Education loans are unsecured loans as there is no collateral required. It is purely provided on the basis of the merit of the student and his future capacity of earnings. Hence, student education loan interest rate in India is higher than that of home loans or car loans. In other words, the cost of education loan is higher than that of home loan or car loan. Banks have their highest percentage of Non-Performing Assets (NPAs) from the product of education loan itself. And hence, there also is much more scrutiny for student loans from the lender’s side.

However, can education loans in India be actually interest-free?

The answer is no. Or at least, technically so.

Unless you have availed some economic benefits or academic subsidies from either the government or your institution. Even then, it is mostly difficult to find a completely interest-free loan. In most of the cases, it is just subsidized.

However, you can still make your way around to avail education loan at 0 interest.

Firstly, you can also negate the effect of the interest by availing scholarships. Based on the course and institute of your choice, there are various scholarships available. You can check and apply for those relevant for you. Even by normal scholarships, you can at least pay off the interest amount of the loan so that it is not a big burden for you or your family. Many scholarships availed by foundations like Tata Trust, KC Mahindra Trust, etc. effectively offer 0% interest scholarships.

Secondly, if your annual family income is below INR 4.5 Lakhs, government offers subsidy on the interest for the moratorium period which is the course period plus 6 months/1 year. You start repaying only after getting stable in your job/business for a year after the course. There is no interest paid until then. This can be availed under the Central Sector Interest Subsidy Scheme and can be availed only from one of the scheduled banks.

Avail Instant Loans for your Education Fees

While you learn more about education loans, here is a detailed article on steps for availing an education loan. It is advisable to be fully prepared in terms of documents and procedures as a student loan can be a time-consuming process. If you do not have much time by your hand, you can avail instant digital loans of up to INR 2 Lakhs from PaySense. Your loan is approved in three easy steps within a few minutes. And it gets disbursed in your account within a few hours. With attractive interest rates, these instant digital loans are a perfect fit for many students and rightly so.