BoB: 6.85%. SBI: 6.90%. Canara: 7.35%. Those are the floor rates for premier institutions.
For non-premier colleges, the same three banks charge 9.25-11.35%. That is a 4.50% gap based purely on which college your child gets into — translating to Rs 8-12 lakh in extra interest on a Rs 20 lakh loan.
SBI, Bank of Baroda, and Canara Bank together account for over 60% of domestic education loan disbursals. Each structures their rates, collateral rules, and moratorium terms differently. Choosing the wrong one costs Rs 2-7 lakh over the loan tenure.
This comparison uses April 2026 rates from official bank rate cards. No affiliate links, no sponsored rankings.
The Rate Comparison Most Sites Get Wrong
Every comparison site shows “starting from” rates. Here is what each bank actually charges, broken down by loan slab and college tier — the two variables that move your rate more than anything else.
For Premier Institutions (IIT, IIM, NIT, BITS, ISB)
| College Tier | SBI Scholar Loan | Bank of Baroda Premier | Canara Vidya Turant |
|---|---|---|---|
| Top IIMs (A/B/C/I/K/L), ISB | 6.90-8.05% (List AA) | 6.85% (BRLLR-1.05%) | 7.35% (Group A) |
| All IITs, BITS Pilani | 8.10-8.65% (List A) | 6.85-7.40% (Top IITs in special category) | 7.35-8.60% |
| NITs, FMS, JBIMS, IISc | 8.65-9.15% (List B) | 7.90% (BRLLR+0.00%, Cat B) | 7.35-8.60% |
| Other premier institutions | 9.00-9.65% (List C) | 8.40% (BRLLR+0.50%, Cat C) | 8.60% |
The number that matters: BoB gives IIT students BRLLR minus 1.05% — a negative spread. The bank lends below its own benchmark to win these borrowers. SBI matches this only for top-6 IIMs and ISB, not for IITs.
For Non-Premier Institutions (General IBA Model Scheme)
| Loan Slab | SBI Student Loan | Bank of Baroda (Baroda Gyan) | Canara Bank (IBA Model) |
|---|---|---|---|
| Up to Rs 4 lakh | 9.65-9.95% | 9.90% (BRLLR+2.00%) | 10.85-11.35% |
| Rs 4 lakh - 7.5 lakh | 9.65-9.95% | 9.90% | 9.25-11.25% |
| Above Rs 7.5 lakh (with collateral) | 8.65-9.15% | 9.80% (BRLLR+1.90%) | 9.25-11.25% |
SBI inverts the rate logic. Borrow less than Rs 7.5 lakh without collateral and you pay 9.65-9.95%. Borrow more than Rs 7.5 lakh with collateral and you pay 8.65-9.15%. The unsecured rate is higher than the secured rate. Students borrowing small amounts for diploma or undergraduate courses are penalized — they are deemed higher risk precisely because they cannot offer collateral.
Canara Bank’s IBA model is the most expensive of the three for small loans. A Rs 3 lakh loan for a diploma course costs 11.35% at Canara versus 9.65% at SBI — a Rs 8,400 annual interest difference that compounds significantly over the repayment period.
Collateral Rules: Where the Real Gatekeeping Happens
The collateral threshold determines whether your family pledges property or walks in with just an admission letter. The gap between premier and non-premier treatment is enormous.
Collateral-Free Limits by Bank and College Tier
| Bank & Scheme | Top-Tier (IIM/ISB) | Mid-Tier (IIT/BITS/NIT) | Lower-Tier Premier | Non-Premier (IBA) |
|---|---|---|---|---|
| SBI Scholar | Rs 50 lakh (List AA) | Rs 40 lakh (List A) | Rs 30 lakh (List B) | Rs 7.5 lakh |
| BoB Premier | Rs 40 lakh (Cat AA) | Rs 30 lakh (Cat A) | Rs 10-15 lakh (Cat B/C) | Rs 4 lakh (no guarantor) |
| Canara Vidya Turant | Rs 50 lakh (Group A) | Rs 30-40 lakh (Group B/C) | Rs 30-40 lakh | N/A (IBA model applies) |
Canara Vidya Turant is the outlier. It offers up to Rs 50 lakh completely collateral-free and guarantor-free for eligible premier institutions. No other PSU bank waives both the collateral and the guarantor requirement at this level. SBI requires a co-borrower (parent) on all education loans. BoB requires a third-party guarantor for loans between Rs 4-7.5 lakh under the general scheme.
