Janice Lozano
The State Bank of India (SBI) offers a range of student loans with flexible repayment options. There are no pre-payment penalty charges, meaning borrowers can repay the loan at any time. The loan's Equated Monthly Instalments (EMI) are calculated based on the principal amount and interest accrued over the loan tenure. The EMI is the minimum amount to be paid each month, but borrowers can pay more without incurring penalties. This means that if a borrower can afford to, they can pay off the principal amount of their loan early.
| Characteristics | Values |
|---|---|
| Interest rate | 7.15% p.a. to 10.15% p.a. |
| Interest rate concession | 0.50% for girls, 0.50% for students with SBI Rinn Raksha or other life insurance policy from the bank |
| Processing fee | ₹10,000 for SBI Global Ed-Vantage Scheme, no processing fee for other schemes |
| Repayment period | Up to 15 years |
| Repayment holiday/Moratorium period | One year after course completion or 6 months after getting a job |
| Prepayment penalty | None |
| Loan amount | Up to ₹50,000, ₹50,000 to ₹1 lakh, above ₹1 lakh |
| Repayment tenure | 3 years, 5 years, 7 years |
| Loan availability | For studies in India and abroad |
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What You'll Learn
Interest rates and concessions
The State Bank of India (SBI) offers a range of education loans with interest rates varying from 7.15% to 11.5% per annum. These loans are flexible, with no pre-payment penalty charges, allowing borrowers to repay the loan at any time. The repayment period can be as long as 15 years.
There are several interest rate concessions available for SBI education loans. For instance, female students may be eligible for interest concessions on their loans. Additionally, students who purchase the SBI Rinn Raksha or another life insurance policy from the bank can receive a 0.50% interest concession. This is available for applicants of the SBI Student Loan Scheme and SBI Global Ed-Vantage Scheme.
Furthermore, students can receive a 1% concession on their interest rate if they pay back the interest amount during their course and the moratorium period. This is available for the SBI Student Loan Scheme and SBI Global Ed-Vantage Scheme.
SBI also provides a Central Scheme for Interest Subsidy on Education Loans, which offers interest subsidies for students from economically disadvantaged backgrounds with annual gross family incomes up to a certain threshold.
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Repayment options
State Bank of India (SBI) offers flexible repayment options for its student loans. Here are the key details regarding repayment options:
Repayment Period
The maximum repayment term for SBI student loans is typically 15 years or 180 Equated Monthly Instalments (EMIs). The repayment period may vary depending on the loan amount. For instance, loans up to Rs. 50,000 have a repayment period of three years, loans between Rs. 50,000 and Rs. 1 lakh have a repayment period of five years, and loans above Rs. 1 lakh have a repayment period of seven years.
Moratorium Period
SBI student loans include a moratorium period after the course is completed. This period allows borrowers to defer repayment until they secure employment or for a specified duration. During the moratorium period, accrued interest is added to the principal loan amount.
Prepayment Options
SBI student loans do not have any pre-payment penalty charges. Borrowers can repay the loan in full or make partial prepayments at any time during the loan tenure without incurring additional fees. Prepaying the loan can help reduce the overall interest cost.
Interest Servicing
Interest servicing during the course and moratorium period is optional. If the borrower chooses to service the interest during this period, it will not be added to the EMIs, resulting in lower monthly payments. Interest paid on SBI student loans may also be eligible for tax deductions under applicable income tax laws.
Top-up Loans
SBI offers the option of a second (Top-up) loan within the overall limit for pursuing additional courses. The repayment period for the second loan may be extended, especially if the borrower opts for further studies during the moratorium period of the first loan.
Interest Subsidy Schemes
SBI participates in various interest subsidy schemes for student loans, such as the Central Scheme for Interest Subsidy on Education Loans. These schemes provide interest subsidies for students from economically disadvantaged backgrounds or specific communities, helping to reduce the overall financial burden.
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Moratorium period
SBI student loans offer a moratorium period after the course is completed. This means that repayment will start one year after the course completion or 6 months after securing a job, whichever is earlier. The accrued interest during the moratorium period is added to the principal amount and repaid through Equated Monthly Instalments (EMIs).
