Education Loan Interest Rates In June 2026: Which Banks Offer The Lowest Cost Of Borrowing For Students?

The dream of pursuing higher education often comes with a significant financial commitment. With tuition fees, accommodation expenses and other academic costs increasing steadily, many students are turning to education loans to bridge the funding gap.

For aspiring graduates seeking admission to reputed institutions in India or overseas, education loans can provide much-needed support. These loans help students focus on their studies while easing the immediate financial pressure on families.

However, choosing the right loan requires more than simply comparing borrowing limits. Interest rates, repayment flexibility and additional charges all play an important role in determining the overall cost of education financing.

Public Sector Banks Offer Competitive Education Loan Rates

Government-owned banks continue to remain a preferred choice for many students due to their comparatively lower interest rates.

Among major public sector lenders, Punjab National Bank is offering education loans at a starting interest rate of 8.10% for eligible borrowers as of June 2026. This places it among the most affordable options currently available for students seeking funding for higher studies.

State Bank of India follows with an education loan rate beginning at 8.90%, making it another attractive choice for students looking for competitive borrowing costs.

Union Bank and Canara Bank are offering education loans at 9.25%, while Bank of Baroda's education loan rate stands at 10.25%. These rates serve as indicative figures and may vary depending on the applicant's profile and loan requirements.

Private Banks Provide Additional Options For Students

Private sector banks also offer education loans, although their interest rates are generally higher compared to many public sector lenders.

ICICI Bank currently offers education loans starting at 9.00%, placing it among the more competitive private-sector options. IDFC First Bank follows with a rate of 9.50%, while IDBI Bank's education loan rate begins at 9.90%.

Axis Bank offers education loans at 10.81%, while HDFC Bank's rate stands at 12.50%, making it one of the higher-priced options among major lenders.

Students should remember that these rates are not fixed for every applicant. Factors such as academic profile, institution, course type, co-applicant strength and loan amount can influence the final interest rate offered by a bank.

Why Comparing Interest Rates Matters

A small difference in interest rates may appear insignificant at first glance, but it can substantially affect the total repayment amount over the life of a loan.

For long-tenure education loans, even a marginal reduction in interest cost can lead to considerable savings. This is why students and parents should carefully compare available options before making a final decision.

Evaluating multiple lenders can help identify the most cost-effective borrowing solution and prevent unnecessary financial strain after graduation.

Look Beyond Interest Rates Before Applying

While interest rates are important, they should not be the only factor influencing a borrowing decision.

Students should carefully review the complete loan structure, including repayment schedules, loan tenure and the flexibility offered by the lender. Understanding these details in advance can help borrowers avoid unexpected challenges later.

Another important aspect is the moratorium period. This is the period during which repayment obligations may remain deferred while the student completes the course and begins their career. A suitable moratorium period can provide valuable breathing space before regular repayments start.

Check Additional Charges Carefully

Borrowers should also examine all costs associated with the loan before signing any agreement.

Processing fees, administrative charges, documentation expenses and prepayment conditions can add to the overall borrowing cost. In some cases, hidden charges may increase the financial burden if not properly understood beforehand.

Reading the loan terms carefully and seeking clarification on every applicable fee can help students make informed financial decisions.

With education expenses continuing to rise, education loans are likely to remain an important funding solution for students across the country. Comparing interest rates, understanding repayment conditions and evaluating all associated costs can help borrowers secure a loan that supports their academic ambitions without creating unnecessary financial stress in the future.