New rates for loan amounts less than Rs4 lakh have been reduced from 12.25% to 11.75%. Rates for loan amounts above Rs7.50 lakh have been reduced from 13.25% to 12.25%. Interest rates for amounts between Rs4 lakh and Rs7.50 lakh have remained unchanged at 13.25%.

Other banks may follow suit. Says M.P. Murugan, assistant general manager, Allahabad Bank: "We are the leader in the educational loan space. We already have special lower interest rates for IIT and IIM students, at 11.25%. However, if the need arises, we may look into reducing our rates as well.

N.R. Shet, general manager, Corporation Bank, says: "We do not have immediate plans to reduce educational loan rates, but you cannot rule out the possibility of us doing so. Our rates are not that high, so we will wait and watch."
Any cut is, of course, good news for students. Hsoc Matthai, 17, a student from Mumbai, says: "Educational loans are necessary. My brother and I are planning to go for professional courses this year. Even a small decrease in interest rates makes a lot of difference. We would rather go to a bank that offers lower rates.