What Counts as Collateral — And What Does Not
| Collateral Type | SBI (LTV) | BoB (LTV) | Canara |
|---|---|---|---|
| Residential property | 90% (10% margin) | 100% (0% margin) | Accepted |
| Fixed deposit | 100% (0% margin) | 90% (10% margin) | Accepted |
| LIC policy (surrender value) | Accepted | 80% (20% margin) | Accepted |
| Government bonds | ~100% | ~100% | Accepted |
| Commercial property | Accepted | Accepted | Accepted |
| Agricultural land | Not accepted | Not accepted | Not accepted |
| Gold | Not accepted | Not accepted | Not accepted |
The valuation trap: Banks appoint their own panel valuers. A residential property worth Rs 50 lakh on the open market is routinely valued at Rs 30-35 lakh by bank valuers — a 60-70% valuation. If you need Rs 30 lakh in collateral coverage and your property is independently worth Rs 40 lakh, the bank’s valuation may come back at Rs 26 lakh, forcing you to pledge additional assets.
BoB charges Rs 8,500 per property (non-refundable) for the valuation. This fee is not mentioned in the interest rate card and applies regardless of whether the loan is sanctioned.
The Rs 80 Lakh BoB Threshold
Bank of Baroda requires 100% collateral coverage for loans up to Rs 80 lakh. Above Rs 80 lakh, the coverage requirement jumps to 125% — meaning a Rs 1 crore loan needs Rs 1.25 crore worth of collateral as assessed by the bank’s valuer. At typical 65% valuation, you would need property worth Rs 1.9 crore on the open market to satisfy this requirement.
Moratorium: The Period That Turns Rs 10 Lakh Into Rs 14.5 Lakh
All three banks offer course period plus 12 months moratorium. During this time, simple interest accrues but is not compounded (IBA mandate). The silent damage happens when families choose not to pay interest during the course.
The Math Nobody Shows You
Scenario: Rs 10 lakh loan at 9% for a 4-year BTech
| Interest NOT Paid During Course | Interest Paid During Course | |
|---|---|---|
| Interest during 4-year course | Rs 3,60,000 (accrued) | Rs 3,60,000 (paid as Rs 7,500/month) |
| Interest during 1-year moratorium | Rs 90,000 (accrued) | Rs 90,000 (paid as Rs 7,500/month) |
| Total accrued/capitalized | Rs 4,50,000 added to principal | Rs 0 |
| Principal when EMI starts | Rs 14,50,000 | Rs 10,00,000 |
| Monthly EMI (15 years at 9%) | Rs 14,710 | Rs 10,143 |
| Total interest over loan life | Rs 12,27,800 | Rs 8,25,740 |
| Total cost (principal + all interest) | Rs 22,27,800 | Rs 22,75,740* |
*Includes Rs 4,50,000 paid during moratorium
Net saving from paying interest during course: Rs 4,02,060. Plus SBI gives a 1% rate concession for interest-servicing during moratorium, which adds another Rs 1.5-2 lakh in savings.
The BoB Early Employment Clause
Bank of Baroda has a clause other banks do not: the moratorium ends either after course period plus 12 months or 6 months after getting a job — whichever is earlier. If you complete a 2-year MBA in April and start working in June, your moratorium ends in December (6 months after employment) — not the following April (12 months after course completion). This can cut 4-6 months off your interest-free buffer.
SBI and Canara do not have this early-employment trigger. Their moratorium runs the full course period plus 12 months regardless of employment status.
Hidden Costs That Do Not Appear in Rate Comparisons
Mandatory Insurance
| Bank | Insurance Requirement | Cost Impact |
|---|---|---|
| SBI | Required for loans above Rs 7.5 lakh | 0.5-0.8% of outstanding per year |
| Bank of Baroda | Mandatory group credit life insurance above Rs 7.5 lakh | Rs 15,000-25,000/year on Rs 30 lakh loan |
| Canara Bank | Required for secured loans | Varies |
BoB adds a 0.10% risk premium to your interest rate if you opt out of their group insurance. On a Rs 30 lakh loan over 15 years, that 0.10% costs Rs 28,000-35,000 in additional interest.
