Lowest interest education loans from PSU banks like SBI and Bank of Baroda, starting at 7%! Unlock dream degrees with rates as low as 7.1%, no-collateral loans up to ₹7.5 lakh, and subsidies like CSIS. From tax benefits to flexible repayments, this guide reveals secrets to save thousands. Are PSU banks your ticket to affordable education?
Getting an education loan is one of the most critical steps for Indian students aspiring to pursue higher studies either in India or abroad. With tuition fees rising every year, financial assistance can make or break a student’s academic plans. Public Sector Undertaking (PSU) banks in India remain one of the most trusted sources for education loans because of their comparatively lower interest rates, government-backed security, and flexible repayment options.
This detailed 2025 guide explores education loans from PSU banks with the lowest interest rates, specifically for loans around ₹4 lakh, along with loans for higher slabs (₹7.5 lakh and above), and even loans for overseas education. We will also compare PSU banks with private banks to give you the most comprehensive picture and help you make the smartest borrowing choice.
Why Education Loans from PSU Banks are Preferred
Before we dive into the lowest-rate options, here’s why PSU banks are still the first choice for most families when applying for an education loan:
- Lower interest rates compared to private banks – With RBI policies and subsidy schemes from the Government of India, PSU banks often provide more affordable repayment options.
- Collateral-Free Loans up to ₹7.5 lakh – Many PSU banks provide unsecured loans up to this cap.
- Government Interest Subsidies – Under the Central Sector Interest Subsidy Scheme (CSIS), economically weaker section (EWS) students can get interest waivers during the moratorium period.
- Wide Network & Accessibility – PSU banks have branches across the country, making them accessible for rural and semi-urban students.
- Better Loan Restructuring Options – PSU banks remain flexible with repayment in case of deferments or employment challenges.
Education Loan from PSU Banks with Lowest Interest Rates (Up to ₹4 Lakh)
For students who are looking to fund basic tuition and living costs with smaller amounts, loans up to ₹4 lakh are a good option since they generally do not require collateral. Here’s where PSU banks stand in 2025:
Top PSU Banks Offering Lowest Interest Rates (Up to ₹4 Lakh)
Bank | Loan Amount | Interest Rate (2025) | Scheme Name | Eligible Institutions |
Up to ₹4 lakh | 8.1% – 11.5% | MBA, Engineering, Medical education loan | IIMs, XLRI, BITS, NITs, and more as per bank | |
Punjab & Sind Bank | Up to ₹4 lakh | 9.1% – 11.6% | PSB Education Loan | As per bank list |
Up to ₹4 lakh | 9.3% – 12.55% | Union Education Premier Abroad / CGFSEL | Tier-I management & technical institutes | |
Punjab National Bank (PNB) | Up to ₹4 lakh | 9.5% – 11.25% | PNB Saraswati, Udaan, Kaushal, Honhaar | IITs, IIMs, XLRI, NIFT, NID |
Up to ₹4 lakh | 9.55% | Indian Bank Skill Loan Scheme | General institutions as per scheme | |
Indian Overseas Bank | Up to ₹4 lakh | 9.75% – 10.25% | IOB Vidya Shrest | Tier-A and Tier-B institutes |
Up to ₹4 lakh | 9.8% – 11.15% | Baroda Scholar, Digital Education Loan | Institutions in List B like SRM, LIBA | |
SBI | Up to ₹4 lakh | 10.65% | SBI Skill Loan Scheme | As per bank policy |
Up to ₹4 lakh | 10.85% – 11.25% | Vidya Sagar | General institutions | |
Up to ₹4 lakh | 10.85% – 12.1% | UCO Education Loan | General courses |
Lowest Rate Standout in 2025:
The Central Bank of India (8.1%) offers the lowest starting interest rate in India for loans up to ₹4 lakh, followed closely by Punjab & Sind Bank and Union Bank of India.
PSU Education Loans Between ₹4 Lakh – ₹7.5 Lakh
For students requiring higher financial support without pledging collateral, PSU banks extend loans up to ₹7.5 lakh. These mid-range loans are ideal for funding both graduate degrees within India and skill development programs.
Best PSU Banks for ₹4L–₹7.5L Slab
Bank | Loan Amount | Interest Rate (2025) | Scheme | Eligible Institutions |
State Bank of India (SBI) | ₹4L–₹7.5L | 8.65% – 11.15% | Scholar Loan, Shaurya Education Loan | IIT, NIT, CEPT, IIFM |
Canara Bank | ₹4L–₹7.5L | 9.25% – 11.25% | Vidya Shakthi, Vidya Sahay | All as per IBA norms |
Indian Bank | ₹4L–₹7.5L | 9.55% | Indian Bank Skill Loan | General |
PNB | ₹4L–₹7.5L | 10.25% – 10.75% | PNB Kaushal | Skill-based courses |
Bank of Baroda | ₹4L–₹7.5L | 10% – 12.5% | Baroda Scholar, Baroda Gyan | Institutions in List B, C |
₹4L–₹7.5L | 10.1% – 11.3% | Maha Scholar, Skill Loan | IFMR, LIBA, SRM, GITAM | |
Bank of India | ₹4L–₹7.5L | 10.95% | Star Education Loan | General |
Union Bank of India | ₹4L–₹7.5L | 10.8% – 12.55% | Union Education Under CGFSEL | Skill Development |
UCO Bank | ₹4L–₹7.5L | 11.2% | UCO Skill Loan | General |
Punjab & Sind Bank | ₹4L–₹7.5L | 11.6% | PSB Skill Education Loan | General |
Lowest Rate Standout in 2025:
The State Bank of India (8.65%) dominates here, providing the most affordable option for collateral-free loans in this segment.
