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Education Loan

The Union Bank of India offers education loans to students to help them realise their dream of higher education in India and abroad. Union Bank education loans ensure that students can focus on studies without worrying about finances.

1. Union Education Loan

A loan which aims to fund education meant for students who wish to go for higher education in both India or abroad.


The loan has the following features:

  • The loan is extended for seeking graduation or post-graduation education, or to pursue a technical, professional or management related courses
  • The maximum loan granted to an applicant who is seeking education in India is Rs.10 lakh. If the institute from where the candidate is seeking such education falls in the Special Education Loan Scheme, the quantum of loan is higher.
  • For studying abroad, the maximum quantum of loan granted is Rs.20 lakh
  • Loans going up to Rs.4 lakh require no maintenance of margin and 100% of the finance is offered as a loan. Loans over Rs.4 lakh would require margin money. The margin requirement would be 5% for education taken in India and 15% for education taken abroad. Any form of scholarship or assistantship would be included in the margin.
  • There is a concept of repayment holiday technically called the moratorium period during which the loan does not need be repaid. The moratorium period would be lower of the course duration plus 1 year post completion of the course or course duration or six months of job placement.
  • For loans of values up to Rs.7.5 lakh, the repayment period would be 10 years excluding the moratorium period and for a loan of a higher value going over Rs.7.5 lakh, the repayment period would be 15 years excluding the relevant moratorium period.
  • The loan does not have any processing charges
  • If the interest amount is paid during the moratorium period when the repayment is not needed, the student would be eligible to earn a concession in the rate of interest
  • The valuation charges, legal charges, stamp duty, CERSAI charges and memorandum registration charges would be payable wherever they are incurred
  • No security would be required if the loan amount is up to Rs.4 lakh. For loans above Rs.4 lakh and going up to the value of Rs.7.5 lakh, the guarantee of a suitable third party which should be acceptable to the bank would be required as security. For loans higher than Rs.7.5 lakh, a collateral security of the amount equivalent to the loan and the required interest should be pledged as security which should be acceptable by the bank. Whatever is the quantum of loan, the student’s parent or spouse should be a co-applicant in the loan.
  • The student should avail of a life insurance cover equivalent to the amount of loan to pay back the loan in case of premature demise of the applicant
  • The loan would be disbursed from the nearest branch of the applicant’s residence and would be directly disbursed to the institute
  • If the loan is later taken over by another bank or financial institution, the bank would charge a penalty of 2% of the average balance of loan over the last 12 months


Students applying for education loan should fulfil the following criteria to become eligible for the loan:

  • He or she should be an Indian citizen
  • The student must have get the admission in the institute from where the education would be sought and such admission should have been through a merit-based selection process or an entrance examination
  • The courses eligible to be covered for Indian studies include graduation, post-graduation or diploma courses undertaken from reputed educational institutions covering technical, professional and management studies
  • Courses undertaken abroad should be graduation, post-graduation or degree courses conducted by institutes of repute, certified degree courses conducted by specified institutes like CIMA (UK), CPA (USA), etc.
  • Any sort of diploma course taken abroad would not be covered under a Union Bank student education loan

Rate of Interest

The rate of interest on educational loans depends on the sex of the student, base rate of the bank and the quantum of loan opted for. The following rates of interest are charged by the bank currently:

MCLR: 9.40%

Quantum of Loan

Boy Student

Girl Student

Up to Rs.4 lakh

(MCLR + 3.15) % = 12.55%

(MCLR + 2.65) % = 12.05%

Rs.4 lakh to Rs.7.5 lakh

(MCLR + 2.90) % = 12.30%

(MCLR + 2.40) % = 11.80%

Rs.7.5 lakh and above

(MCLR + 2.15) % = 11.55%

(MCLR + 1.65) % = 11.05%

2. Special Education Loan Scheme

This Union Bank student scheme gives loans to MBA students who are pursuing a management degree/ diploma from the most recognized educational institutions in India.


  • The amount of education loan offered under this Union Bank student loan scheme is up to Rs.20 lakh
  • The Union Bank education loan is given at a floating rate of interest at the base rate of 10.25% (as on June 1, 2013)
  • The repayment tenure of loan is a maximum of 15 years
  • No collateral security and margin are required for this Union Bank student education loan
  • This Union Bank education loan can be availed either from the student’s place of residence or from his/ her educational institute

Education Loan Eligibility

Students who have been admitted to the following B-schools are eligible for this special scheme for educational loans:

  • Indian Institute of Management, Ahmedabad
  • Indian Institute of Management, Bangalore
  • Indian Institute of Management, Calcutta
  • Indian Institute of Management, Indore
  • Indian Institute of Management, Kozhikode
  • Indian Institute of Management, Lucknow
  • Indian Institute of Management, Raipur
  • Indian Institute of Management, Ranchi
  • Indian Institute of Management, Rohtak
  • Indian Institute of Management, Shillong
  • Indian Institute of Management, Trichy
  • Indian Institute of Management, Kashipur
  • Indian Institute of Management, Udaipur
  • Xavier School of Management, Jamshedpur
  • SP Jain Institute of Management & Research, Mumbai
  • Management Development Institute, Gurgaon

Central Government Scheme of Interest Subsidy on Educational Loans

This scheme of education loan, launched by the Ministry of Human Resource Development, Government of India, helps students belonging to lower middle class sections of the society by giving them interest subsidy.


