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Education Loan

Investing in education offers the best interest and is most beneficial in long run. A good education from a recognized educational institution can build a great career for a student or aspirant. However, as the awareness for the need of good education is growing, its cost is also increasing simultaneously. Many banking institutions are coming up with a scheme for education loans to make education easier and more stress-free for the student and the parents. In an attempt to ensure that students get utmost financial benefits during their education whether in India or abroad, Indian Overseas Bank provides an extensive education loan scheme with attractive interest rates and discounts along with flexible repayment options and higher loan amount.

Indian Overseas Bank is one of the leading public sector bank, headquartered in Chennai. It has 3700 branches all over India. It has few branches outside India as well. Mr. R Koteeswaran is the MD and CEO of Indian Overseas Bank.
 
Indian Overseas Bank provides educational loans so that students can pursue their studies within India and overseas as well. Indian Overseas Bank education loan covers a range of programmes and disciplines offered by different educational institutions of India. Indian Overseas Bank offers 2 education loan schemes. They are “Vidya Jyothi” and “Vidya Jyothi Suraksha”. A lot of academic courses in India and overseas are covered under these schemes.
 

Vidya Jyothi Education Loan

This Indian Overseas Bank student scheme is one of the best financing solutions available to students who are aspiring to pursue their higher studies in premier educational institutions within country and / or abroad. The Indian Overseas Bank student education loan is preferred among the bank’s existing customers and also people looking for an educational loan from a leading bank.

  • Loan Amount:-

Rs. 30 lakh is the highest amount of education loan that could be granted for students studying in India. For overseas, the maximum amount can be up to Rs. 40 lakhs.

  • Interest:
  • Up to loan amount Rs. 4 lakh, 11.55% is the interest on education loans that requires to be paid.
  • Up to loan more than Rs. 4 lakh to Rs. 7.50 lakh, 12.05% is the interest rate that requires payment.
  • Up to loan more than Rs. 7.50 lakh, 12.30% is the interest rate that requires payment.
  • 11.70% is the interest rate that requires payment for vocational courses.
  • For ward of staff, the 11.05% is the interest rate that requires payment.
  • In case of repayment holiday/moratorium, simple interest would be charged on monthly basis.
  • A concession of 0.5% is allowed for girl students whether they pursue education in India or abroad

           Margin:-

  • No margin applicable for amounts up to Rs. 4 lakhs.
  • For loan amounts greater than Rs 4 lakhs , margin amount is 5%  for students studying in India
  • For students abroad, and loan amount greater than Rs. 4 lakhs margin amount would be 15%
  • Scholarship is a part of margin.
  • Security:-
  • For education loan amounts up to Rs. 4 lakhs , parents’ co-obligation is necessarily required.
  • For loan amount greater than Rs 4 lakhs and less than Rs. 7.5 lakhs a third party guarantee is also required apart from parent’s co-obligation.
    • For education loan amounts greater than Rs 7.50 lakhs parent’s co-obligation along with fixed collateral security like LIC Policy/KVP/NSC etc are required. In such cases security in the form of home or land can also be considered.
  • Holiday Period:-

Also known as the moratorium period, it is the duration of 12 months after the completion of course or 6 months after having a job whichever happens soon.

  • Repayment:-

Repayment can begin after the end of moratorium period i.e. after one year after completion of course or 6 months after having a job, whichever occurs sooner. The EMIs have to be paid within 5 to 7 years, excluding the moratorium period.

Also 1% interest rebate facility is available for applicants who chose to pay the interest during the course tenure.

  • Interest Servicing:-

The bank gives students the flexibility to choose to pay the interest while pursuing the course or to pay the interest with the principle loan amount after the completion of their studies. However, the students can get a rebate of 1% if they chose to repay the interest during the tenure of the course.

2. Vidya Jyothi with Suraksha Education Loan:-

Vidya Jyothi with Suraksha Education Loan provides education loan along with Insurance Coverage to students and their parents studying within India and / or overseas. For students studying abroad, the airfare is also covered in this to some extent.

  • Loan Amount:- Rs. 7.50 lakh is the highest amount of loan that is available for students who want to pursue academic courses in India. For overseas, Rs. 15 lakh is the highest amount that can be approved.
  • Interest: Interest Rate may change on periodic basis. In order to know the current interest rate, customers have to contact the nearest branch.
  • Margin:- Margin is Nil for loan that amounts up to Rs. 4 lakhs.
  • For a student studying in India, 5% would be the loan margin for more than Rs. 4 lakhs.
  • For a student studying overseas, 15% would be the loan margin for more than Rs. 4 lakhs.
  • Scholarship is a part of margin.
  • Security:-
  • Parent’s co-obligation is needed for education loan that amounts to Rs. 4 lakh. No other security is needed in this case.
  • Parent’s co-obligation along with third party guarantee is needed for amount more than Rs. 4 lakhs and up to Rs. 7.50 lakhs.
  • Parent’s co-obligation along with fixed collateral security like LIC Policy / KVP / NSC, etc. is needed for more than Rs. 7.50 lakhs. House or land can also be utilized for the same purpose.
  • Holiday Period:-

Holiday period is considered for 12 months after the student completes the course or after six months after he / she gets a job whichever is sooner.

  • Repayment:-

Repayment process requires to be initiated after the student completes his / her course or after six months of getting a job subject to whichever is sooner. The loan requires to be repaid within five to seven years in EMIs. However, the holiday period is excluded from this.

