Tips to Repay Your Education Loan Faster and Save on Interest
By Team CodeForBanks | May 23, 2025
Growing Education Loan Market in India: Education loans have become a lifeline for students aspiring to pursue higher studies in India and abroad specially their professional studies. Many Indian students rely on loans to fund their education due to rising tuition fees and living expenses. According to reports, the education loan market in India has witnessed a 17% growth in 2022-23, amounting to an increase of approximately Rs.14,000 crore in a single year. This increase shows the increasing dependence on loans for higher education particularly in Tier 2 and Tier 3 cities.
It is true that education loans provide financial support, but at the same time it is also important to know that repaying education loans efficiently is crucial to avoid excessive interest payments and financial stress. It is, therefore, necessary to know as to 'How to pay off student loans faster?'.
What is an Education Loan?
An education loan is a financial aid provided by banks and financial institutions to students for funding their higher education. These loans cover tuition fees, accommodation, books, travel expenses and other academic costs.
Eligibility Criteria for Education Loans in India
To avail an education loan, students must meet certain eligibility criteria,
- Must be an Indian citizen.
- Should have secured admission to a recognized institution in India or abroad.
- Must have a co-applicant (parent/guardian) with a stable income.
- Some banks require collateral for higher loan amounts.
Top Banks Offering Education Loans in India
Tabled below a comparison of some of the top banks providing education loans in India and showing student loan interest rates India,
| Bank Name | Interest Rate | Loan Amount | Tenure | Processing Fee & Other Charges |
|---|---|---|---|---|
| State Bank of India | 8.15% to 11.15% | Up to Rs.1.5 crore | Up to 15 years | Nil for loans within India |
| Punjab National Bank | 8.70% to 11.10% | Up to Rs.75 lakh | Up to 15 years | Concessions for girl students |
| HDFC Bank | Starts from 10.50% | Up to Rs.1.5 crore | Up to 15 years | Nil up to Rs.7.5 lakhs & 1% above Rs.7.50 lakhs |
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Tips to Repay Your Education Loan Faster
Given below are the tips for Education loan repayment swiftly,
1. Start Repayment During the Moratorium Period
Most education loans come with a moratorium period (usually 6 months to 1 year after course completion). If it is possible for you then you should start making small payments during this moratorium period to reduce the principal amount early.
2. Opt for Higher EMIs
If your financial situation permits; you should go for paying higher EMIs to shorten the loan tenure and reduce interest costs.
3. Make Lump-Sum Payments Whenever Possible
Use bonus, tax refund or extra saving to make lump-sum payments towards your loan. This significantly reduces the outstanding principal. This will help you in getting education loan prepayment benefits.
4. Consider Loan Transfer
If another bank offers a lower interest rate you can apply for transferring your loan to save on interest payments.
5. Utilize Government Subsidies & Schemes
Indian government offers interest subsidies for economically weaker sections. Check if you are eligible for any loan repayment assistance schemes or Subsidies.
6. Avoid Late Payments
Late payments attract penalties and additional interest so never forget to set up auto-debit or reminders to make timely payments.
7. Use Education Loan EMI Calculator
Education loan EMI calculator helps you estimate EMIs, total interest payable and repayment schedules. Use it to plan your finances effectively.
How Paying Off Your Loan Faster Benefits You?
- Lower Interest Costs: The faster you repay, the less interest you pay during your repayment tenure.
- Improved Credit Score: Timely repayments boost your credit score which further make future loans easier to obtain.
- Financial Freedom: If you pay loan faster you are free to focus on investments and savings afterwards.
- Reduced Stress: A debt-free life means less financial burden and more peace of mind.
Education loans are a stepping stone to a brighter future, but repaying them wisely is crucial. By following these tips, you can clear your loan faster, save on interest and achieve financial stability. There are always some best ways to repay student loans.
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