The growing demand for higher education abroad has directly influenced the demand for overseas education loans. The availability of exclusive education loan schemes, hassle-free loan applications and disbursal processes are further driving the growth of these loan.
Knowing the need for funds to study abroad, the Indian Banks’ Association (IBA) has developed the IBA Model Educational Loan Scheme. Supported by guidelines from the Reserve Bank of India (RBI), this loan scheme aims to make higher education both in India and abroad more accessible by providing structured and affordable financial assistance to meritorious students. Additionally, this scheme is also eligible to offer interest rate subsidies under the Central Sector Interest Subsidy Scheme. It is supported by several major banks in India.
This article provides details of the IBA Model Education Loan Scheme for studying abroad, covering everything in one place. By the end, you will have a clearer understanding of how this scheme can financially contribute towards fulfilling your study-abroad dream.
To provide students with a reliable financial foundation, the IBA Model Education Loan Scheme for abroad offers various benefits and unique features. Given below is a detailed look at what students and their families can expect.
Loan Amount
For students planning to study abroad, the IBA Model Education Loan Scheme offers a loan amount of up to INR 20 lakhs. Additionally, for MBA and Executive Management Programs, the loan amount can go up to INR 25 lakhs. Also, the exact loan amount is often determined by the specific bank based on the applicant’s needs and the chosen institution.
Interest Rates
The interest rate for loans under this scheme is usually tied to the bank's benchmark prime lending rate (BPLR). Many banks offer a concession in the interest rates which usually go up to 1%. These are also subject to periodic revisions based on market and regulatory changes.
Collateral Requirement
For loans of up to INR 7.5 lakhs, most banks under the IBA scheme do not require collateral. However, for loans exceeding this limit, collateral such as property, fixed deposits, or other assets are required to secure the loan.
Margin Money
For students opting to study abroad, the required margin money is usually set at 15% of the total expenses which means that the bank covers the remaining 85%. This margin can vary slightly as per the bank’s policies and discretion.
Moratorium Period
A major benefit of the IBA scheme is its moratorium period. The moratorium covers the course duration plus an additional 6-12 months. During this period, students or their co-applicants can choose to pay the accrued interest to reduce the future loan burden, although it is optional.
Repayment Tenure
The scheme’s flexible repayment tenure ranges from 5 to 7 years, depending on the bank and the loan amount. This is beyond the moratorium period.
Expenses Covered
The IBA Model Education Loan Scheme provides comprehensive coverage by including a wide range of expenses associated with studying abroad. It includes tuition fees, examination and library fees, textbooks, computers, study materials, caution deposit, accommodation rent, living expenses, student health insurance and air travel expenses to the destination country.
After knowing these exciting features, you definitely might want to know more. So, moving ahead, let’s discuss the eligibility criteria to determine if this education loan scheme applies to you or not.
Both applicants and their co-applicants must meet certain eligibility criteria to qualify for this IBA Model Education Loan Scheme:
Applicant’s Criteria
The student must be an Indian citizen, including a Non-Resident Indian (NRI)
They must have confirmed admission to a recognized foreign institution through a valid admission process like entrance tests or merit-based selection.
The student’s academic record should reflect that he or she is a meritorious student.
Co-Applicant’s Criteria
The co-applicant serving as a financial guarantor can be a parent, guardian, or spouse.
They should have a stable source of income and a good credit history. Banks may also require income proof and credit documentation for the co-applicant.
If you and your co-applicant have ticked all the requirements mentioned above, then the next step is to gather the documentation given below.
A detailed checklist of documents is required for both the applicant and co-applicant for the IBA Model Education Loan Scheme for Abroad. They include:
Applicant Documents
Proof of identity as per the KYC norms
Admission letter from the University or institution abroad
Academic records like 10th, 12th, graduation mark sheets, and certificates
Course fee structure as provided by the institution
Passport-size photographs
Bank account statements for the last 6 months
Co-Applicant Documents
KYC documents for identity like PAN and Aadhaar card
Proof of income like salary slips and income tax returns for the last two years
Address proof
Collateral-related documents such as property papers (if applicable)
Bank statements for the past 6 months
Once you have collected these documents, you can begin the loan application process under this scheme. Wondering how to get started? Well, you can follow the process given below.
The application process for this scheme is almost the same as that of other Indian banks. Since it comprises banks that follow the guidelines of RBI, the process is simple to complete. Applicants will have to complete this process through the Vidya Lakshmi Portal (VLP) for non-subsidy educational loans. On the other hand, subsidy loan applications are accepted through the Jan Samarth Portal.
Sign up or log in to the portal and fill in all the required information
Select your preferred participating bank or financial institution
Upload all the documents asked
Pay the application fees and submit
Wait for the approval. It usually takes 15 days to get the final confirmation of loan sanction or rejection. If the application is approved, then the bank will issue the sanction letter outlining the loan terms, including the education loan interest rate and repayment tenure. The sanctioned loan will be disbursed in stages based on the course fee structure and payment schedules provided by the institution.
To sum up, this is everything that you must know about the IBA Model Education Loan Scheme. If you are considering this loan scheme, then Élan Overseas Education Loans can guide and assist you through the entire process. From choosing the right bank to completing the application process, everything will be taken care of once you connect with our Expert Overseas Education Loan Advisors. With Élan experience and partnerships with major banks under the IBA scheme, securing the funds for your study-abroad dreams can be both easy and efficient.
Schedule a consultation with the Élan team today!
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