Indian Overseas Bank Education Loan for India and Abroad

Indian Overseas Bank has two education loan schemes to help students finance their higher education, namely - Vidya Jyoti Education loan and IOB Scholar Education Loan.

• Vidya Jyoti Education Loan was launched with the purpose to help students meet educational expenses for job oriented professional/technical courses in India and abroad. 
• IOB Scholar is an educational loan scheme to help all those students who were not covered by the Vidya Jyoti Education loan scheme. Students who wish to pursue higher education in India or abroad are eligible to apply for the loan. 

Indian Overseas Bank Education loan eligibility criteria for students is as follows - 

• The student should be an Indian national
• The student should have secured admission to a reputed and a recognized university through an entrance test or merit-based application process. 
• The student must have secured at 60% - for the general category and 55% for the SC/ST students in the last qualifying examination. 
• The student should not be in any gainful employment. 

The colleges which are recognized by Indian statutory bodies such as UGC /GOVT/AICTE/AIBMS/ICMR/ are eligible under the Vidya Jyothi Educational scheme. Although, vocational/skill development courses, PG Diploma, or courses pursued from an open university are not eligible under the scheme. 

The quantum of finance that students can borrow from the bank under this scheme for studies in India is INR 30 lakhs. The same for abroad studies is INR 40 lakhs. In both cases, the minimum amount a student can borrow is above INR 7.5 lakhs. 

The rate of interest offered by the bank is RLLR (Repo Linked Lending Rate) + Spread, meaning that it is linked with the repo rate of the RBI. The RLLR (w.e.f 1.07.2020) is 6.85%, with a spread of 3.20%, making the effective rate of interest as 10.05%. There is a 0.50% concession rate given to women applicants. 

The Vidya Jyothi scheme provides a chance to finance studies in India as well as abroad. The loan application process is simple. Moreover, students can apply for the loan on the Vidya Lakshmi portal.

Margin money for studies in India is 5%, whereas for abroad studies it is 15%. Margin money is the contribution of the applicant to the total expenses incurred. To know more about margin money, read here. Scholarships are included in the margin money. 

Another favorable feature of the loan product is that the processing charges are NIL, meaning applicants do not have to shell out even a penny to apply for the loan. 

The bank offers a generous period of 15 years to the applicants to repay the loan amount. Moreover, there is a moratorium period of the course period + 1 year. This is to say the applicants will start repaying the loan amount one year after course completion. There is also the option to close the loan early. There are no prepayment penalties. 

The eligibility criteria for the loan under the IOB Scholar scheme is as follows - 

• The student should be an Indian citizen.
• Students who have secured admission in a recognized university, and require a loan amount that is more than the limit in any other loan scheme. Though, the loan will be considered only under one scheme. 
• Students who have secured admission in a recognized university through management quota are also eligible for the loan. However, they should meet the minimum cut off marks of 60% for the general category and 55% for the SC/SC category. 
• Students who wish to pursue vocational courses and skill development courses are also eligible for the loan. 

Students can apply for the loan for any course or university provided it is recognized by any of the statutory bodies in India. 

The maximum loan amount that a student can borrow for studies in India is INR 50 lakhs, whereas, for abroad studies, a student can apply for a loan amount up to INR 60 lakhs. 

• 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 ROI as 9.05%.
• For Loan Amount Above INR 7.5 lakhs - The rate of interest offered is 10.05%.

The IOB Scholar loan is designed specifically to cover all the students who couldn’t apply for an educational loan under any other scheme. The quantum of funds is, therefore, increased along with additional categories of courses that are eligible for the loan.

The margin money, the money that has to be contributed by the borrower, is 25%. If the student has won any scholarship amount, it will be added to the margin money. The borrower is not required to bring-in the margin money altogether. It can be brought in on a year-to-year basis as and when the disbursements are made.  

The processing fee charged is 0.5% of the loan amount. The fee percent is irrespective of the loan amount borrowed for the education. 

The loan tenure offered by the bank is 15 years. The students are also provided with a moratorium period of course period + one year or after getting a job, whichever is earlier. 

There are many educational loan schemes available by several different lenders. Students are bound to get confused. To sail through the confusion without making a wrong move, simply contact GyanDhan. Apart from partnering up with several of the lenders in the market, we can offer an unbiased opinion on the loan products as our executives are thoroughly acquainted with them. Not only that, the executives study your profile closely, help you apply for the loan, and solve any problems you may face during the process.