Tips to lower education loan costs and maximize savings
Pursuing higher education abroad is a valuable investment in your future and understanding how to manage education loan interest rates can help you make the most of that investment. In 2024, interest rates for international education loans typically ranged between 10% to 15% for Indian students, depending on the type of loan and whether the lender is public, private or international. It’s crucial to navigate these rates effectively to ensure the lowest cost for your loan.
If you’re planning to study abroad, understanding international student loan interest rates can help you reduce the amount of interest you pay over the life of your loan. Let’s explore critical strategies for managing and reducing your education loan interest rates. These strategies offer practical insights that can lead to long-term financial benefits.
What’s an education loan interest rate?
A student loan interest rate is the percentage charged on the total loan amount you borrow for your education. This rate can vary based on several factors, including the lender’s terms, the type of loan and your creditworthiness.
It’s essential to note that interest rates can be either fixed or variable. Fixed rates remain constant throughout the loan tenure, enabling easier budgeting, while floating rates fluctuate based on market conditions, which can increase during inflationary times like the last few years.
How to find the best education loan interest rates
Finding the best education loan interest rate can significantly lower the overall cost of your loan. Here are some strategies to consider:
Which bank offers the lowest interest rate for study abroad education loans for Indian students?
As of 2024, public sector banks in India offer some of the lowest education loan interest rates, starting at around 9%. However, these loans often require:
When comparing loans, consider both the nominal interest rate and annual percentage rate (APR), which includes all fees and gives the true cost of the loan. For instance, MPOWER Financing offers fixed rates starting at 9.99% (10.89% APR) for customers who qualify for both the Early Bird promotion by submitting their fall 2025 application by January 31, 2025 and who sign up for automatic payments.
Always review the loan agreement carefully to understand all terms.
Education loan interest rates in India across different lenders
Lender type | Interest rate | Key features | Repayment Terms |
Public sector banks | 8.50% – 11.25% | Requires collateral and cosigner; lower rates | 6-12 months moratorium, flexible tenure. |
Private banks | 9.25% – 13.70% | Requires strong cosigner; higher rates | EMI options, repayment after the course. |
International lenders | 11.99% – 13.99% | No-collateral or cosigner; competitive rates | Immediate or post-graduation start, flexible. |
Non-Banking Financial Company (NBFCs) | 10.99% – 14.50% | Higher rates; require collateral | Customized plans, shorter tenures. |
Considerations beyond student loan interest rates
The MPOWER advantages in securing student loans
No-collateral or no-cosigner required:
Financial flexibility:
Predictable and customer-friendly terms:
Unique borrower benefits:
Career support and additional resources:
MPOWER Financing Student Loan
A loan based on your future earnings
When should you start making payments on an education loan?
Making payments on your education loan as early as possible can help reduce the total cost of the loan. For many lenders, including MPOWER Financing, making interest-only payments while still in school can prevent interest from accumulating, helping to reduce the overall cost of the loan.
This approach helps build positive repayment habits early on and reduces the financial burden after graduation. However, the right timing to start paying on your loan ultimately depends on your financial situation and the repayment terms set by your lender.
Fund your dreams without collateral or cosigner
If you’re planning to study abroad and need an education loan without the hassle of a cosigner or collateral, MPOWER Financing could be an excellent option. MPOWER offers loans to international students at competitive rates, with no prepayment penalties and flexible repayment terms. Additionally, MPOWER provides career support and resources to help you succeed throughout your educational journey.
In conclusion: How to reduce education loan interest
Managing education loan interest rates effectively can greatly impact your overall costs. For every student planning on taking a loan for further studies abroad, it’s crucial to compare lenders, understand terms like cosigner and collateral requirements, and choose fixed rates when possible.
MPOWER Financing is a strong option for students without a cosigner or collateral, offering fixed rates and additional support like career resources. Finding the right loan that fits your needs will set you up for long-term success in your academic and professional journey.
MPOWER Financing Student Loan
A loan based on your future earnings
FAQs
Several factors influence education loan interest rates for studying abroad, including the type of lender (public versus private), the loan amount, tenure, market conditions and the applicant’s credit profile.
Yes, having a cosigner, especially one with a good credit score, can help you secure a lower interest rate.
The nominal interest rate or advertised rate, is the cost of borrowing money without considering any additional fees or expenses associated with the loan.
The APR is a broader measure of the cost of borrowing money than the nominal interest rate. It includes the interest rate and other costs associated with borrowing, such as origination fees, processing fees and interest.
The APR provides a way to conduct an apples-to-apples comparison of loans (and their cost) available to you.
A higher credit score may result in a lower interest rate, because that score shows your ability to timely manage your existing loans and payment obligations. Maintaining a good credit score can lead to more favorable loan terms.
DISCLAIMER – Subject to credit approval, loans are made by Bank of Lake Mills or MPOWER Financing, PBC. Bank of Lake Mills does not have an ownership interest in MPOWER Financing. Neither MPOWER Financing nor Bank of Lake Mills is affiliated with the school you attended or are attending. Bank of Lake Mills is Member FDIC. None of the information contained in this website constitutes a recommendation, solicitation or offer by MPOWER Financing or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.
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