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Last Updated on: 01/04/2024


Home >> Frequently Asked Questions (FAQ) >> FAQ on Retail Products >> FAQ on Educational Loan


FAQs on Education Loans

1. What is Education Loan (EL)?

An education loan scheme, is a financial product designed to help students and their families cover the costs of higher education, including tuition fees, accommodation, books, and other related expenses.

All the Education loans are to be routed through Vidya Lakshmi Portal or Jan Samarth Portal of Government of India. The general educational loan up to 7.5 Lakhs is sanctioned under our' Vidya Suraksha  Education Loan Scheme' as per IBA model education loan scheme and education loan above 7.5 Lakhs is sanctioned under 'Vidya Jyothi Education Loan Scheme.

2. What are the benefits of taking educational loan from Indian Overseas Bank.? 

Indian Overseas Bank is having best educational loan schemes and offers an array of educational loan schemes to suit all categories of students @ attractive interest rate with repayment tenure up to 15 years. Maximum loan amount for studies in India is Rs 150 lakhs* and for studies abroad is Rs 300 lakhs *(* Depending on the ranking of the college/university).

3. What are the variants of educational loans provided by Indian Overseas Bank?

4. Does IOB offers any special interest concession for educational loan?

Yes, IOB is offering special interest concession for educational loan under Vidya Jyothi and Vidya Suraksha Scheme.

Details Concession %

a. Girl Student


b. For Interest Serviced during the moratorium *


c. Study in India (NIRF Stream wise Ranking)


Ranked upto 20

Ranked from 21 to 50



d. Study Abroad

Institutes Ranked upto 100

Ranked from 101 to 200



*Benefit of concession for interest servicing during the moratorium period to be extended at the start of repayment w.e.f. date of first disbursal.

After all concessions put together wherever applicable, the Interest Rate shall not fall below RLLR, therefore total concessions to be adjusted accordingly.

For other educational loan schemes interest concession @ 0.50% for girl child and 1% for prompt interest servicing during holiday period is provided.

5. How does education loan help the student and his/her family?

Education loan helps a student to avail loan for higher studies without constraint of own funds and helps the student to get gainful employment irrespective of the family background, parents CIBIL or financial history.

6. Who is eligible for an education loan?

Resident Indian | NRI/OCI/PIO students who are pursuing higher education either domestically or internationally are eligible. Student should have secured admission to a higher education course in recognised institution in India or abroad through entrance test/ Merit based selection process after completion of HSC.

Student who has secured admission on Management Seat is also considered subject to funding shall be restricted to the fee as approved by the state government /government approved regulatory body for payment seats will be taken, subject to viability of repayment.

Student should not be in gainful employment during study.

Credit worthiness of the student will be checked, if credit history has any adverse remarks student will be advised to submit the reason for the same.

7. What expenses can be covered by an education loan?

Education loans can cover a range of expenses related to education, including tuition fees, accommodation, books, examination fee, and purchase of computer at reasonable cost, study materials, equipment, travel, and other miscellaneous expenses necessary for pursuing higher education. Additionally, the reimbursement of fees can be done for first year of the course if paid by the student& family.

8. Which courses are eligible for education loan for studies in INDIA?

  • Courses as indicated under various Government subsidy schemes
  • Approved courses leading to Graduate/Post Graduate degree and PG Diplomas/courses conducted by recognized colleges /universities recognized by UGC / Government/ AICTE/ AIBMS/ ICMR/etc
  • Courses conducted by IIMs, IITs, IISC, XLRI,NIFT,NID, etc
  • Approved courses offered in India by reputed foreign universities
  • Regular degree courses like Aeronautical, Pilot Training, Shipping degree, diploma in nursing or any other discipline approved by DGCA/Shipping/Indian Nursing Council, or any other regulatory body will be considered.

9. Which courses are eligible for education loan for studies outside INDIA?

  • Courses as defined under various Government subsidy schemes
  • Graduation - For job oriented professional/technical courses offered by reputed universities / institutions.
  • Post-Graduation- MCA, MBA, MS, etc.
  • Courses conducted by CIMA London, CPA in USA, etc.
  • Degree/diploma courses like aeronautical, pilot training, shipping, etc. provided these are recognized by competent regulatory bodies in India/ abroad for the purpose of employment in India/abroad.

10. How do I apply for education loan and what are the ineligible courses?

Education loan can be applied through Vidya Lakshmi Portal or Jan Samarth Portal or the applicant may directly visit the branch.

Ineligible courses:

Off Campus, Onsite/Partnership Programme courses offered by open universities, Distance Education Programme courses which are not education in nature and only training in nature certified training courses are not eligible.

11. What are the documents required to avail education loan from Indian Overseas Bank?


  • proof of identity & address proof as per KYC norms
  • Proof of academic records
  • Offer letter of admission letter from the institution
  • Statement of cost of study/ schedule of expenses
  • Previous/existing loan, if any, from banks/lenders, branch to obtain suitable documentary evidence


  • proof of identity & address proof as per KYC norms
  • Pan Card is a mandatory document and to be submitted along with the application or before 1st disbursement
  • Income Documents.

