IBA Model Education Loan Scheme: Overview & Details

    Updated on: 25 Oct 2023 8 min read

     

    Education is the backbone of any society, and it is of utmost importance for the state to provide students with world-class education. When it comes to higher education, there is no dearth of students who are qualified to study at top institutions globally, and many are doing so too.

    The credit culture in India has been revamped with the joint effort of state and financial institutions. The Indian Banking Association (IBA) has been a pioneer in initiating borrower-friendly policies that will increase the number of students under education loans.

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    Expenses Covered

    You can't miss expense coverage, as abroad education is way beyond the tuition fee. The cost of living and other expenses are significantly high when compared with domestic education. So, it's in the best interest of students to know the expenses that will be covered under the loan. You can also ask the bank to include or exclude some expenses that depend on the country you will be studying and the university/college.

    The following expenses are covered under the Model Education Loan Scheme:

    • The tuition fee for the course is payable to the university or college.
    • The examination or library or laboratory fees. It depends on the course for which you have applied.
    • The expense of traveling is also included since the amount runs into lakhs.
    • If you are planning to take insurance on the loan, then the payable interest is also included.
    • The Caution deposit, Building fund / refundable deposit as per the receipts from the university. However, it is to be capped at 10% of the total tuition fees.
    • The cost of the hostel will also be included, and if the students plan to stay outside the campus, then a reasonable amount can be a part of the expense.
    • The cost will also include the expense of books/equipment/ instruments/ uniform, purchase of a computer (if required for completion of course), study tours, project work, and thesis. But the combined value of all these expenses will be subjected to a cap of 20% of the tuition fee.
    • While calculating the expenses, the cost of a scholarship or other financial assistance must be factored in.

    Other Relevant Conditions

    Some other points that might help you in having a better understanding of the loan scheme:

    • If one of your brothers or sister from the family is a beneficiary under the scheme, then it will not have any bearing on a fresh loan.
    • There is no bar on the minimum age for taking the loan. However, if the parents execute the loan documents for minor students, the Student has to obtain a letter of ramification upon attaining majority.
    • If you can prove your credentials, the banks might even consider Top-up loans, which will help you study further.
    • Banks allow parents or legal guardians to become joint borrowers. If you are married, then your spouse or parents-in-law can also be included within the meaning of joint borrower.



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Written by Anjaney Chaturvedi

Anjaney has in-depth knowledge of abroad colleges, and universities. With a background in Mechanical Engineering, he has a unique understanding of STEM courses. His interest also lies in finance and education financing. Firmly believes in ‘Being as unique as your fingerprint’.


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Reviewed by Aman Jain

Aman Jain graduated from IIT Kanpur, and currently functions as the CMO at GyanDhan. He is deeply passionate about creating equality in higher education and has directly interacted with 2 Lakh students in his 8-year-long journey.


Specializes in:
Education loan , Study Abroad Admissions


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GyanDhan is India's first education financing marketplace.



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