During the moratorium period, interest is applied to the loan account, which will not be added to the EMIs. This results in lower EMIs for the borrower. However, if the full interest is serviced before the commencement of repayment, the EMI is fixed based on the principal amount only.
Borrowers can get a 1% concession in interest throughout the loan tenure if they pay back the interest amount during the moratorium period and the course period. There are no pre-payment penalty charges, allowing borrowers to repay the loan at any time.
The moratorium period also offers flexibility for those pursuing further studies. The repayment of the first loan can be deferred if the borrower pursues additional courses during this period.
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Prepayment penalties
SBI student loans do not have any prepayment penalty charges, allowing borrowers to repay the loan at any time during the loan tenure. You can prepay your education loan at any time without any penalty charges. This means that if you have the funds, you can pay off your student loan ahead of schedule without incurring any additional fees.
The absence of prepayment penalties provides borrowers with the flexibility to manage their debt efficiently. It empowers borrowers to take control of their finances and repay their loans ahead of time, reducing the overall interest paid over the life of the loan.
However, it is important to note that prepayment dynamics can vary based on the specific loan scheme and its terms and conditions. While SBI does not impose prepayment penalties, it is always advisable to review the loan agreement carefully to understand the specific conditions applicable to your loan.
In general, when a borrower prepays a loan, they are paying off the loan before the stipulated time or the end of the loan term. This can result in a loss of interest income for the bank, as they expected to receive interest on the loan over a certain period. In some cases, lenders may charge a prepayment penalty to compensate for this loss of interest income.
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Loan application process
The State Bank of India (SBI) offers a range of education loans with interest rates varying from 7.15% to 10.15% per annum. These loans are available for both domestic and international studies, covering professional and vocational courses. SBI also provides takeover loans, which allow borrowers to replace existing high-interest loans with SBI loans at lower rates.
- Register on the Vidya Lakshmi Website: Visit the Vidya Lakshmi website and register by providing your personal details. This is the first step in applying for an SBI education loan.
- Complete the Loan Application Form: Fill out the loan application form provided by SBI. This form will require you to provide personal and academic information.
- Gather Supporting Documents: Along with the duly filled loan application form, you must submit various documents, including:
- Mark sheets of 10th, 12th, and graduation (if applicable)
- Proof of admission, such as an offer letter, admission letter, or ID card
- Passport-size photographs of the student, parent, co-borrower, and guarantor
- Permanent Account Number (PAN) and AADHAAR (if eligible for GOI subsidy schemes) of the student, parent, co-borrower, and guarantor
- Asset-Liability Statement of the co-applicant/guarantor (for loans above Rs. 7.5 lakhs)
- For loans above Rs. 7.5 lakhs: Copy of Sale Deed and other documents of title to property offered as collateral security
- Submit the Application: Submit the completed loan application form and supporting documents to SBI. The timeline for processing starts after the complete submission of documents.
- Bank Review and Verification: SBI will review your application and may request additional verification, which can extend the processing timeline by up to 15 working days.
- Loan Approval and Disbursement: If your loan application is approved, SBI will disburse the funds as per the specified loan terms.
It is important to note that SBI offers flexible repayment options, including a moratorium period after course completion. There are no pre-payment penalty charges, so borrowers can repay the loan at any time. Additionally, SBI provides interest concessions for female students and those who purchase life insurance policies from the bank.
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Frequently asked questions
Yes, you can pay the principal amount for an SBI student loan. Equated Monthly Instalments (EMI) comprise both principal and interest components.
EMI is calculated based on the principal amount and interest accrued over the tenure of the loan. Paisabazaar's Education Loan EMI Calculator can help you determine your EMI.
Repayment begins one year after the course ends or six months after you get a job, whichever is earlier.
No, there are no penalty charges for prepayment.
Yes, there is an interest rate concession of 0.50% for students who buy the SBI Rinn Raksha or other life insurance policy from the bank. There is also a 0.50% concession for female students.
