SBI Education Loan (State Bank of India) offers one of the best interest rates in the market for Indian students wishing to pursue their Master’s degree or MBA degree in the United States. SBI offers interest rates as low as 9.5% with a 15-year repayment term. The SBI Global Ed-Vantage Education Loan program is an option that all students wanting to study abroad must consider with a high loan margin and low interest.

FinTown Rating: 4/5

Category Rating
Interest Rate 4.5
Fees, Charges & Terms 4
Loan Margin 4
Application Process 2

 

  • Interest Rate: With industry-leading interest rates starting at as low as 9.65%, SBI scores very highly here
  • Fees, Charges & Terms: SBI’s processing fee and charges are competitive at a max of 10,000 INR.
  • Loan Margin: SBI offers a 100% of tuition and covers up to 20% of tuition on other education-related expenses which is competitive.
  • Application Process: Compared to many of the online lenders, SBI’s process to get an application through is quite tedious. However, considering the

Pros and Cons:

Pros Cons
Low-Interest Rate Loan and Tedious Application Process
Potential income tax benefits Prepayment Penalty
Low processing fee (INR 10,000) Collateral / Cosigner required
Loan margin covers tuition and expenses
up to 20% of tuition cost

Rates, Charges, and Terms

Interest Rate 10.65%
10.15% (women)
10.15% (men who have life insurance policy assigned to SBI)
9.65% (women who have life insurance policy assigned to SBI)
Processing Fee Up to INR 10,000
Loan Repayment Term Up to 15 years
Grace Period (Moratorium) Up to 6 months after completion of course
Loan Margin (Amount that can be borrowed) 20 Lakhs – 1.5 Crore INR
Eligible Courses
Graduate, Masters, and Doctorate courses in foreign universities in USA, UK, Canada, Australia, Europe, etc
Eligible Expenses
Tuition Fees + Travel Expenses + Other expenses capped at up to 20% of Tuition Fee expenses
Collateral / Security Required (Collateral owned by a third party that is not parents also accepted)

Interest Rate:

SBI’s Global Ed-Vantage Program offers one of the most competitive interest rates in the market for education loans. While private banks offer rates starting at ~11% and NBFC’s offer interest rates starting at ~13%, SBI comes out much cheapest starting at 9.65%.

For those that are interested in Prodigy Finance which advertises interest rates starting as low as ~8%, you might be interested in learning more about interest rate parity. With interest rate parity, what we need to learn is that interest rates from two different countries can never be compared as apples to apples. Our advice is that when someone compares Prodigy Finance’s interest rates to loans from Indian banks, there has to be a 5% buffer added to Prodigy interest rates. To learn more about Prodigy Finance and interest parity, please click here.

Is SBI Education Loan RIGHT for you?

SBI Education Loan is GREAT for anyone who might be considering an education loan

When is SBI NOT the best choice?

SBI Education Loan might NOT be the best for you if:

  • You do not have a collateral: Unless you do not have a collateral to offer, SBI Education Loan is one of the best offers in the market.

When you do not have the option to choose SBI, you can choose to apply for loans with NBFC’s like Credila and Avanse. There are also other options like Prodigy Finance which we discuss in detail below.

Repayment Terms

Grace Period:

Banks usually offer a grace (moratorium) period after the graduation of the student from college/university for the student to secure a job and start repayments. With SBI, the grace period is 6 months after graduation.

Loan term:

The SBI Global Ed-Vantage Education Loan Program can be taken for a loan term of up to 15 years.

Early Payment Penalty:

There is sometimes an early payment penalty that might be levied by SBI for students who want to repay their loan prior to the loan term. In this case, check with your loan issuing branch to ensure you understand the terms of early payment penalty if levied.

Collateral and Cosigner?

SBI Global Ed-vantage Program NEEDS a collateral for this program. A collateral can either be offered by the parents or a 3rd party who will become a co-signer on the loan.

The collateral should be valued at a rate that is greater than the principal amount of the loan. Examples of acceptable collaterals include Fixed Deposits and Real Estate properties.

The co-signer is responsible for the loan payments if the primary borrower defaults on the loan. In such a case, the co-signer(parent/3rd party) might be required to liquidate collateral.

Expenses Covered

The expenses covered under this program include FULL Tuition Fee. The full list of expenses include:

  • Tuition Fee
  • Exam, Library, and Lab Fees
  • Travel Expenses
  • Education costs up to 20% of the cost of Tuition
    • Cost of books, equipment, technology(laptop), study tours, project work, thesis, etc.
  • Other miscellaneous expenses of up to 10% of tuition fees of course
    • Caution deposit, building fund, refundable deposit, etc

Document Requirements for Application

  • Official Admission Offer Letter from University/College
  • SBI Loan Application Form (Filled out)
  • 2 Passport Photos
  • PAN Card
    • Student
    • Parents
    • Co-signer if not the parent
  • Aadhaar Card
    • Student
    • Parents
    • Co-signer if not the parent
  • ID Proof (Driver License, Passport)
  • Residence Proof
  • Official cost of study statement from the university
  • Bank statement
    • Student
    • Parents
    • Co-signer if not the parent
  • IT return of last 2 years
    • Student
    • Parents
    • Co-signer if not the parent
  • Income Proof Statement
    • Student
    • Parents
    • Co-signer if not the parent

Loan Application Process

To get your loan application process started, reach out to any of the listed bank branches in the list here: SBI Global Ed-Vantage Bank Branch List 

What other loan programs should I consider?

There are 4 other options that one may consider when looking for education loans to study abroad

Private Banks (HDFC, Axis Bank, etc)

Private Banks like HDFC and Axis Bank also offer education loans but are usually not as competitive as SBI or other public banks like Bank of Baroda and Andhra Bank. However, if you cannot qualify for a loan with public banks, private banks are worth a shot as interest rates are still reasonable.

NBFC’s (Credila, Avanse, etc)

If you are not able to furnish a collateral to get a loan with the private/public banks, you can apply for an education loan with one of the NBFC’s in the market like HDFC Credila, Avanse, or InCred Finance. The advantage with some of these NBFC’s is that they do not require a collateral. However, they still need a co-signer as part of the application.

Prodigy Finance

Prodigy Finance is a tricky option. While they advertise very aggressively to students who are going abroad with interest rates that look low, I would recommend people to look beyond interest rates that are advertised. The interest rate of Prodigy Finance is much higher than loans from Indian public banks. To learn more, please check out Prodigy Finance Review by FinTown.

Borrow in the country of your study/education

If one is attending university in the US, one can always apply for an education loan with the support of a local guardian in the US who can cosign the loan with the borrower. By doing so, students can then borrow at very attractive rates from the country of education. In the US, students can borrow at interest rates that are as low as 2% USD rate.

Bottom Line?

If you are an Indian student wanting to study abroad, then, you cannot find many better loan options than SBI. Low-interest rates, Low processing fees, and very competitive terms and loan margin. The only downside with State Bank of India is its long processing times.

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