IBA Model Education Loan Scheme for Pursuing Your Education Abroad

IBA Model Education Loan Scheme

Education is crucial for the complete growth of both a person and a nation. It not only improves social thinking but also grows and develops the nation as a whole consistently. However, for many aspiring students, due to the rising cost, receiving a good education is just a dream. To overcome this, many financial organisations offer education loans to students, which not only helps them achieve their goals but also lessens the financial load that might be a barrier. 

Also Read: Before applying for loans, know all about the minimum family income requirements for education loans in our blog.

What is IBA Model Education Loan Scheme?

In 2001, the Indian Banks’ Association created a Model Education Loan, which the Reserve Bank of India urged banks to use. The programme was further updated in 2007–2008 based on knowledge gathered from running the programme over the years. As more people became aware of the advantages of student loans, bank branches began to receive an increasing number of loan applications each year. Students who want to pursue higher education in India and abroad can use the IBA Model Education Loan to pay for their courses and associated costs. 

Why IBA Model Education Loan?

  • Students who want to pursue further education in India or abroad might use the loan to do so.
  • The loan is disbursed over the appropriate number of years as a series of payments rather than in one big sum.
  • Can be used for any institution fees as well as connected costs like buying books, laptops, etc. or paying for boarding, lab, exam, and other fees.

Eligibility for IBA Model Education Loan Scheme

The Model Education Loan Scheme’s eligibility requirements are not too stringent, and banks are granted a lot of flexibility. Listed below are certain criteria:

  • The candidate must be an Indian national who has been a resident of the country for more than 180 days in the most recent fiscal year.
  • Courses in graduate, postgraduate, and technical fields from recognised colleges and universities that have received accreditation from the UGC, the State or Central Government, the AICTE, the Department of Electronics, the IMC, and independent organisations like the IIM and IIT, among others.
  • Any degree- or diploma-granting courses provided by respected Indian colleges, universities, or institutions
  • Study abroad opportunities are available for programmes leading to graduate, postgraduate, PhD, or other degrees.
  • The student must have passed an entrance exam or something comparable in order to be admitted to a university overseas.
  • In certain postgraduate and research programmes where the students aren’t chosen based on their performance in an entrance test, banks will have the option to exempt the requirements for the entrance test.
  • When deciding whether to grant loans for international education, banks may take an institution’s reputation into account.
  • The course that the student has registered for must be a career-focused professional or technical course provided by a reputable university, such as an MBA or MS.
  • Professional courses are offered by reputable organisations like CIMA-London and CPA in the United States.

Also Read: Did you know that you can get an income tax rebate on education loans? Check out how to avail, calculate, and claim tax deductions.

Documents Required for IBA Model Education Loan Scheme

  • Application form accurately filled out, signed, and accompanied by information about the applicant, guarantor, and family
  • two passport-sized photos of the applicant, guarantor, and/or the student
  • To be submitted at the time of application or while enrolled in the course is a photocopy of the student’s PAN card.
  • Electoral I-card, Passport, Driving Licence, PAN Card, or Aadhaar Card are examples of personal identification documents.
  • Proof of Residential Address (Any One): Electricity bill, landline phone bill, voter registration card or passport, electoral ID card, admission letter, and prospectus
  • Details of the fee and the institution’s demand for payment
  • Mark sheets and certificates are all acceptable proofs of previous academic performance.

Loan Amount and Interest

  • The maximum loan amount is determined by the student’s needs on a case-by-case basis and is limited.
  • According to the Indian Bankers Association (IBA) Model Education Loan Scheme, the upper limits are set at Rs. 10 lakh for in-country studies and Rs. 20 lakh for studying abroad.

Additionally, banks are free to modify the maximum loan amount as per the institution’s standing, its track record of placements, and other relevant considerations. According to the most recent modification to the Model Education Loan Scheme, there is NO MORTGAGE FOR LOANS UNDER INR 7.5 Lakh. The loan must, however, be qualified for a credit guarantee for the margin to be NIL in this instance. Another important requirement is that the margin must take into account any applicable scholarships and assistantships. Whenever the disbursement is done pro-rata, banks have the option to increase the margin year over year.

  • The interest rate for a loan up to Rs. 7.5 lakh is equal to the 1-year MCLR multiplied by a factor of 2%. MCLR stands for Marginal Cost of Funds-Based Lending Rate.
  • For loans over Rs. 7.5 lakh, the interest rate consists of the 1-year MCLR plus a 1.5% component. 
  • The interest rate on loans for female students is 0.5% lower than the regular rate.
  • While the principle is not required to be paid during the moratorium, the interest can. For interest repayment during the moratorium period, you are eligible for a 0.5% discount.
  • The moratorium term for this financing programme is the course period plus 12 months following the course’s conclusion.

Also Read: Check all about the Delhi Government education loan for abroad studies- who can apply, eligibility criteria, and list of documents required.


There are several loan payback policies, which change depending on each individual circumstance. In certain circumstances, the banks may decide to change the moratorium period if something unexpected happens or if they see the need to do so for any other reason.

  • The payback typically begins after the payback Holiday / Moratorium Course time plus one year.
  • The bank may make changes in the case of unemployment cycles, but it can only do so twice or three times for a total of six months at once.
  • After the moratorium period has ended, the loan amount for each year is repayable in equal monthly payments for a maximum of 15 years.
  • This indicates that you only pay interest during the moratorium period before making monthly payments until the loan is fully repaid.

A candidate will be better able to understand things and make an informed decision by taking into account all the significant elements once they have a clear understanding of the loan guidelines and requirements and how they affect their loan.

FAQs on IBA Model Education Loan Scheme

Who is eligible for IBA Model Education Loan Scheme?

Applicants seeking graduate or postgraduate degrees as well as technical or professional courses at reputable schools or universities that have been endorsed by the UGC, a state or federal government agency, the AICTE, the Department of Electronics, IMC, and independent institutions like IIM and IIT, among others.

What is IBA Model Education Loan?

Students who want to pursue higher education in India and abroad can use the IBA Model Education Loan to pay for their courses and associated costs

What is the repayment period for IBA Model Education Loan?

A maximum of 15 Years is the repayment period for the IBA Model Education Loan.

What is the limit of IBA education loan?

The limit for IBA Education loans is up to INR 10 lakhs to study in India and up to 20 lakhs to study abroad.

Which banks are under IBA?

Some of the banks under IBA are Bank of Baroda, Bank of India, Canara Bank, IDBI Bank, Indian Bank, Bank of America, Citibank, City Union Bank, etc.

This was all about the IBA Model Education Loan Scheme. To know more about education loans, the loan application process, the best bank accounts for students, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience. 

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