rate.
• If you are a minor, the loan is applied for through your parent or guardian.
• You need to submit your admission letter, academic records, and any required test scores (GRE, GMAT, IELTS, TOEFL, etc.).

Meeting these criteria doesn't guarantee approval. The bank makes the final decision based on your profile, your co-applicant's profile, and its lending policies.

Eligible Courses and Institutions

Courses
Karnataka Bank education loans cover full-time, regular undergraduate, postgraduate, diploma and professional courses, including engineering, medicine, management, law, etc. For short vocational or skill-based courses at ITIs, polytechnics and NSQF-aligned institutes, Karnataka Bank has a separate KBL Skill Loan.

Institutions in India

• Recognized universities and colleges, including premier institutions (no margin money for premium institutes under KBL PEAK)

Institutions abroad

• Recognized universities and colleges in the destination country, available under KBL PEAK only

Not every university or course is treated the same. Margin money, interest rate, and loan amount can vary by institution, so check with your financial officer before you apply.

To start the process, you need the Karnataka Bank education loan application form and documents from the student and the co-applicant. You can check out the detailed education loan documents checklist for Karnataka Bank below. 

Student Documents

Academic Documents - Copies of 10th and 12th marksheets, Semester-wise graduation results (if applicable), Entrance exam results (GMAT, CAT, etc.), Language test results (TOEFL, IELTS, etc.), Offer letter or admission letter from the university.

KYC Documents - Aadhaar, PAN card, Voter ID, Driving license, Passport, etc.

Co-Applicant and Income Documents

KYC Documents - Aadhaar, PAN card, Voter ID, Driving license, Passport, etc.

Financial Documents - 

• For Salaried - Last 3 months' salary slips, last 6 months' bank statement (where salary gets credited), last 2 years' Form 16

• For self-employed - Last 3 years of ITR with statement of income, P&L account along with balance sheet, last 6 months' bank statement, and business proof. 

Collateral Documents

Property documents for residential and commercial properties: 

1. Sale agreement/Chain agreement,

2. OC (Occupancy Certificate), CC (Commencement Certificate), or sanctioned approval,

3. Latest maintenance copy,

4. Utility bill of the property,

5. Society NOC (Karnataka Bank Form)

Liquid securities:

1. Fixed Deposits - Principal value certificate

2. Insurance - Surrender value certificate and policy papers 

3. Government Securities - Face value certificate and policy papers

These are some of the most popular liquid security documents. Every collateral has a list of required documents; do check with your bank prior to applying for your education loan process.

For unsecured loans, the co-applicant must provide residence-stability proof, such as a property tax receipt or rent agreement.

To begin your application at Karnataka Bank for an education loan via WeMakeScholars, you start by filling out the eligibility form. After that, you will be assigned a financial officer who will then assist you in your entire loan process. 

Your application process starts with filling out the eligibility form, after which you talk to our financial officer, who tailors the best plan for you based on your profile and requirements. After that, you submit all the required documents on the WeMakeScholars portal, and your financial officer becomes your primary point of contact. They keep you posted regarding all the updates in your process, making the process hassle-free and fast. 

KBL PEAK Application

You can also apply directly for the Karnataka Bank education loan via the bank portal. You start by filling the form, entering all your basic details, and submitting all the required documents. After which, the bank evaluates your profile and contacts you to proceed with the loan process. The application link can be found on the bank's official page listing KBL PEAK. 

Processing Time

Processing time refers to the time banks take to evaluate your profile and provide you with a sanction letter after you have submitted all the required documents. Here is the average time that it takes to process your loan application after document submission.

Karnataka Bank charges a flat processing fee of ₹10,000 + GST for the KBL PEAK scheme, irrespective of the loan amount. The processing fee covers administrative costs of the loan application process and is mandatory. 

Apart from the education loan processing fee, there are a few additional charges that may apply to your application based on your loan type:

Interest Concession for Girl Students: Many banks offer special benefits to female students to encourage higher participation in pursuing higher studies. Karnataka Bank also offers an interest rate concession where they provide a concession of 0.10% to female students. This concession is only applicable for students who are planning to pursue STEM (Science, Technology, Engineering and Mathematics). For example, if your interest rate is 10.35%, then after applying this interest rate concession benefit, your new interest rate will be 10.25%.

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

WeMakeScholars provides holistic support to students who aim to pursue their higher education abroad. We are partnered with multiple banks and NBFCs and have helped 100,600+ students. Processing your education loan via WeMakeScholars comes with various key benefits; some of the most common ones are:

• Better Interest Rates: Processing via WeMakeScholars can get you interest rates up to 2% lower than applying directly with a bank.

• Faster Loan Process: Banks often take weeks to process a loan application; constant follow-ups can further delay processing. With our team by your side, you not only receive quick updates but also higher priority compared to if you get your loan processed directly.

• Tax Benefits: Interest paid on an education loan is deductible under Section 80E of the Income Tax Act under the old regime, and we will guide you through it.

• End-to-End Support: From compiling documents to meeting every bank’s requirement. WeMakeScholars financial officer assists you in the entire loan process, giving you fast, hassle-free, and complete support.   

• Cashback: Students going through us earn cashback of up to ₹3,000 in their first disbursement.

Karnataka Bank is a good option for students who are looking for flexibility in their education loan. They offer both fixed and floating rates of interest; unsecured loans can go up to ₹40 lakh and require no margin money for premium institutes. The moratorium period is also much longer (up to 18 months after the course duration) compared to other banks or NBFCs. 

The interest rates for both secured and unsecured loans start from 9.77% and go up to 13.77%, with the maximum loan amount for secured loans going up to ₹2 crore. Karnataka Bank also offers a repayment tenure of up to 15 years. Before you apply, compare the bank's terms with your own profile, the university you've chosen, and your co-applicant's credit history. If you'd like guidance on rates, documents, and the application process, WeMakeScholars can match you with a financial officer who will help you at every step. Check your eligibility today to get started.