Facility of 1% interest rebate is available to applicants who chose to pay the interest during the course tenure.

  • Insurance Coverage:-

Vidya Jyothi with Suraksha Education student loan scheme also offers insurance coverage for student as well as his / her guardian after paying a small premium amount. Indian Overseas Bank provides this facility by the help of LIC of India.

  • Interest Servicing:-

The bank gives students the flexibility to choose to pay the interest while pursuing the course or to pay the interest with the principle loan amount after the completion of their studies. However, the students can get a rebate of 1% if they chose to repay the interest during the tenure of the course.

IOB vocational education and training loan: this student loan scheme aims to provide financial support to those worthy students, who have the minimum educational qualification as required by the educational institutions running the vocational education and training courses. This scheme of loan for vocational education was formulated initially in the year 2001 and modified subsequently from time to time depending upon requirements.

Education Loan Eligibility:-

  • The student needs to have Indian nationality.
  • The student should have taken admission to the following academic courses in India and overseas

Courses Covered

IOB student loan scheme covers a wide variety of courses under which the candidate may enrol for the amount of education loan. The courses covered under this scheme are -

  • Post Graduation/Graduation/Computer Education/Diploma courses that are recognized from State/Central Government University.
  • Professional course study in India like Veterinary, Engineering, Dental, Management, Engineering, Agriculture etc .
  • Courses from XLRI, NIFT, IISC, IIM etc.
  • Computer Certified courses of recognized institutes accredited to Dept. of Electronics or University affiliated institutes.
  • Courses from reputed foreign universities.
  • Diploma/Degree courses that are conducted by a University and approved by AICTE/UGC etc.
  • Evening courses offered by reputed educational institutions.
  • Student loan scheme is also offered for vocational educational and training programmes. The bank offers a special IOB loan for vocational educational and training.
  • For abroad studies, a loan is available for Graduation and Post Graduation courses only. Diploma courses are not covered under this IOB student scheme.
  • Computer Certified courses of recognized institutes accredited to Dept. of Electronics or University affiliated institutes.

Documents Required:-

  • Identity Proof: PAN Card, Voter Card, Passport, etc.
  • Residential Proof: Aadhar Card, Ration Card, Electricity Bill, etc.
  • Educational Documents needs to be shown such as course related documents seeking education loan is needed.
  • Proof of Income: IT Returns, Salary Slip/Business Proof.
  • Documents of Guarantor.

Course Related Information that requires to be provided are:-

  • Course Name
  • Course Duration
  • University/Institution from which the course will be pursued
  • Yearly Course Fee.
  • Other information like textbooks cost, stationary cost, exam fees, air ticket cost and expenditures related to clothes, rent etc. requires to be provided as well.

If the applicant or his/her father/guardian has any credit card, the same information requires to be provided as well.

Income related Information of father/guardian that requires to be provided like:-

  • Occupation of father/guardian
  • Monthly Income
  • Age of father/guardian
  • If occupation is service, then retirement year needs to be stated.
  • Number of dependents
  • Income Details of other members of the family (if any)
  • Passport Number, Voter ID, PAN Number requires to be provided as well.

Information related to repayment capacity of father/guardian is also required including details like:-

  • Expected monthly income
  • Expected monthly expenditures
  • Expected monthly savings
  • Available amount for loan repayment.

Applicability of the Scheme: The model loan scheme for vocational education and training is adopted by all the banks and financial institutions as advised by RBI. The scheme provides broad guidelines to the banks for moving ahead with the student loan scheme. The implementing bank will have the ability to make changes as required in vocational education loan and vocational training loan.

EMI Calculator

EMI Calculator is a tool for calculating EMI payable for student loan scheme. This could be well understood with the help of following examples:-

  • Amit got admission for Mechanical Engineering from a university in Hyderabad. After making his calculation about tuition fees including other expenditures, he made up his mind for applying for IOB education loan of Rs 5 lakhs. He consults the Bank Manager and gets the loan that he decides to pay in 4 years. He needs to pay an EMI of Rs. 13,401 at 12.95%.
  • Raju got admission into  MBA (Information Technology) from a university in Birmingham After making his calculation about tuition fees including other expenditures; he made up his mind for applying for IOB student education loan of Rs 10 lakh . He consults the Bank Manager and gets the loan that he decides to pay in five years. He needs to pay an EMI of Rs. 22,600 at 12.70%.

IOB Education Loan – FAQs:

How can we apply for IOB student loan scheme?

Applying for a student loan scheme with IOB is very simple and convenient. All you need to do is to fill up the loan application form online and provide all the necessary details including the loan documents.

Can mortgaged properties be submitted as collateral security for an IOB education loan?

The unencumbered portion of guaranteed properties can be submitted as security on second charge basis, provided that it covers the amount of education loan.

Are IOB education loans available only for PG and UG courses abroad?

Yes, the loan is provided only for post graduate and under graduate courses and not for diplomas. However, IOB education loan for vocational education and training is also given to students pursuing vocational education and training courses.

Can the IOB student loan scheme be taken for purchasing computers or other instruments related with their study?

Yes. The student loan scheme from IOB can be availed for purchasing computers and other devices that are necessary to effectively pursue the educational programme.

What is the maximum tenure of loan available to customers of IOB?

The maximum loan tenure for which an IOB education loan can be taken is 7 years.