  • The scheme offers interest subsidy on educational loans of up to Rs.10 lakh (even if loan amount is greater than Rs.10 lakh)
  • To avail this subsidy, the student must submit an income proof which should have been issued by a competent authority appointed by the state government
  • Subsidy is granted only for the course duration and the moratorium period
  • A student can claim interest subsidy only once, either for his/ her first undergraduate degree course or post-graduate degree/ diploma or any other technical or professional course study in India


  • The student must have obtained admission in a reputed institute after completing Class XII offering any technical or professional courses. The institute should be recognised and should be in India and loan should be taken from a scheduled bank including the Union Bank of India.
  • The student must belong to the economically weaker section of the society and his/ her gross family income from all sources should not exceed Rs. 4.5 lakh in a year

4. Padho Pardesh Scheme

This student loan scheme has been designed to provide interest subsidy on educational loans for overseas studies to deserving students who belong to lower middle class sections of notified minority communities as per the terms of Section 2(c) of National Commission for Minorities Act, 1992. The scheme gives subsidy on the interest payable for an education loan for courses abroad at the masters, M.Phil. Or Ph.D. level during the moratorium period – course duration plus 12 months or 6 months after securing a job, whichever is earlier.


  • The scheme would be granted only to students who have taken loans for overseas studies from the year 2013-14 onwards. The annual family income of such students should not be more than Rs. 6 lakh.
  • The subsidy would not be available if a student leaves the course mid-stream or if he/ she is expelled from the institution due to disciplinary reasons or on academic grounds
  • The subsidy would only be granted during the moratorium period of the loan post which the interest payment along with the principal repayments would have to be borne by the borrower
  • An income certificate would have to be submitted to prove that the family income of the student applicant meets the eligibility criteria of Rs. 6 lakh per year. Such a certificate should be issued by a competent authority appointed by the state or central government.
  • The student should not give up his/ her Indian citizenship during the course of education abroad, else he/ she will lose the benefits under this scheme
  • The students belonging to minority communities like SC/ ST/ OBC should not have availed a similar loan from other banking or financial institutions

5. Dr. Ambedkar Central Sector Scheme of Interest Subsidy on Educational Loan for Overseas Studies for Other Backward Classes (OBCs) & Economically Backward Classes (EBCs)/ ACSISOBCEBC Scheme

This student loan scheme has been created and implemented by the National Backward Finance and Development Corporation (NBCFDC), Ministry of Social Justice and Empowerment, Government of India for the benefit of students belonging to OBC sections. It offers interest subsidy on educational loans to students of marginalised communities mentioned above to pursue studies abroad. The scheme reimburses the interest charged in the course and moratorium period.


  • The subsidy would be given for higher studies abroad at the masters, M.Phil. & Ph.D. level
  • The annual family income of a student belonging to other backward classes should not exceed Rs. 3 lakh
  • The annual family income of a student belonging to economically backward classes should not exceed Rs. 1 lakh
  • The student should submit a proof of income in the form of an income tax return or Form 16 or an income certificate issued by a competent authority appointed by a state government
  • Subsidy is granted for the duration of course and moratorium period only and on loans taken from the year 2014 onwards

Union Bank Loan for Vocational Education and Training

Union Bank vocational education and training loans are also offered as mandated by a RBI directive. The bank provides a vocational education loan as well as a vocational training loan to students for skill enhancement. Courses for vocational education and training should be undertaken at Industrial Training Institutes (ITIs), polytechnics, etc. A Union Bank loan for vocational education and training allows students to pursue vocational and skill development courses, preferably those which lead to a certificate/ diploma/ degree recognised by the National Skill Qualification Framework (NSQF).


To avail Union Bank education loans, the following documents have to be submitted along with loan documents:

  • Any one of these documents to be submitted as ID proof – PAN card,  passport, employee ID card or any other valid identity proof
  • Any one of these documents to be submitted as address proof – ration car, telephone bill ,electricity bill or another valid address proof
  • PAN card
  • Bank statements for the last 12 months
  • Relevant admission papers like admission letter or admit card, schedule of expenses which includes the fees structure and living expenses and mark sheets of Class X and onwards (educational documents)
  • Any proof of income which might be last one year’s income tax return, Form 16 or letter from employer or salary slip of the previous 6 months if the person is a salaried employee, income tax return of the past 3 years, profit and loss account and balance sheet of the business if he/ she is a businessman and income certificate from Tahsildar and a proof of land holding if the individual is engaged in agriculture
  • 3 coloured passport size photographs
  • Proof of out-goes which may include loan repayment statement, LIC policies and other valid proof of out-go
  • Any other document which might be required as per the directives of the loan application form