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What is Processing Fees in Education Loans?
Government/Public Banks | Updated

Students pursuing higher Education in a world-class university open the door to countless career opportunities. But this often comes with a lot a financial burden. This is when Education loans step in to ease the financial burden. Education Loans are a great source to finance students' higher Education.
When applying for Education loans, students are required to pay Processing Fees. Why are Processing Fees paid in education loans? In this blog, we will discover what is Processing Fee is, why it is to be paid, and its role in Education Loans.
What is the Processing Fee?
A processing fee is a one-time Fee that banks charge applicants to process the Loan application. The Processing Fee covers the administrative costs associated with processing and disbursement of the Education Loan. These fees are separate from the Loan amount and are paid upfront to the financial institutions, either at the time of loan application or disbursement.
How do processing Fees Work?
Purpose: The processing fee is levied on applicants to cover all the costs associated with the loan processing, including checking credit scores, paperwork associated with the processing of the loan, etc.
Amount: Generally, processing fees vary from lender to lender, depending on the profile of the student.
Government banks: For government banks, the Processing Fee is 10k.
Private banks & NBFCs: For private banks, the Processing Fee is up to 2% of the loan amount. Again, this percentage of the amount varies from lender to lender.
GST: Goods and Services Tax applies to the processing fees in addition to the basic processing fees.
Refundability: Usually, Processing Fees are non-refundable, even if the student's loan is rejected or the student decides not to proceed further with the loan application.
Why do Lenders charge Processing Fees?
- As previously discussed, Lenders charge processing fees to cover the costs associated with document verification, evaluating the profile, and approving the loan. Processing fees also cover the expenses related to paperwork, credit checks, and other administrative work.
- Lenders use processing fees to check the credit scores of the applicant, asses their credit history and their repayment capacity.
The processing also helps lenders reduce the risk associated with lending, such as loan default. Paying processing fees ensures the financial stability of the applicant, which in turn can help lenders in evaluating the repayment capacity of the applicant. - The processing fees include the operational cost associated with the processing of the loan, such as the time and the resources spent on processing the Loan.
What is the Processing Fee for Government Banks?
- Students applying for an Education Loan with Government banks have to pay the processing fees at the beginning while applying for the Loan.
Government banks ask for processing fees to pay while submitting the documents required for the loan to be processed. - After paying the processing fees, the banks then start the Loan processing.
- The processing fee for the Government Banks is 10k plus GST.
- The processing fees are strictly non-refundable with Government lenders, whether the loan is rejected or the student does not proceed further with the loan.
What is the Processing Fee for Private banks and NBFCs?
- Unlike Government banks, Private banks and NBFCs do not require payment of processing fees at the beginning of the Loan application.
- Generally, Private banks and NBFCs function online. Once the student applies and uploads the documents for an Education Loan, the Lenders start the process.
- After the process is done and the Lender sanctions the loan after a thorough verification, this is when lenders ask the student to pay the processing fee.
- After paying the processing fees, the lender then issues the sanction letter to approve the loan.
- The processing fees for Private banks and NBFCs are up to 2% of the Total Loan amount plus GST.
- The processing fees with Private banks and NBFCs are non-refundable, even if the student does not go forward with the Loan.
- Processing fees with Private Banks and NBFCs generally differ from lender to lender based on the profile of the student.
Tips to Negotiate a Better Processing Fee
Below are the Negotiation Tips for better processing fees.
Apply for a STEM course: Applying for a STEM course can help students negotiate the processing fees with their lenders. Because lenders believe that the STEM courses have high chances of employability, thus enhancing the chances of repaying the loans.
High-Ranking University: Applying to a high-ranking university can increase their chances of future earning potential of the students. This can help negotiate with the lender and lower your processing fees.
Good Test Score: Test scores such as GRE, GMAT, etc, can help students negotiate with the lenders. A good test score builds credibility and enhances the chances of Loan approval. Students can leverage this opportunity to negotiate with the lender.
Support from WeMakeScholars: WeMakeScholars is a government-backed Education start-up, offering unwavering support to students in getting Education Loans. We have partnered with over 14 government banks, public banks, and NBFCs. On behalf of students, we negotiate with lenders and can significantly bring down the processing fees to a minimum. Reach out to us today and get the maximum benefits.
Benefits of going through WeMakeScholars
Lower Interest Rates: As previously discussed, WeMakeScholars is associated with 14 plus lenders across India. Going through WeMakeScholars can help you get Education Loans at Lower interest Rates.
Lower Processing Fees: WeMakeScholars negotiates on students' behalf and tries to bring down the processing fees to a minimum. This helps students get the best possible Processing Fees.
Faster Loan Approval: Applying for Education loans through WeMakeScholars can ensure fast loan approvals. We have a dedicated financial officer who lends support throughout the loan process. Our financial officers will provide end-to-end support and make your Education Loan process stress-free, and the best part is our service is free of cost, as WeMakeScholars comes under the Digital India campaign.
Conclusion
To summarize, in this blog, we have discovered what is the processing fees in Education Loans. We have also discussed why lenders ask for it and how it works. Furthermore, we have also explored the processing fees that the Government banks, Private banks, and NBFCs charge. In addition, we also shared some tips on how to negotiate with the lenders to reduce the processing fees.
We at WeMakeScholars support students in choosing the right Education Loan. We also negotiate with lenders to minimize the loan processing fees on the student's behalf. Request a callback and thank your future self.
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