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IOB Education Loan

Last Modified : June 28, 2018

Indian Overseas Bank (IOB) provides high-value loans at low subsidized rates, Main educational loan scheme provided by IOB is Vidya Jyoti Education Loan which has an added association with HRD ministry's Interest subsidy program. Being a public sector bank it has lower rates as compared to other banks with variable interest rates as per loan amount.

The cost of education is on a constant rise, thus students require Education Loans for India and Abroad to pursue their education in either India or overseas

Why IOB?

Low-interest rates and easy documentation process is a key factor that attracts students. The bank charges 12.25% interest on loan amount upto INR 4 Lacs, 13.50% on loan amount between INR 4 to 7.50 Lacs and 13.25% on loan amount above INR 7.50 Lacs.

Are you eligible for IOB Education Loan?

  • Indian National. Student must be an Indian National or an NRI having an Indian passport
  • 10+2.  You must have cleared 10+2 from a recognized board or institute
  • Co-signer. IOB does not ask for a co-applicant for loan amount upto INR 4 Lacs. For amount above that, one must have a co-signer.
  • Age Limit. There is no age limit for applying to IOB Education Loan

We have curated all aspects of IOB Vidya Jyoti Education Loan below. Have a look: 

1. Vidya Jyoti Education Loan 

Indian Overseas Bank's Vidya Jyoti Education Loan provides education loan to meritorious students in need of financial support to pursue their studies in India and Abroad. It is one of the most feasible loans with easy documentations and lenient eligibility criteria’s. No joint borrowers are required for loans scheme under IOB.

What makes you eligible for Vidya Jyoti Education Loan?

  • Indian National
  • Professional/ Technical courses 
  • No age limit
  • Studies Abroad - Graduate and postgraduate courses offered from reputed universities and is not available for a diploma.

Present Rate of Interest

Loan Amount

Rate of Interest

Upto INR 4 Lacs


Between INR 4 to 7.50 Lacs


Above INR 7.50 Lacs


Vocational Courses


Ward of Staff


Quick Facts about Vidya Jyotoi Education Loan


Upto loan 4 Lacs – No margin

Above 4 Lacs –

for India: 5%

for Abroad: 15%

Maximum Loan Limit

For India – INR 30 Lacs

For Abroad- INR 40 Lacs


  • No collateral or security for loan upto INR 4 Lacs
  • Third party guarantee along with co-obligation of the parents for loan amount ranging between INR 4-7.5 Lacs
  • NSC, KVP, LIC policies, immovable properties and bank deposits in the name of applicant, parent/guardian or any other third party with suitable margin for loan amounts above INR 7.5 Lacs

Moratorium Period

Course Period + 1 year or 6 months after getting job

Repayment (Maximum)

5 to 7 Years

Prepayment Charges


Additional Facts about  Vidya Jyoti Education Loan

  • No collateral or security for loan upto INR 4 Lacs
  • No Processing charges
  • No foreclosure penalty 
  • 0.50% concession to girl students
  • Easy Documentation and faster processing
  • Interest concession and interest rebate as per terms and conditions
  • Joint borrowers are not required for these student loans upto INR 4 Lacs

Courses Covered under Vidya Jyoti Education Loan:

For India

  • Graduation/Post graduation/Diploma/Computer education in any recognized State/Central Government/University
  • Professional Courses such as Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management
  • Courses offered by Institutes viz. IIM, IIT, IISc, XLRI, NIFT, etc.
  • Computer Certificate courses offered by institutes accredited to the department of electronics or institutes affiliated to renowned universities.
  • Degree or Diploma courses like Aeronautical, Pilot Training, Shipping and alike approved by Director General of Civil Aviation/ Shipping
  • Courses that are offered by reputed foreign universities in India
  • Professional courses like ICWA, CA, CFA, etc.
  • Reputed foreign universities/Evening courses of approved institutes

For Abroad

  • Job oriented professional/ technical courses at graduation level offered by reputed universities abroad
  • Post-Graduation courses in any discipline from reputed universities.
  • The course should not lead to a diploma
  • Pilot Training, Shipping, aeronautical training from an institute recognized by the competent local aviation/ shipping authority