Processing and Documentation Charges
| Charge | SBI | Bank of Baroda | Canara Bank |
|---|---|---|---|
| Processing fee | Nil (up to Rs 20 lakh); Rs 10,000+GST (above Rs 20 lakh) | Nil (premier institution, India) | Nil (Vidya Turant); up to Rs 20,000 (other schemes) |
| Property valuation | Bank-appointed (varies) | Rs 8,500/property (non-refundable) | Not disclosed upfront |
| Mortgage creation | Applicable (stamp duty as per state) | Nil | Applicable |
| Late payment penalty | 2% p.a. on overdue amount | 2% p.a. (above Rs 2 lakh); 1% (below Rs 2 lakh) | 2% p.a. on overdue |
| Prepayment (own funds) | Nil | Nil | Nil |
| Prepayment (balance transfer) | May charge foreclosure fee | 0.50% of outstanding | Not clearly disclosed |
SBI’s Rs 10,000+GST processing fee kicks in only above Rs 20 lakh. For the typical domestic education loan of Rs 10-15 lakh, all three banks charge zero processing fees. The real hidden cost is stamp duty on mortgage registration, which varies from 0.1% (Rajasthan) to 8% (Uttar Pradesh) of the property value.
Premier Institution Lists: Each Bank Has Its Own
Banks do not use a single standardized premier institution list. A college that qualifies for BoB’s AA category might be in SBI’s B list. This directly affects your interest rate and collateral-free limit.
Where the Lists Diverge
| Institution | SBI Classification | BoB Classification | Canara Classification |
|---|---|---|---|
| IIM Ahmedabad/Bangalore/Calcutta | List AA | Top-10 IIMs (Special) | Group A |
| IIM Indore/Kozhikode/Lucknow | List AA | Top-10 IIMs (Special) | Group A |
| ISB Hyderabad | List AA | Category AA | Group B |
| All IITs | List A | Top-10 IITs (Special) | Group C / Vidya Turant eligible |
| BITS Pilani (all campuses) | List A | Category A | Vidya Turant eligible |
| NITs | List B/C | Category B/C | Vidya Turant eligible |
| FMS Delhi | List B | Category B | Varies |
| XLRI Jamshedpur | List AA | Category AA | Group A/B |
SBI covers 264+ premier institutions across its four tiers — the widest coverage among PSU banks. BoB covers approximately 200+. Canara’s Vidya Turant covers a narrower set but compensates with the highest collateral-free limit.
Critical check before applying: Download the bank’s latest institution list from their website. A college that was List A last year may have been reclassified. IIT and IIM placements are stable across all banks, but NITs, state engineering colleges, and newer private institutions frequently shift between tiers.
Interest Rate Benchmarks: Why the Same Repo Cut Hits Differently
| Bank | Benchmark | Current Base Rate | Reset Frequency |
|---|---|---|---|
| SBI | EBLR (External Benchmark Lending Rate) | Repo rate + spread | Quarterly (RBI mandated) |
| Bank of Baroda | BRLLR (Baroda Repo Linked Lending Rate) | 7.90% (Repo + 2.65% markup) | Quarterly |
| Canara Bank | RLLR / MCLR (varies by scheme) | Varies | RLLR: Quarterly; MCLR: 6-12 months |
All three use repo-linked benchmarks for new loans (RBI mandate since October 2019). When RBI cuts the repo rate by 0.25%, your rate drops by 0.25% at the next quarterly reset — typically within 3 months.
Canara’s catch: Some Canara Bank schemes, particularly the IBA model, may still reference MCLR for certain loan categories. MCLR-linked rates reset only every 6-12 months, meaning Canara borrowers on MCLR may wait months longer to benefit from a rate cut compared to SBI and BoB borrowers on repo-linked rates. Confirm your benchmark at the time of sanction.
Section 80E Tax Benefit: The 8-Year Clock Most People Miss
All three banks’ education loans qualify for Section 80E deduction. The key rules:
- Only interest qualifies — not principal repayment
- No upper limit on the deduction amount (unlike Section 80C’s Rs 1.5 lakh cap)
- 8-year window — deduction available from the year you start paying interest, for a maximum of 8 assessment years
- Old Tax Regime only — approximately 70% of salaried Indians are now on the New Tax Regime where 80E does not apply
The Clock Trap
The 8-year window starts from the year you begin paying interest, not from the year you took the loan. If you pay interest during the moratorium period (to get SBI’s 1% concession), the 80E clock starts ticking immediately. On a 4-year course with interest-servicing during moratorium, you use up 4 of your 8 years before repayment even begins.
If you are on the New Tax Regime anyway (and thus cannot claim 80E), there is no tax reason to prefer paying or deferring interest during moratorium. Base the decision purely on the moratorium capitalization math above.
Both Co-Borrowers Can Claim
The student and parent co-borrower can both claim 80E deductions based on their respective interest payments. However, you need documented proof of who paid which EMI. Joint account payments create ambiguity — maintain separate payment trails. If the parent is repaying entirely, only the parent claims the deduction.
