Education Loan for Abroad Studies: Interest Rates Comparison 2025

Studying in another country is a dream for many Indian students. But the truth is, it can cost a lot of money. That’s where student loans for overseas study come in handy. These loans help you pay for tuition, travel, living costs, books, and much more.

But before taking a loan, it’s very important to compare interest rates offered by different banks and financial companies. Why? Because interest decides how much extra money you will pay back. A small difference in interest can save you thousands of rupees in the long run.

In this guide, we’ll help you understand how interest works and show you a simple comparison of the latest Education Loan interest rates in 2025. We’ll also tell you about the role of tools like the Education Loan Eligibility Calculator to plan smartly. Let’s begin!

What Is Interest Rate in a Student Loan?

When you borrow money from a bank or lender, you don’t just return the amount you took (called the principal). You also pay an extra fee for using that money. That extra fee is called the interest. It's calculated every month and added to your EMI.

There are two types of interest rates:

• Fixed Interest Rate – Stays the same for the entire loan period. Your EMI won’t change.

• Floating Interest Rate – Changes depending on the market. EMI may go up or down.

Both have pros and cons, but most students go with floating rates as they are often lower in the beginning.

How Is Interest Calculated?

Interest is usually calculated using two methods:

• Simple Interest: A basic method where interest is calculated only on the principal.

• Compound Interest: Interest is added to the loan each month, so next month’s interest is calculated on the total of principal + previous interest. This is more common in student loans.

Formula (for EMI):
EMI = [P × R × (1+R)^n] / [(1+R)^n – 1]
Where:
P = Loan amount
R = Monthly interest rate
n = Number of months

You don’t have to do the math manually. Use an Education Loan Eligibility Calculator online to find your EMI and interest cost instantly.

Interest Rates of Top Education Loan Providers in 2025

Let’s look at a quick comparison of different banks and NBFCs offering loans for studying abroad:

Lender	Secured Loan Rate	Unsecured Loan Rate	Max Secured Loan	Max Unsecured Loan
Union Bank	8.25% – 10.35%	7.1% – 10.35%	₹1 Cr	₹40 Lakh
Axis Bank	10.35% – 11.0%	10.5% – 12.25%	₹2 Cr	₹1 Cr
ICICI Bank	9.5% – 12.5%	10.5% – 12.5%	₹50 Lakh	₹1 Cr
IDFC First Bank	11.0% – 11.5%	10.8% – 13.0%	₹50 Lakh	₹1 Cr
HDFC Credila	10.0% – 11.5%	8.95% – 13.0%	₹50 Lakh	₹1.5 Cr
Avanse	10.5% – 11.5%	10.25% – 14.5%	₹1 Cr	₹1.25 Cr
InCred	NA	11.0% – 14.0%	NA	₹1 Cr
Auxilo Finance	11.5% – 12.0%	11.0% – 14.0%	₹50 Lakh	₹1 Cr
Prodigy Finance	NA	8.47% – 13.0%	NA	₹82 Lakh
MPower Finance	NA	9.99% – 13.99%	NA	₹82 Lakh
SBI	8.65% – 9.15%	9.15%	₹3 Cr	₹50 Lakh
Bank of Baroda	7.15% – 10.7%	NA	₹2 Cr	NA

As you can see, government banks like SBI and Bank of Baroda generally offer lower interest rates, especially for secured loans. Private banks and NBFCs offer quicker service and higher amounts, but at slightly higher rates.

(Note: The actual interest rates may vary. Please check the official websites for exact interest rates.)

What Affects the Interest Rate?

Here are some things that affect your student loan interest:

• Your academic record – Better scores can get you lower rates

• The university you choose – Well-known universities may attract better offers

• Whether the loan is secured or unsecured

• Your co-applicant’s income and credit score

Always talk to your lender about how you can lower the rate. Even a 1% difference can save you a lot over the years.

How to Choose the Best Option?

Here are a few quick tips:

• Use an Education Loan Eligibility Calculator to check your EMI before applying

• Compare both secured and unsecured options based on your need

• Don’t just look at interest, check processing fees, moratorium terms, and repayment flexibility

• Apply to multiple lenders to see who gives you the best deal

If comparing all this feels confusing, you can always take help from loan marketplaces. Platforms like Spoctree can help you compare interest rates from different lenders in one place and apply easily.

Conclusion

Choosing the right abroad student loan is just as important as choosing the right university. By understanding how interest works and comparing different banks carefully, you can save money and reduce stress later on.

Always check your eligibility, use calculators to plan your EMI, and apply smartly. With the right loan, your study abroad dream can become a reality without turning into a financial burden.