Union Bank Education Loan Interest Rate

Union Bank education loan interest rate starts from as low as 8.50% and goes all the way up to 10.25%. There are two schemes under which Union Bank education loans are provided: Union Education Loan Scheme and Special Union Education Loan Scheme. Both schemes have secured and unsecured loan options. During the moratorium period, the bank calculates simple interest, which isn't mandatory to pay. The maximum repayment tenure offered is 15 years, excluding the moratorium. The processing fee for the schemes is 10k + GST if the loan amount is below 40 lakh; for loan amounts above that, the processing fee is 20k + GST. 

This article explains UBI education loan interest rates, how they are calculated, what affects them, how your EMI will look, and how you can get a better deal. To learn more, you can read the article below.

Here is an overview table to understand the Union Bank of India education loan interest rate:

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

Union Bank education loan interest rates for abroad schemes are listed below. The education loan interest rate at Union Bank is calculated based on the External Benchmark Lending Rate (EBLR). This consists of two primary rates: the RBI repo rate and the spread rate. On this EBLR, banks add their spread charges and then provide the effective rate of interest. The Union Bank education loan interest rate differs based on the scheme of choice, loan amount, and type of loan (secured/unsecured). Here is a detailed breakdown of Interest rates under each scheme. 

Category A Institutes: Rate by Loan Amount and Collateral

Category A is a section under the Special Union Education Loan Scheme; in this category, top/premier institutions are listed. The categorisation is based on the university ranking and the bank’s internal assessment criteria. Under this category, the maximum loan amount that the student can avail without collateral is ₹40 lakh. If an asset is pledged, the maximum loan amount is ₹1.5 crore. The lowest Union Bank education loan interest rate under this scheme is 8.50%, going up to 9.50%.

Category B Institutes: Rate by Loan Amount and Collateral

Category B consists of well-recognised and reputed institutions that are considered among the top universities, but are ranked below Category A institutions. Under this category, the maximum loan amount that the student can avail collateral-free is ₹30 lakh, and under a secured loan, the maximum loan amount is ₹1.5 crore. The Union Bank education loan interest rates under this category start as low as 8.65% and go up to 9.75%. Here is a breakdown of the education loan interest rate at Union Bank:

Rates for Non-Listed Universities Abroad

What if a university is not listed as premier? Can applicants still get an education loan? Yes, even if a university is not listed, students can still get an education loan under the Union Education Loan Scheme. Under this scheme, the maximum loan amount that a student can get collateral-free is ₹7.5 lakh, beyond which collateral is mandatory. The maximum loan amount is provided as per the needs of the applicant based on the course requirements. The Union Bank education loan interest rate under this scheme starts at 9.50% for female applicants and 10.00% for male applicants. Here is a detailed list of interest rates under the Union Education Loan Scheme: 

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

Note: The EBLR used to calculate the Union Bank education loan interest rate as on date (November 2026) is 8.25%, i.e., RBI repo (5.50%) + Spread (2.75%)

How to Check Which Category Your University Falls In

Under the Special Union Education Loan Scheme, the list of eligible universities for Category A and B is predecided. This list consists of the premier universities and the eligible courses for each of them. You can check which category your university falls under by checking the Union Bank Education Loan, eligible courses, and institutions section. Any university that doesn't fall in the premier listing is eligible for the Union Education Loan Scheme.

In the above section, we understood what is considered to determine your final Union Bank education loan interest rate. In this section, we will understand how Union Bank of India education loan rate of interest is calculated. 

What Is EBLR

EBLR stands for External Benchmark Lending Rate. It is a reference rate that banks use to determine the interest rates on floating-rate loans. EBLR is directly linked to the RBI repo rate, so any changes in the repo rate are reflected in the benchmark rate.

To understand this simply, the repo rate is the rate at which the RBI lends funds to the banks. Banks then add an applicable spread percentage to the benchmark rate to determine the final Union Bank of India education loan rate of interest that is charged to the borrower. This can be expressed as:

Final Interest Rate = EBLR + Applicable Spread

How Collateral Coverage Lowers Your Spread

To understand how collateral coverage lowers your spread, we first need to understand why collateral-based loans have lower interest rates. Collateral-based loans/secured loans lower the risk of default or loan non-repayment. This is why secured loans always have a lower interest rate. In the same way, fully secured loans will also have a lower interest rate compared to partially secured loans. When the total expenditure cost is covered 100% by the collateral value, then the spread rate offered ranges between 0.25% and 0.40% under the Special Education Loan Scheme. 

