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Indian Overseas Bank Education Loan

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Indian Overseas Bank (IOB) Education Loan

What Is an Education Loan?

An Education loan is the loan or funds acquired by an individual to pursue higher studies in India or abroad. The loan repayment commences for the student after completing the education and a period of 6 months is given as grace period to students to get or join a job.

The repayment amount will be determined by your choice of interest, you need to decide how you want to repay the loan. That is if you want to start paying during the time of moratorium period itself or after the moratorium period. The Moratorium period is the time of your education plus 6 months or 1 year given to get a job. It is only after this time that you are expected to pay the loan.

The loan interest starts to accrue at the time of dispersal of funds, so at the time of your graduation you have a huge amount to repay. The other option is your parents or guardian can start paying the loan during the moratorium period itself where it is calculated as a simple interest.

This way your loan amount at the time of graduation is drastically reduced.

There are 4 types of education loans in India

1. Under Graduate education loan - These are given to students who have completed their secondary education and looking to do higher studies in the form of under graduation. It can be done in India or abroad.

2. Post graduate education loan - These are education loans given to individuals who want to pursue post-graduation after completing under graduation course from a reputed university/college. Here also the loan can be for studying in India or abroad.

3. Parents availing education loan - This is the case where the parents take loan for the education purposes of their children. This is an unsecured loan and need not be for graduate or post-graduation courses but also for elementary and higher secondary courses.

4. Career growth education loans - These are loans provided to young people who want to pursue courses or trainings, certifications that will benefit their career growth.

About Indian Overseas Bank (IOB)

Established in 1937 before World War 2 by Thiru.M.Ct.M. Chidambaram Chettyar to encourage overseas banking and foreign exchange operations. It is now managed by "The Nationalized Banks (Management and Miscellaneous Provisions) Scheme, 1970, formulated by the Central Government, after consultation with the Reserve Bank of India, in exercise of the powers conferred by section 9 of "The Banking Companies (Acquisition and Transfer of Undertakings) Act 1970".

The bank is operating with about 3700 domestic branches, including 1150 branches in Tamil Nadu, 3 extension counters, and eight branches and offices overseas as of 2014. It also has 3300 ATMs across India.

An Introduction to Indian Overseas Bank (IOB) Education Loans

Education is one area where everybody is willing to spend a lot of money to live a prosperous life in the future. Being one of the major education loan providers, Indian Overseas Bank (IOB) understands the needs of the students and offers extremely competitive education loans at better interest rates. Every year, a large number of students secure admissions in top universities and colleges in India and abroad with Indian Overseas Bank (IOB) education loans.

Advantages of Indian Overseas Bank (IOB) Education Loan

Following are some of the advantages of applying for an educational loan with Indian Overseas Bank (IOB).

  • Low interest rate
  • No hidden costs and administrative charges
  • Less paperwork
  • No processing fees
  • No security required for up to 4 Lakhs
  • 0.50% concession for girl students

Features of Indian Overseas Bank (IOB) Student Loan Scheme

Objective: To provide term loan to Indian students for pursuing higher education in India and abroad where admission has been secured

Loan is made available for Graduation/Post graduation/Diploma/Computer education in any recognized State/Central Government/University, professional courses including Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management, courses like ICWA, CA, CFA, etc., courses conducted by IIM, IISC, XLRI, NIFT etc, courses offered in India by reputed foreign universities/Evening courses of approved institutes, regular degree/ diploma courses like Aeronautical , Pilot training , shipping etc approved by Director General of Civil Aviation/ shipping if the course is pursued in India. Incase the course is pursued abroad, the institute should be recognized by the competent local aviation/ shipping authority. For studies abroad, loans will be made available only for Graduation and Post-Graduation Courses offered by Reputed Universities and not for diplomas

Quantum of Loan:

Maximum of Rs.30.00 lakhs for studying in India and Rs.40.00 lakhs for studying abroad

Margin:

For loans upto Rs. 4.00 lakh Nil
For loans above Rs. 4.00 lakhStudies within India 5%
For studies abroad 15%

Security:

For loans upto Rs.4.00 lakh Co obligation of parents. No security
For loans above Rs.4.00 lakh and up to Rs.7.50 lakh Co obligation of parents together with collateral security in the form of suitable third party guarantee.
 For loans above Rs.7.50 lakh Co obligation of parents  together with tangible collateral security .Collateral security in the form of NSC /KVP/ LIC Policy/ Immovable properties/ Bank Deposits in the name of student/Parent/Guardian or any other third party with suitable margin. Wherever the land/ building is already mortgaged the unencumbered portion can be taken as security on second charge basis provided it covers the required loan amount. In case the loan is given for the purchase of computer , the computer  has to be hypothecated to the bank.

