Education loans work differently from most other loans — repayment often doesn't start until after your course ends, and collateral requirements vary a lot by loan amount. Here's what to actually compare, since "best bank" lists go outdated as rates and schemes change.
What makes education loans different
Moratorium period — most education loans don't require EMI payments during the course, plus often a short grace period after (commonly 6–12 months) before EMIs begin
Interest during moratorium — interest usually still accrues during this period, even though you're not paying EMIs; some lenders let you pay just the interest during this time to avoid it compounding
Collateral requirements — loans above a certain amount (commonly ₹7.5 lakh–₹10 lakh, varies by lender) may require collateral or a guarantor; smaller loans are often collateral-free
What to compare across lenders
Interest rate — and whether it's fixed for the full tenure or reviewed periodically
Moratorium terms — exact length, and whether simple or compounding interest applies during this period
Collateral/guarantor requirements — at what loan amount collateral kicks in, and what's accepted as collateral
Coverage — does the loan cover tuition only, or also living expenses, travel, and equipment for study abroad?
Processing fee and prepayment charges
Interest subsidy eligibility — government interest subsidy schemes exist for certain income brackets and courses; check if you qualify, as this can meaningfully reduce effective cost
Paying at least the interest during the moratorium period, if you can afford to, is one of the highest-leverage things you can do — it prevents interest from compounding on itself before repayment even begins, which can otherwise add a surprising amount to your total loan cost.
Public sector banks vs private banks vs NBFCs
Public sector banks — often lower rates and access to government interest subsidy schemes, but can involve more paperwork and slower processing
Private banks — usually faster processing, sometimes higher loan limits for study abroad, but rates can be less competitive without subsidy access
NBFCs specialising in education loans — often faster, more flexible for study-abroad and unconventional courses, but typically at higher interest rates
Questions to ask before signing
Exactly when does the moratorium end and EMI begin — is it linked to course completion or a fixed date?
Is the interest rate fixed for the full tenure, or can it change?
What happens if the course takes longer than expected, or you pause studies?
Are there any tax benefits available on the interest paid (Section 80E in India applies to education loan interest, with no upper limit, for a specified number of years)?
Plan your post-course EMI
Once you know your loan amount and expected rate, it helps to see what your EMI will look like after the moratorium ends — so you can plan your finances before repayment starts.