The Indian overseas bank is one of the leading public sector banks that can offer an education loan to students aspiring to study in India and abroad at an affordable rate of interest. Understanding students' plight Indian overseas bank has designed student-friendly education loan schemes.

Indian Overseas Bank education loan covers an array of programs and disciplines offered by different educational institutions, the loan can also be provided to individuals who wish to enroll in technical or professional courses abroad. This article will be focused on Indian overseas bank education loan covering the scheme, interest rate, required documents, etc.

Indian overseas bank education loan scheme

The major schemes of IOB education loan are

• Vidya Jyoti - The loan under this scheme is made available to job-oriented professional/technical programs from reputed universities abroad, and to students for pursuing any Graduation / Post-Graduation / Diploma program in India and abroad in an Institution recognized by the State / Central Government / University. It can cover educational expenses like travel, tuition fees, books, hostel fees, exam fees for studies abroad.
• IOB Scholar - This scheme is for students pursuing higher education in India & abroad other than loans covered under the Indian Banks Association Model Scheme i.e to cover all those students who were not covered by Vidya Suraksha/Vidya Jyothi Educational Loan Scheme.

Eligibility criteria for Indian overseas bank education loan

• The student should be an Indian national.
• Should have secured admission to any program in recognized university through an entrance test or merit-based application process.
• In the states where there is no common entrance test (CET), the applicant must secure 60% for the general category and 55% for SC / ST students in the qualifying examination as Cut-off marks.
• For programs where CET is absent for securing admission, employment and reputation of the institution concerned will be the criteria.
• The applicant should not be in gainful employment.
• Students who wish to pursue vocational courses and skill development programs are also eligible for the loan.

IOB Education Loan Documents Required

The required documents that are needed to be submitted when you apply for an education loan are mentioned below:

• Filled in the Loan application form along with 2 passport-size photographs
• Academic documents-10th and 12th mark sheets and certificates, entrance exam results, GMAT/TOFEL/IELTS/GRE results
• Collateral documents
• Residential Address Proof (Any One): Passport, Voter ID, Aadhaar Card, Driving License, Electricity Bill, Landline Telephone Bill
• Identity Proof (Any One): Passport, Voter ID, Aadhaar Card, PAN Card, Driving License
• Letter of acceptance from a recognized university

Additional IOB Education Loan Documents Required for a guarantor or co-applicant/borrower

• Income proof of the guarantor or co-applicant/borrower (i.e. salary slips/ Form 16)
• Photocopy of PAN Card of the Student and co-applicant/borrower
• Last 6 months bank account statement of Co-applicant/borrower
• ITR of previous 2 years of co-applicant/borrower (if IT Payee)
• A brief statement of assets & liabilities of co-applicant/borrower

Any additional IOB education loan documents required that have been requested by the bank must be provided as well.

Amount on security

Both schemes offer different education loan amounts for study in India and abroad. But you are required to bring in collateral to take a loan against it since both these schemes are secured education loan and an assignment of future income.

Collaterals that are accepted for Indian overseas bank education loan are Immovable property like a house, flat, non-agricultural land, and liquid security like Fixed deposit, Insurance policies(Term insurance), and Government bonds.

• Assignment of future income- It is essential to be submitted in order to opt for an education loan. It acts as consent that you will be getting a job and have a stable source of income in the future on course completion which in turn will help in repayment of the loan. You just need to sign on the concerned document pertaining to this clause. In case you do not get a job, still you need to start the repayment of the loan.

The amount you can expect from

• Vidya Jyoti - Minimum loan amount: Above Rs. 7.50 Lacs. The maximum loan amount for India is Rs. 30 lakhs and for abroad is Rs. 40 lakhs
• IOB Scholar - The maximum loan amount for India is Rs. 50 lakhs and for abroad Rs. 60 lakhs

Indian overseas bank education loan interest rate

1. The interest rate for Vidya Jyoti scheme -The IOB education loan interest under the Vidya Jyoti scheme is Repo Linked Lending Rate (RLLR) + Spread, implying that it is linked with the repo rate of the RBI. The RLLR (w.e.f January 2022) is 6.85%, with a spread of 3.20%, making the Indian overseas bank education loan interest rate 10.05%. There is a 0.5% concession rate given to women applicants. 

2. The interest rate for the IOB Scholar scheme -

• For Loan Amount up to INR 7.5 lakhs - The rate of interest offered under the IOB Scholar scheme is RLLR + Spread, in which RLLR is 6.85% and the spread is 2.20% making the effective rate of interest 9.05%.

• For Loan Amount Above INR 7.5 lakhs - The IOB education loan interest offered is 6.85% + 3.20% which is 10.05%.

Repayment and holiday period

Indian overseas bank equates monthly installments of the loan amount for a period of 15 years excluding the moratorium period which is the student's course duration + 12 months. Students are not required to pay any interest during their moratorium period but they can if they want to and by doing so they may avail of a 1% interest concession by the bank.

Loan margin and disbursement 

• The loan margin under the Vidya Jyoti scheme for studies in India is 5% and for studies abroad is 15%.
• And the uniform margin of 25% for all loans, irrespective of the loan amount under the IOB Scholar scheme.
• IOB may ask the applicants to pay the margin amount on a yearly basis during the course period to meet the percentage numbers of the total loan disbursed, and Scholarship/assistantship to be included in the margin.

Margin money refers to the amount the applicant contributes to the overall amount required. For eg. a course costs Rs. 40 lakh in such case the borrower has to provide a margin of Rs. 2 lakh (5% for Indian courses) or Rs. 6 lakh (15% for study abroad) while IOB offers the rest and the loan to be disbursed in stages as per the requirement. It is important to note here that scholarship/ assistantship is included in the margin.

The Indian overseas bank may be less known to many due to its less presence across India with just about 3,500+ branches and due to this, students from places where the IOB branch is not present can not avail IOB education loan. But there are other lenders both public and private that can lend you an education loan for which you can take help from WeMakeScholars.

Note: WeMakeScholars is an organization funded and supported by the Government of India that focuses on International Education finance. We are associated with 10+ public/Pvt banks/ NBFCs in India and help you get the best abroad education loan matching your profile. As this initiative is under the Digital India campaign, it's free of cost. The organization has vast experience dealing with students going to various abroad education destinations like the US, Canada, UK, Australia, Germany, Sweden, Italy, China, France among others.