Holiday Period :

6 months after getting the job or 12 months after completion of the course whichever is earlier

Repayment :

Repay the loan in equal monthly Instalments for a maximum period of 5 - 7 years excluding holiday period

Interest Servicing :

It is left to the option of the student either to service the interest during the study period or pay it along with the principal over a period of 5 - 7 years to commence from 12th month after completion of the study. 

Interest Servicing – Concession :

For prompt servicing of interest for all months during the study period when repayment holiday  is specified for interest / repayment  under the scheme, an interest rebate @1.00 % is allowed. Interest concession at 0.50% on all Education Loans to Girl Students for pursuing education in India and Abroad is allowed. The interest rebate thus calculated will be credited back to loan account at the time of commencement of repayment of the principal sum.

Rate of Interest

Loan AmountRate of Interest
Upto Rs.7.50 lakhs10.40%
Above Rs.7.50 lakhs11.40%
Vocational Courses11.40%
Ward of Staff10.10%
 "A" rated Institutions8.60%
" B" rated Institutions

Documents Required

  • Letter of admission
  • Filled in Loan Application Form
  • 2 passport size photographs
  • Statement of cost of study
  • PAN Card of the student and Parent/ Guardian
  • AADHAR Card of the student and Parent/ Guardian
  • Proof of identity (Driving Licence/Passport/Aadhar/ any photo identity)
  • Proof of residence (Driving Licence/Passport/Electricity bill/Telephone bill)
  • Student/Co-borrower/ guarantor's bank account statement for last 6 months
  • IT return/ IT assessment order, of previous 2 years of Parent/ Guardian/ other co-borrower (if IT Payee)
  • Brief statement of assets & liabilities of Parent/ Guardian/ other co-borrower
  • Proof of income (i.e. salary slips/ Form 16) Parent/ Guardian/ other co-borrower

EMI Payment Methods

Indian Overseas Bank (IOB) education loan can be repaid in following three ways.

Standing Instruction (SI): If you are an existing account holder with Indian Overseas Bank (IOB), Standing Instruction is the best mode of repayment. Your EMI amount will be debited automatically at the end of the monthly cycle from the Indian Overseas Bank (IOB) account you specify.

Electronic Clearing Service (ECS): This mode can be used if you have a non-Indian Overseas Bank (IOB) account and would like your EMIs to be debited automatically at the end of the monthly cycle from this account.

Post-Dated Cheques (PDCs): You can submit post-dated EMI cheques from a non-Indian Overseas Bank (IOB) account at your nearest Indian Overseas Bank (IOB) Loan Centre. A fresh set of PDCs will have to be submitted in a timely manner. Please note Post Dated Cheques will be collected non-ECS locations only.

It is recommended that you opt for either the SI or ECS mode of payment for faster and less prone to error than the use of PDCs.

How to Apply for Indian Overseas Bank (IOB) Education Loan?

You can either apply online or visit a nearby Indian Overseas Bank (IOB) branch for the application. You can also download the education loan application form from the Indian Overseas Bank (IOB) official website, complete the form and submit it the bank representative.

You can also check your eligibility for an education loan through CreditMantri and apply for it.

Indian Overseas Bank (IOB) Education loan FAQ

1. What is the interest charged during moratorium period?

Only simple interest will be charged during the moratorium period. After the moratorium period the actual interest mentioned will be charged.

2. Can I take an education loan without a co-borrower?

No, a co-borrower is needed to take an education loan. The loan will be taken as a joint loan in collaboration with your parent/ guardian or spouse.

3. Is there a range on the rate of interest charged on Education Loan offered by Indian Overseas Bank (IOB)?

Yes, the interest rate ranges from 8.60 % - 12.00%. However, it is subject to change at the sole discretion of the bank.

4. I am planning to study abroad. Am I eligible to apply for an Education Loan?

Yes, Indian Overseas Bank (IOB) offers up to INR 40 lakhs for courses pursued abroad which also includes travel expenses and study tours.

5. Is there a processing fee for an education loan with Indian Overseas Bank (IOB)?

There are no processing fees for an education loan with Indian Overseas Bank (IOB)

6. Is there a way I can reduce the interest paid?

There is special subsidy provided according to Central Government subsidy for education loans. Indian Overseas Bank (IOB) also provides special interest rates for some premier institutions. The other option is your parent/ guardian or spouse can pay the loan amount during the moratorium period due to which the loan amount you need to repay is less.

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