Documents required for Vidya Jyoti Education Loan

  • Identity Proof: Passport, Voter’s ID, Driving Licence or PAN Card
  • Mark sheet of recently qualified public exam for school, college in India
  • Admission Proof: Fee receipts, Transfer certificate, etc.
  • Schedule of expenses for the course
  • Passage expense
  • Two recent passport size photographs of applicant, co-obligant and guarantor
  • Educational Proof: copy of admission letter along with fee structure, mark sheets, SSC, HSC and degree course certificates
  • Salary Proof: Latest salary slip, Form 16 and recent salary certificate (if salaried)

Central Scheme for Interest Subsidy

This scheme is specially formulated for economically weaker sections (EWS), to promote education amongst them. The scheme is available for students pursuing approved professional course from Institute or University in India. HRD Ministry, Government of India to extend financial support to deserving and meritorious students in need.

Key points of CSIS

  • Applicable only for courses offered in India
  • Student must not be already enrolled in recognized professional courses after XII in institutes established by acts of parliament
  • Annual gross family income should not exceed INR 4.5 Lacs
  • Available upto moratorium period (Course Period+1 year)
  • Available only once either for undergraduate/ post graduate/ diploma courses.

Courses Covered under CSIS

Undergraduate and Post Graduate courses in:

  • Engineering
  • Medical
  • Para-Medical
  • Agriculture
  • Veterinary
  • Law
  • Dental
  • Management
  • Computer Science

Post Graduate Diploma approved by AICTE/ UGC


Q. What schemes does Indian Overseas Bank considers for its education loans?

Answer: There are multiple other schemes offered by Indian Overseas Bank apart from the basic education loans. These are:

  • IOB Vocational Education and Training
  • IOB Career Dreams
  • IOB Scholar

Q. In whose name is the loan granted?

Answer: The loan is granted in the name of the student

Q. Is the loan contract executed only in student’s name?

Answer: No, the loan can be executed both in name of student and co-borrower as both are equally responsible for repayment of loan.

Q. What is the age limit for availing loan in Indian Overseas Bank?

Answer: There is no age restriction for the applicant applying for education loan from Indian Overseas Bank. He/ she should only meet the other stated eligibility criteria’s.

Q. Are minors eligible to apply for Indian Overseas Bank Education Loan?

Answer: Yes, Minors aspiring for further studies can apply for education loan with help of legal representation from parents/ guardians.

Q. What does margin on any loan mean?

Answer: Margin amount is the amount that a borrower has to pay through his/ her own sources in form of a down payment as his/ her contribution towards the education.

Q. Should the student’s margin be paid upfront in the starting?

Answer: Margin can be paid on a year to year pro rata basis whenever bank disburses loan amount as per requirement.

Q. Where can I avail Indian Overseas Bank Education Loan?

Answer: You can either contact your nearest branch for the application form or details regarding the loan or apply online from the official website.

Q. Is there any provision to apply for loan online?

Answer: : Yes, you can apply online through Vidyalakshmi portal to avail for this loan.

Q. Can I view my loan statement online if I am an existing education loan borrower?

Answer: Yes, by creating a login on Indian Overseas Bank web portal, you can view all details related to education loan online.

Q. Is there any minimum aggregate marks to meet the eligibility criteria to avail Indian Overseas Bank education loan?

Answer: Yes, a student must have secured a minimum aggregate marks in their last qualifying examination (10+2 or Graduation). Relaxation in the marks is given to SC/ ST students

Q. What is the discount/ rebate offered by Indian Overseas Bank?


  • 0.50% concession is given to girl students
  • 1% concession is given if the interest is serviced during moratorium period
  • Eligibility criteria and margin on education loan is relaxed for SC/ST students

Q. What all is included in tangible collateral security?

Answer: Mostly Indian Overseas Bank asks tangible security in lieu of the loan amount sanctioned along with assignment of future salaries in favour of Indian Overseas Bank. Tangible security includes documents related to land/ building/ government security/ public sector bonds/ units of UTI, NSC, Life insurance policy/ bank deposits/ shares or debentures. The value of the security should be equal to the education loan amount.

Q. Is scholarship or assistantship included in the margin?

Answer: Yes any scholarship or assistantship will be a part of margin charged on education loan.

