Don’t Miss Out: PSU Bank’s Lowest Interest Education Loans For 2025

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
Central Bank of India	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
Union Bank of India	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
Indian Bank	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
Bank of Baroda	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
Canara Bank	Up to ₹4 lakh	10.85% – 11.25%	Vidya Sagar	General institutions
UCO Bank	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
Bank of Maharashtra	₹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.