12. Can education loan be availed without any collateral from IOB?

In IOB, we provide education loan up to Rs. 7.5 lakhs without any collateral and 100% collateral is required for loan above 7.5 lakhs. More details refer IOB education loan scheme in India for students

13. What is the rate of interest applicable for education loan?

Interest rate is RLLR + 1.65%, presently 1i% (Latest Rate refer here). However, interest concessions are available for Girl student for 0.50%, 1% interest concession for interest serviced during the moratorium period, interest concession of 1.5% for institutions ranked up to 20 under NIRF ranking and interest concession of 1% for institutions ranked from 21 to 50 under NIRF ranking. (Interest rates are subject to change from time to time- Latest Rate refer here).

14. What type of interest is applicable on the loan during holiday period?

Simple interest to be charged during the study period and up to commencement of repayment.

15. What is the maximum amount of educational loan that can be availed from IOB?

Maximum loan amount for studies in India- Rs. 150 lakhs*

Maximum loan amount for studies abroad- Rs. 300 lakhs*

(*conditions apply - Depending on the ranking of the college/university)

16. What is the moratorium period in Education loan?

Course period + 1 year or 6 months after getting the job/employment whichever is earlier. Servicing of interest is left at the option of the borrower.

17. What is the maximum repayment period for education loan?

Repayment of loan will be in equated monthly instalment for a period of 15 years for all categories (excluding course and moratorium period)

18. What is the margin money requirement (Applicant's contribution) for availing educational loan?

Margin Money Requirements Study in India Study Abroad

Up to 4 lakhs



Above 4 lakhs to 30 lakhs



Above 30 lakhs to 100 lakhs



Above 100 lakhs to 150 lakhs



Above 150 lakhs to 300 lakhs



*Margin to be brought in on a Pro rata basis as & when disbursements are made.

19. Who can be my co-applicant in educational loan?

The Co applicant should normally be parent (s)/ guardian of the student borrower. In case of married person, co applicant can be spouse or the parent (s)/ parents in law.

20. Whether Scholarship/assistantship to be included in margin?

Yes, Scholarship can be included as margin for education loan.

21. Whether I will be eligible for subsidy if I avail educational loan from IOB?

Borrower may be eligible for Central Sector interest subsidy (CSIS) if the annual gross parental/family income is up to Rs. 4.5 lakh. Under the scheme, interest subsidy on Education loan is provided for a maximum loan amount of Rs. 10 lakhs. (Even sanctioned loan amount in excess of Rs. 10 lakhs would also qualify for interest subsidy for the loan amount up to 10 lakhs).

22. What is skill loan scheme?

This loan is given for students pursuing technical courses offered by training institutes, polytechnics etc. The loan amount ranges from Rs. 5,000 to Rs. 1,50,000. The repayment period depends on the loan amount but can go up to 7 years.

23. What is IOB Vidya Shrest Loan?

The Vidya Shrest education loan scheme is designed to aim at providing term loan to students for pursuing higher education in India in Select Premier institution in the country's best engineering and Medical colleges, top B schools, Law colleges & other reputed institution.

24. What is the maximum loan amount that can be availed under Vidya Shrest Scheme?


Maximum Loan Amount

No security, only parent/guardian as co borrower

With tangible collateral of full value and parent guardian as co borrower

List A

Rs. 15 lacs

Above 15 lacs upto 30 lacs

List B

Rs. 7.50 lacs

Above 7.5 lacs upto 30 lacs

25. What is the margin & processing charges for Vidya Shrest?


26. What is IOB Scholar Loan?

IOB Scholar is an educational loan scheme for pursuing higher education in india & abroad other than covered under IBA model scheme.

27. Who are the eligible for availing loans under IOB Scholar?

Students who have got admission into a college approved by AICTE, UGC or any other recognized statutory body under management quota without undergoing any test or interview but have secured minimum cut off marks (60% for General & 55% for SC/ST in plus two or its equivalent examination.

28. What are the courses eligible for finance under IOB Scholar loan?

All courses that are covered / not covered under IBA model scheme.

29. What is the maximum quantum of loan under IOB Scholar?

For Inland Study- Rs. 50 lacs

For Foreign Study- Rs. 60 lacs

30. What is the >margin requirement for IOB Scholar Loan?

Uniform margin of 25%. Scholarship /assistantship to be included in margin.

31. What is the security coverage for IOB Scholar?

Particulars Coverage % Loan Amount

Security Coverage


Upto Rs. 30 lacs (Inland)

Upto Rs. 40 lacs (Foreign)


Above 30 lacs (Inland)

Above 40 lacs (Foreign)

32. Whether interest subsidy is available under IOB Scholar loan? 

Interest subsidy under the CSIS scheme is not applicable for the loans granted under IOB Scholar scheme.

33. What is career dream scheme of education loan?

It is for financing coaching fee of entrance exams of reputed institutions, civil service examinations, career & skill development. To know more click here

34. Who all are eligible to get a loan under Career dream scheme? 

All aspirants including working professionals are eligible.

35. What is the loan quantum that can be availed under career dream?

Minimum - Rs. 25000; Maximum - Rs. 200000/-

36. What is the minimum margin for availing loan under career dream?

Minimum margin is 5%.

37. What is the maximum repayment period under career dream?

36 months

38. Is there any holiday period under career dream scheme?

No holiday period available.