Education Loans are disbursed by Banks as per Model Education Loan Scheme of Indian Bank Association (IBA). Reserve Bank of India (RBI) has deregulated the interest rates charged by Banks, linking up with their base rates. The interest rate on education loan accordingly varies depending upon the base rate and the quantum of loan. The interest rate charged by State Bank of India(SBI) on education loans during the last three years has varied from 10.25% to 15.25% per annum.
Reserve Bank of India (RBI) has reported that on receipt of complaints regarding education loans, the matter is taken up with the Head Office of the concerned Bank for redressal. Indian Bank Association (IBA) has advised the banks to give wide publicity to their grievance redressal mechanism on education loans and to make effective use of the mechanism.