Q. What is Moratorium Period?

Answer: Course Period plus one year, or six months after getting a job

Q. What is tenure of an education loan?

Answer: Tenure of education loan provided by Indian Overseas Bank is maximum 7 years as per IBA Model Loan Scheme.

Q. What does MCLR stands for?

Answer: MCLR stands for Marginal Cost of funds based Lending Rate. It refers to the minimum interest rate of bank below which it cannot lend.

Q. What all expenses are covered under this course?

Answer: Expenses covered by Indian Overseas Bank education loan are:

  • Tuition/ college/ hostel fee
  • Examination/ lab/ library fee
  • Books/ uniform/ instruments
  • Caution deposit
  • Passage money for studies abroad, etc.

Q. Will my travel expense will be covered if I take loan from Indian Overseas Bank?

Answer: Yes, travel expenses are covered under this loan

Q. I have taken admission through management quota. Am I eligible?

Answer: This depends totally on bank’s discretion as whether a student meets other eligibility criteria or not.

Q. What do you mean by reputed or recognized institutes?

Answer: Institutes that are affiliated to state/ central universities and comes under UGC or AICTE are considered as recognized institutes. Reputed institutes are those which are well known and have standard course of repute. More often, banks provide the list of institutes they consider for loan. (You can contact nearest branch for the same)

Q. Are there any special benefits if I have secured admission to one of the top premier institutes?

Answer: Indian Overseas Bank does not provides any additional concession to students who have secured admission in top rated institutes

Q. What is the processing fee or prepayment charges?

Answer: The education loan offered by Indian Overseas Bank does not carry any prepayment charges or processing charges for studies in India or Abroad.

Q. Will cost of my computer be covered under the loan sanctioned?

Answer: Reasonable cost for the computer or laptop well be covered under the loan if it is required to complete the course. 

Q. Why is Pan Card necessary?

Answer: Pan Card is one of the mandatory document required by banks these days. It is mandatory because:

  • Easy to assess Income
  • Easy to trace borrowers

Q. Are diploma or certificate courses considered under Indian Overseas Bank education Loan (both for India and Abroad)?

Answer: Diploma courses are eligible under Indian Overseas Bank Education Loan. Regular degree or diploma courses like, shipping, pilot training, and aeronautical that are approved by Director General of Civil Aviation or Shipping.

Q. Is a co-borrower necessary for loan?

Answer: Yes, it is mandatory to have a co-borrower to avail loan from Indian Overseas Bank.  

Q. Who can be my co-borrower?

Answer: Your parent/ spouse/ guardian can be a co-borrower. A co-borrower should be your immediate family member, should have a steady source of income, and a good credit history.

Q. What all documents are required from the co-borrower?

Answer: Documents required from the co-borrower are:

  • Attested copies of age proof, residence proof and birth date.
  • Self-attested passport size photograph
  • Income proof and/or copy of income tax return file
  • Details of collateral security along with government approved valuation certificate (if any).

Q. How many guarantors do I need to borrow loan from Indian Overseas Bank?

Answer: You need at least 2 guarantors to avail loan from Indian Overseas Bank.

Q. What is the KYC requirement in education loan?

Answer: KYC requirements are the documents as a proof of personal identification and residence proof of the applicant as well as the co-borrower.

Q. What are maximum term for repayment?

Answer: Maximum Term for repayment for Loan is 5- 7 years

Q. How can I repay the loan?

Answer: You can repay the loan after the moratorium period by mode of EMI or through post- dated cheques.

Q. What is EMI? How are they calculated?

Answer: EMI stands for Equated Monthly Installments. It can be calculated by using the formula given below

  • EMI = [P x R x (1+R) ^n] / [(1+R)^ n-1]
  • Here, P is Amount of Education Loan, R is Rate of Interest, n is Tenure of the Loan.
  • Or simply you can use the EMI calculator provision available on Indian Overseas Bank’s official website.

Q. What are the charges for late EMI payment?

Answer: 24% per annum on outstanding amount is charged for the late EMI payment and INR 500 for every bounced cheque.