PSU Education Loans Above ₹7.5 Lakh
Loans above ₹7.5 lakh generally require collateral security (property, fixed deposits, or other assets). These loans are commonly taken by students planning to study abroad or in premier domestic institutions.
Best PSU Banks for ₹7.5L and Above
Bank | Loan Amount | Interest Rate (2025) | Scheme | Coverage |
Union Bank of India | Up to ₹2 Cr | 8.55% – 12.5% | Union Premier Abroad | Students abroad in Tier-1 institutions |
Bank of India | Up to ₹40L | 8.75% – 9.25% | Star Education Loan | India + Abroad |
Indian Bank | Up to ₹1.5 Cr | 8.95% – 10.05% | Global Ed-Vantage | Overseas M.Sc./MBA/Tech degrees |
Punjab & Sind Bank | Up to ₹20L | 9.1% – 9.3% | PSB Excellence Scheme | Domestic + Global |
Canara Bank | Up to ₹1 Cr | 9.25% – 11.35% | Global Top University Loan | Top 50 global institutes |
Central Bank of India | Up to ₹20L | 8.1% – 11.5% | MBA/Engineering/Medical Higher Tier | Domestic & Global institutions |
SBI | Up to ₹1.5 Cr | 10.65% – 11.15% | SBI Global Ed-Vantage | Over 100+ countries covered |
Bank of Baroda | Up to ₹40L | 11.15% | Baroda Premier Abroad Development Loan | Tier-A global |
Indian Overseas Bank | Up to ₹30L | 9.75% – 10.25% | IOB Vidya Shrest | India & Overseas |
Lowest Rate Standout in 2025:
- Union Bank (8.55%) remains the lowest for high-value loans.
- Bank of India (8.75%) is the closest competitor for global loan seekers.
Overseas Study Education Loans from PSU Banks
Overseas education is one of the fastest growing categories in Indian banking portfolios. With rising international tuition fees, many PSU banks now offer tailored products for students heading abroad.
Cheapest Overseas Loan Options (2025)
Bank | Loan Limit | Interest Rate | Scheme | Coverage |
Union Bank of India | Up to ₹2 Cr | 8.55% – 12.5% | Premier Abroad | UK, Canada, USA, Australia |
Bank of India | Up to ₹40L | 8.75% – 11.75% | Star Vidya Loan | A, B, C-tier universities |
Indian Bank | Up to ₹1.5 Cr | 10.05% | Global Ed-Vantage | STEM + MBA abroad |
Punjab & Sind Bank | Up to ₹20L | 9.1% – 11.6% | PSB Excellence, Model Abroad | General overseas |
SBI | Up to ₹1.5 Cr | 10.65% – 11.15% | Global Ed-Vantage | 100+ countries financed |
Canara Bank | Up to ₹1 Cr | 9.85% – 11.35% | Top 50 Global Loan | Ivy League + Europe |
Best Choice for Abroad in 2025:
- Union Bank of India’s Overseas Loan at 8.55% is the most competitive in the market.
Comparison: PSU vs Private Banks (Education Loans 2025)
Feature | PSU Banks | Private Banks |
Interest Rate Range | 8.1% – 12.5% | 9% – 16% |
Collateral Requirement | No collateral up to ₹7.5L | Often collateral needed beyond ₹4L |
Loan Processing | Slower, paperwork heavy | Faster, high-tech apps |
Government Subsidies | Available (CSIS, EWS subsidies) | Not available |
Loan Tenure | Up to 15 years | Usually 10–12 years |
Accessibility | Strong in semi-urban & rural | Limited to metro cities |
Verdict:
Private banks like HDFC Bank (9%-12.58%) and ICICI Bank (9.58%-15.5%) are competitive but often lack government subsidy benefits. For most Indian households, PSU banks remain the safer and more affordable bet.
Final Thought
Choosing the right education loan from PSU banks with the lowest interest rate depends on three things: the loan amount, your eligibility for collateral-free schemes, and whether your education will be domestic or international.
- For loans up to ₹4 lakh, the Central Bank of India (8.1%) is the winner.
- For loans between ₹4–7.5 lakh, SBI (8.65%) continues to dominate.
- For loans above ₹7.5 lakh, Union Bank of India (8.55%) is the top pick for overseas education financing.
In 2025, while private banks are closing the gap with tech-driven loan processing, PSU banks still deliver the most cost-efficient loans supported by government schemes. If you are looking to minimize your long-term repayment costs, PSU banks remain your best option in India.