When the collateral value covers only 50% or above (lower than 100%) of the total expenditure, then it is known as a partially secured loan, and the spread rate for that ranges between 0.50% and 0.65%. 

Repo Rate Changes

EBLR consists of the repo rate plus the spread rate, in which the repo rate is a fluctuating rate that is decided by the RBI’s Monetary Policy Committee (MPC). The committee meets once every two months and decides if the repo rate should remain the same, drop, or hike. In simple terms, if the repo rate rises, then the Union Bank education loan interest rate rises, leading to higher EMIs. If the repo rate falls, then EMIs are lower. Note that these fluctuations are very minimal and only apply to floating-rate loans. To secure the borrower, Union Bank provides a facility where the borrower can shift from a floating rate of interest to a fixed rate and vice versa. The conditions for this can be read from the bank’s official website.

The choice of secured or unsecured loans primarily depends on the loan size and how much risk your family is comfortable with. Under the Union Education Loan Scheme, the maximum loan amount provided collateral-free is ₹7.5 lakh. For Category A & B universities, the loan amount is ₹40 lakh and ₹30 lakh, respectively, under the Special Union Education Loan Scheme. Secured loans go up to ₹1.5 crore for the Special Union Education Loan Scheme and have no cap for the Union Education Loan Scheme. But secured loans take a longer processing time compared to unsecured loans, as they involve additional steps such as legal and valuation checks. As collateral is provided, the risk associated with the loan is lower, which allows the bank to give a lower interest rate for secured loans. Hence, depending on your profile and requirements, students can choose between secured and unsecured loans.

The education loan moratorium period refers to the grace period during which EMIs don't start. This period lasts for the course duration + 1 year post-course completion. During which simple interest is calculated on the disbursed loan amount and not the entire sanctioned amount. 

At Union Bank, paying this accrued interest is optional. After the end of the moratorium, this unpaid interest is added to the principal loan amount, after which compound interest is calculated. Hence, it is suggested that if the applicant/co-applicant can, they should clear the accrued interest amount before the end of the moratorium. This step alone can save lakhs for the students.

Understanding how your loan amount, scheme, and interest rate determine your EMI is essential to make informed decisions about your education loan repayment journey. Here is a detailed example to understand EMIs:

The examples assume a 2-year course, so the moratorium period is 3 years (course duration plus 1 year) and the repayment tenure is 15 years. 

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

Every case is different; hence, you can use the education loan EMI calculator to calculate your future EMIs.

1. Loan Type - Secured loans have a lower rate of interest as the risk associated with the loan is reduced significantly because of the collateral. Hence, most banks offer a much lower rate of interest for secured loans. In the case of Union Bank, both fully secured and partially secured loans are possible. UBI education loan interest rates start as low as 8.50% for fully secured loans and 8.75% for partially secured loans. 

2. Co-applicant - A strong co-applicant profile is crucial in the education loan process. A good income and a strong credit score help banks trust you when providing a loan. If the co-applicant has a CIBIL score above 700, then the chances of getting a better deal from the bank are higher. 

3. Apply via WeMakeScholars - WeMakeScholars is partnered with 20+ banks and NBFCs. This allows your profile to be evaluated across various banks in order to secure the best deal. The financial officer who will be assigned to you will also negotiate with the bank and get interest rates lower than the market rate. You can start your education loan process via WeMakeScholars by clicking on ‘Check Eligibility’.

Here are the education loan interest rates at Union Bank of India and other public banks:

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

In the above article, we understood how the Union Bank education loan interest rate and EMI are calculated. What affects them, and how you can secure a lower interest rate for your abroad education loan. The article also highlights both Union Bank Education loan schemes. These are the Union Education Loan Scheme and Special Union Education Loan Scheme. Both provide secured and unsecured education loans. For the Union Education Loan Scheme, the Union Bank education loan interest rate starts from as low as 9.5% and goes up to 10.25%. The maximum loan amount under this scheme is offered as per the requirement of the applicant. The other scheme is the Special Union Education Loan Scheme for premier universities, where the interest rates start from as low as 8.5% and go up to 9.75%. The maximum loan amount (unsecured) under this scheme is ₹40 lakh for Category A and ₹30 lakh for Category B universities. Secured loans can go up to ₹1.5 crore. The moratorium period lasts for the course duration plus 1 year, during which simple interest is calculated and is not mandatory to pay. The repayment tenure offered lasts up to 15 years. The education loan processing fee charged for both schemes is 10k + GST if the loan amount is below 40 lakh, and for amounts above that, it's 20k + GST.