IOB is a major public-sector bank in India that offers education loans to study abroad. The loan policy is based upon the IBA’s model education loan scheme and the interest rate is also determined based on the same model. The loan is provided under two major schemes for study abroad i.e. IOB Scholar Education Loan and IOB Vidyajyoti Education Loan.
IOB education loan interest rate depends on many factors like the amount of loan, repayment period, credit history etc. The bank offers up to INR 7.5 lakh education loans without collateral to study abroad at an affordable rate of interest. Let’s check all the details on the IOB education loan interest rate.
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What is the IOB Education Loan Interest Rate?
IOB education loan interest rate is provided at an interest rate ranging between 9% to 12% for the Vidyajyoti scheme. The interest rate is determined considering the base rate and the spread. The bank also provides some rebates on interest rates to wards for bank employees and retired staff. Under the IOB scholar education loan scheme, the interest rate varies between 11% to 13%. You should always check the interest rate before initiating the IOB Education Loan disbursement process. Check more details below:
- The interest rate can vary based on the amount of the loan and the income of the co-applicant
- Usually, the bank offers low-interest rates on education loans above INR 7.5 lakhs. The interest rate for a lower amount may attract slightly higher interest
- The interest rate on education loans also depends on the university and the course selected by the student
Also Read: Applying for a loan from IOB? Check this and know about the IOB Education Loan Documents Required
IOB Scholar Education Loan Interest Rate
The bank offers education loans to study abroad under its IOB Scholar loan scheme. The maximum loan amount for study abroad is INR 60 lakhs with margin money of 25% that will be charged irrespective of the loan amount. Any student who is above 18 years of age and wants to pursue a UG or PG course from an approved university abroad can get an IOB Scholar loan. Check the interest rate of an IOB Education Loan under the scholar loan scheme:
| Loan Amount (INR) | Spread | Effective Interest Rate |
| Up to INR 7.5 lakhs | RLLR + 2.20% | 11.55% |
| Above 7.5 lakhs to 60 lakhs | RLLR + 3.20% | 12.55% |
| Iob Scholar To Staff Ward up to INR 60 Lakhs | RLLR + 1.90% | 11.25% |
IOB Vidyajyoti Education Loan Interest Rate
IOB Vidyajyoti education loan is offered by Indian Overseas Bank to students who want to study abroad in a foreign university. The maximum loan amount under this scheme is INR 50 lakhs and the minimum amount is INR 7.5 lakhs. The bank also implements 15% margin money for study abroad loans under the Vidyajyothi scheme. Check the IOB Vidyajyoti education loan interest rate below:
| Category | Spread | Effective Interest Rate |
| For all amount to general customers | RLLR +1.65% | 11% |
| Interest Rate for Wards of Staff and Retired Staff | RLLR + 0.40% | 9.75% |
IOB Education Loan: Concessions on Interest Rate
Indian Overseas Bank provides certain concessions on the interest rate for education loans. The concessions are provided to employees, retired employees, female students etc. Check the details of concession under various categories for IOB education loans to study abroad:
| Category | Concession |
| Female Students | 0.50% |
| Interest Services During Moratorium | 1% |
| Wards of Staff and Retired Staff | 1.25% |
| Top 100 International Institutes | 1.50% |
| Top 101 to 200 International Institutes | 1% |
Also Read: Want an unsecured study loan? Check here all about IOB Education Loan without Collateral
Factors Affecting Interest Rate on Loans
The interest rate on education loans is determined by a lot of factors such as the guidelines of RBI on education loans, economic factors, credit history and score of the applicant, type of institution and course selected, loan amount, repayment period etc. Check details on some of the common factors impacting the education loan.
Credit Score of the Borrower
The credit score of the individual applying for an education loan is a major factor affecting the interest rate. A higher credit score indicates a lower credit risk for the bank/lender, leading to a better chance of securing a lower interest rate. Lenders offer rebates on interest rates to borrowers with a strong credit history, as it reflects their financial responsibility and ability to repay the loan.
Type of Education and Institution
The type of educational program and the institution where the student wants to study also play a role in determining the interest rate. Loans for courses with high job prospects and earning potential may attract lower interest rates. Also, prestigious institutions or those with a proven track record may result in lower interest rates compared to lesser-known or average universities. Lenders often assess the risk associated with the chosen course and institution before setting the interest rate.
Loan Amount and Repayment Tenure
The loan amount and the repayment period over which it is repaid can impact the interest rate. Generally, larger loan amounts might lead to higher interest rates and longer repayment tenures may result in a higher overall interest cost, as the lender is taking on a greater risk over an extended period. However, for amounts above INR 7.5 lakhs to a certain limit, the public sector banks offer lesser interest rates. Check and compare the schemes before finalising the loan.
Economic Conditions and Regulatory Policies
The ongoing economic conditions and regulatory policies of the Reserve Bank of India (RBI) can directly impact the education loan interest rates. Changes in the overall economic conditions, inflation rates, and central bank policies can affect the cost of borrowing. Moreover, government initiatives and regulatory changes aimed at promoting education or easing financial burdens on students may impact interest rates and it may be secured at lesser rates in such cases.
FAQs
IOB Education loan interest rates vary between 9% to 13% depending on factors such as credit score, loan amount and repayment period.
The bank considers factors such as the co-applicant’s credit score, the course and university selected, loan amount, and repayment tenure. The effective rate of interest is then calculated by adding the spread determined to the RLLR.
Indian Overseas Bank provides a rebate of 0.5% to 1.5% to female students and wards of IOB employees and retired employees.
IOB offers both fixed and floating interest rate options. You can choose between the two based on your preferences and risk tolerance. However, it is not guaranteed that the bank will implement the interest rates category as requested by the borrower and it totally depends on the bank’s internal policy.
If you are foreclosing the education loan, the bank will waive the interest rate on the net due amount. Also, the is no early repayment charge on education loans.
This was all about the IOB education loan interest rate for various loan schemes. Always compare the terms and conditions of the different schemes of education loans before finalising the loan.
To know more about education loans, 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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