Q. Is the loan disbursed in name of individual applicant or to the institute/ university directly?

Answer: The loan is disbursed directly to the institute/ university that you have taken admission to. Hence, an applicant is supposed to submit institute brochure with proper division of the fee

Q. If I am unable to complete my course in given tenure, will my repayment term be extended?

Answer: It is completely on the banks discretion to extend the moratorium period or not. It can be extended for maximum 2 years based on student’s reason. You can contact your nearest branch for more details.  

Q. What is method of application of interest on education loan?

Answer: The interest will be charged at simple rate from the date of disbursement till commencement of repayment of loan. After that, compound interest is charged on reducing balance. 

Q. What is interest rate of education loan?

Answer: The interest rate is different for different loan offered. Refer the tables below:

Loan Amount

Rate of Interest

Upto INR 4 Lacs


Between INR 4 to 7.50 Lacs


Above INR 7.50 Lacs


Vocational Courses


Ward of Staff


Q. What is interest subsidy on education loan?

Answer: Indian Overseas Bank offers

  • Vocational Education and Training scheme is offered to students who wish pursue vocational courses to increase their career prospects.
  • Interest Subsidy scheme for economically weaker sections and to promote education amongst them
  • Career Dreams offers financial assistance for coaching/ tuition fee to students preparing for professional entrance exams and civil services entrance exam
  • IOB Scholar is offered to students who have secured admission in recognized institutes.

Q. What documents do I need to submit to avail interest subsidy scheme?

Answer: The documents that need to be submitted are:

  • Income certificate issued by authorised authorities
  • Bonafide student certificate
  • Letter of undertaking or declaration signed by borrower/ co-borrower

Q. If I am availing loan for overseas studies, can I also avail interest subsidy scheme?

Answer: No, the interest subsidy scheme is available only for studies applying for studies in India.

Q. What is employment verification in an education loan?

Answer: The bank takes the responsibility to cross verify all the employment details of the applicant and co-borrower. If the banks fails to cross verify every detail provided, it might reject the loan application.

Q. Are there any tax benefits in education loans?

Answer: Under Section 80E of Income Tax Act, loan borrowers can avail the tax benefits. This benefit is only available over and above INR 1,50,000. Tax benefits can be availed once the borrower starts paying interest on loan. The deduction is available until borrower pays off full interest amount on loan or for maximum of 8 years (whichever is earlier). You can visit the official website of Indian Overseas Bank to calculate your tax benefit through their tax benefit calculator.

Q. Is it necessary to have bank account with the bank while availing loan from that particular bank?

Answer: It is not necessary to have a bank account while availing the loan but it makes it easier for the borrower to get loan application approved.

Q. Can I repay my loan in foreign currency even if my bank is in India?

Answer: Yes, you can pay the amount in foreign currency (Euro, Pound, Dollar, etc.) The bank might charge an additional currency conversion fee as per RBI regulations.

Q. Why do banks require insurance policy as security?

Answer: The banks require insurance policy as security in lieu of education loan provided. The insurance policy should be equal or more to the amount of loan sanctioned. In case of untimely demise of the borrower, the bank recovers the amount from the insurance policy

Q. Are there any additional benefits on availing loan from Indian Overseas Bank?

Answer: There are no additional benefits offered by Indian Overseas Bank mentioned on the official website. Borrowers can contact the nearest branch for the same.

Q. What is credit score? Is it important for education loan?

Answer: Credit Score is inclusive of various factors such as credit history (Loan history or credit card). If a student does not have a credit score, banks calculate it by considering factors such as University, College and the Course of admission. Banks consider the academic background of student and credit history of co-borrower.

Q. Are NRIs eligible for the education loan?

Answer: NRIs are eligible for the loan if they have Indian citizenship and are Indian passport holder.

Q. Is Visa a necessary document for studying abroad?

Answer: Visa is needed as a document proof but it is not a sole requirement.

Q. What all procedures do one have to go through while applying for abroad?

Answer: A student who is applying for studying abroad have to give necessary documents required by the bank. One needs to have a thorough knowledge of the course they are applying for and in which institute as it can be asked on the airport by the foreign officials.

Q. If a student have any query, where or whom to contact?

Answer: student can reach out to the nearest branch in case of any query.

Customer Care Number: 91-44-28524212/ 044-28519490/ 044-28519639

Customer Care Id:

Local rates apply on every call