Applying for education loan? Here's a look at interest rates of key fintech lenders

At a time when financing education is becoming expensive, new-age fintech firms are providing accessible and affordable credit for students and young professionals to pursue further education.

With rising loan defaults, traditional banks seem to have reduced education lending since 2018. However, the education loan market has soared to over $10 billion, Yourstory reported, quoting Unitus Ventures. Only 5 percent of that market is currently serviced by organised lenders, the report said.

The void created in the education finance space is now being filled by a new crop of fintech lenders, start-ups and NBFCs which are offering flexible loans at low interest rates to students.

Here’s a look at interest rates offered by key fintech lenders in the industry.

Founded in 2016, Eduvanz is a digital NBFC that provides affordable no-cost financing solutions. The company partners with some educational institute and provides students zero-cost loans. The institute bears the interest cost. In other cases, students are charged an interest rate in the range of 15 percent to 45 percent.

Avanse Financial Services’ Parentage Warburg Pincus, a global private equity firm, acquired controlling stake in the company in July 2019 from Wadhawan Global Capital (WGC) and DHFL and now holds 80 percent of equity in the company. 20 percent equity-stake continues to be held by International Finance Corporation (IFC), an arm of World Bank.

Avanse claims to provide growth and working capital to several educational institutes catering to over 5-6 lakh students.

HDFC Credila, a subsidiary of HDFC Limited, provides education loan starting from Rs 1 lakh. The company charges a floating rate of interest which is linked to HDFC Credila's Benchmark Lending Rate (CBLR), starting at 11 percent per annum.

This new-age financial services group provides education loan without asking for any security. For a loan of up to Rs 10 lakh, InCred charges a rate of interest starting from 12.75 percent to 14.00 percent. For loans above Rs 10 lakh, the rate of interest varies from 11.75 percent to 13.75 percent.

Auxilo charges an interest rate between 12.70 percent and 14.50 percent. However, the fintech charges 18 percent for late payment of EMI.