PM Vidyalaxmi: The Government Subsidy That Changes the Math
For families earning under Rs 8 lakh per year, PM Vidyalaxmi significantly reduces education loan costs. All three banks participate.
| Family Income | Benefit | Loan Cap | Institution Requirement |
|---|---|---|---|
| Up to Rs 4.5 lakh | 100% interest subsidy during moratorium | Rs 10 lakh | 860+ approved QHEIs |
| Rs 4.5-8 lakh | 3% interest subvention during moratorium | Rs 10 lakh | 860+ approved QHEIs |
| Credit guarantee (CGFSEL) | 75% of default covered | Rs 7.5 lakh | Any recognized institution |
What this means in practice: A family earning Rs 4 lakh per year with a student at a central university borrows Rs 10 lakh. The government pays all interest during the 5-year moratorium period (approximately Rs 4-4.5 lakh). The student starts repayment on the original Rs 10 lakh, not Rs 14.5 lakh.
The Rs 10 lakh cap is the limitation. IIT/IIM fees for 4-year programs routinely exceed Rs 10 lakh. The subsidy covers only Rs 10 lakh of the loan — any amount above that accrues interest normally. A Rs 25 lakh loan gets subsidy on the first Rs 10 lakh and full interest accrual on the remaining Rs 15 lakh.
Apply through pmvidyalaxmi.co.in (the old vidyalakshmi.co.in portal has been merged). Portal fee: Rs 200 + GST. As of early 2026, approximately 60% of applications are being approved with Rs 7,754 crore sanctioned.
Which Bank to Choose: Decision Framework
Choose SBI Scholar Loan If:
- Your college is on SBI’s AA or A list (264+ institutions — the widest coverage)
- You want to pay interest during the course (1% rate concession makes SBI the cheapest option for disciplined borrowers)
- You prefer the largest branch network for disbursement and servicing
- You need the moratorium to run the full course + 12 months regardless of employment
Choose Bank of Baroda Premier If:
- Your child has a top-10 IIT or IIM admit (BoB’s 6.85% is the lowest floor rate)
- You want zero mortgage creation charges (BoB waives this)
- You are comfortable with the early-employment moratorium trigger
- Loan amount is under Rs 40 lakh (BoB’s collateral-free limit for AA colleges)
Choose Canara Vidya Turant If:
- You need the highest possible collateral-free amount (Rs 50 lakh with no guarantor required)
- Your family cannot provide property collateral at any amount
- Your institution is in Canara’s eligible list but lower-tier at SBI or BoB
- Speed matters more than rate — no collateral documentation means faster processing
For Non-Premier Colleges (Under Rs 7.5 Lakh):
- SBI at 9.65% is the cheapest of the three
- Canara’s IBA model at 10.85-11.35% for small loans is the most expensive
- All three offer Rs 7.5 lakh collateral-free under the IBA model scheme
- Check PM Vidyalaxmi eligibility first — the interest subsidy dwarfs the rate difference between banks
What to Do Before Walking Into the Bank
-
Download the institution list from all three banks’ websites. Confirm your college’s tier classification at each bank — it directly determines your rate and collateral-free limit
-
Check PM Vidyalaxmi eligibility at pmvidyalaxmi.co.in before approaching any bank directly. The portal aggregates 45+ banks and 139+ loan schemes — you may find a better deal than SBI, BoB, or Canara
-
Get your parent’s CIBIL report (not just the score). PSU banks use the parent’s credit profile as the primary filter. A missed credit card payment from 2 years ago can push you from an 8.5% rate to a 10% rate — or outright rejection
-
Calculate the moratorium cost using the math in this article. Decide upfront whether you will pay interest during the course. If you will, factor SBI’s 1% concession into your comparison. If you will not, factor the Rs 4-5 lakh capitalization cost
-
Get property valued independently before the bank’s valuation. If the bank’s panel valuer comes back 30-40% below market, you can negotiate or switch banks. BoB’s Rs 8,500 valuation fee is non-refundable even if you do not proceed
-
Apply to 2-3 banks simultaneously — there is no restriction on parallel applications. Compare actual sanction letters (not website rates) before accepting. The sanction letter is the only document that shows your real interest rate, not the “starting from” rate
For a broader comparison including private banks and NBFCs, see our complete education loan rate comparison. For understanding the moratorium trap in detail, read our moratorium capitalization math breakdown.
If you are weighing whether to study abroad, our country-wise education loan ROI analysis covers the real return on investment after accounting for loan costs, visa restrictions, and post-graduation earnings.