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Raghuvamshi Kanukruthi
Apr 11, 2024

Learn about IBA model education loan scheme: low interest rates, documents required and process. Secure your future today!

About IBA Model Education Loan Scheme

The high expense of education in India prevents students from low-income families from pursuing their goals. The challenge of funding their education always pertains to students coming from economically disadvantaged sections. That's why the Indian Banks' Association (IBA) has come up with an educational loan scheme to help these students pursue technical and professional education.

IBA model education loan scheme enables students to cover tuition fees and expenses associated with education in both India and abroad. The central scheme offers interest subsidies during this period of moratorium. Today, we will explore 'What is IBA model education loan scheme?' along with its benefits, eligibility, and application process.

What is IBA Model Education Loan Scheme?

The IBA Model Education Loan Scheme is a comprehensive project that aims to provide financial help to aspirants seeking higher education in India and abroad. The initiative was developed to answer the growing need for accessible and inexpensive education loans, enabling students from various socio-economic backgrounds to pursue their academic goals without financial restraints

Objectives and Purpose of the Scheme

The IBA Model Education Loan Scheme provides financial help to aspirants seeking higher education in both India and abroad. The initiative was developed by the Indian Banks’ Association (IBA) to answer the growing need for accessible and inexpensive education loans. The objective was also to allow students and aspirants from various backgrounds to pursue their academic goals without financial restraints.

IBA Model Education Loan Scheme Interest Rate and Features

The Indian Banks' Association (IBA) developed a complete model educational loan plan that banks are encouraged to follow. The Indian government has now approved a plan to fully subsidize interest on loans taken out by students from economically disadvantaged sections. When you apply for the student loan, you get access to the following IBA model education loan scheme features:

Details India Abroad
Loan Amount ₹10 lakh ₹20 lakh
Interest Rates Starting from 5% 15%
Repayment 15 years after course completion 15 years after course completion
Moratorium Period Course duration + 1 year Course duration + 1 year
Margin No margin required for loans up to ₹4 lakh No margin required for loans up to ₹4 lakh
Collateral No collateral required for loans up to ₹7.5 lakh Tangible collateral required for loans above ₹7.5 lakh

IBA Model Education Loan Scheme Eligibility

For you to apply for IBA model education loan scheme, you must first fulfill specific student loan eligibility criteria. It includes:

  • Aspirants must be Indian citizens who have secured admission to professional courses in India or foreign through an entrance test or merit-based selection process.
  • Students must achieve certain academic benchmarks, such as a certain percentage or grade point average, to be eligible for the loan.
  • Applicants may be subject to age limitations or higher age limits, depending on the course and level of study.
  • The plan takes into account the applicant's and their family's financial situation when determining loan eligibility and interest rates.

Besides eligibility, you must also understand varying interest rates. The IBA model education loan scheme interest rate is charged based on the individual banks and their provisions for interest rates. It can start from 9.25% per year.

Courses Eligible

The IBA Model Education Loan Scheme offers a comprehensive choice of courses to meet the academic interests and career goals of students. The policy recognizes the need to provide financial support at many stages of education, ranging from professional degrees to vocational training programs.

Courses in India Courses in Studies

Graduation courses: BA, B.Com., B.Sc., etc

Graduation: For job-oriented professional/ technical

Post Graduation courses: Masters & Ph.D.

Post graduation: MCA, MBA, MS, etc.

Engineering, Management, Medical, Veterinary, Agriculture, Law, Dental, Computer Science

Courses offered by reputed universities.

ICWA, CA, CFA, etc.

Courses conducted by CIMA- London, CPA in the USA, etc.

Courses conducted at IIM, IIT, IISc, XLRI, and NIFT etc.

To pursue the course overseas, the Institute must be recognized by the relevant local aviation/shipping authorities.

Director General of Civil Aviation-approved aviation and pilot training

 

Colleges and universities accredited by UGC, Govt., AICTE, AIBMS, and ICMR offer diploma and degree courses.

 

Participating Banks and Financial Institutions

The IBA Model Education Loan Scheme is implemented through a network of participating banks and financial institutions across India. These include public sector banks, private sector banks, and non-banking financial companies (NBFCs). Some of the major participating institutions are:

  1. State Bank of India (SBI)
  2. Punjab National Bank (PNB)
  3. Bank of Baroda
  4. HDFC Bank
  5. ICICI Bank
  6. Axis Bank
  7. Kotak Mahindra Bank
  8. Bajaj Finserv

Interest Rates For Education Loan

The interest rates applied to the educational loan will be determined by the IBA Model Educational Loan Scheme's interest rate rules as well as the BPLR/Base Rate of each individual bank. Here is a breakdown of bank-wise interest rates for the IBA model education loan scheme:

Name of Bank Interest Rates % (Per Annum)
Union Bank of India 11.30% Onwards
Federal Bank 12.55% Onwards
Axis Bank 13.70% Onwards
State Bank of India 8.55% Onwards
HDFC Bank Preferential rates as per the college/university
ICICI Bank 9.55% Onwards
Canara Bank 9.25% Onwards
Punjab National Bank 9.25% Onwards
Bank of Baroda 9.15% Onwards

Documents Required for IBA Model Education Loan Scheme

To ensure a smooth and swift loan application process, the IBA Model Education Loan Scheme requires students to submit a set of essential documents. Here are the key documents typically required for education loans in India:

  1. Proof of Identity: Students must provide valid identity proof, like a passport, Aadhaar card, or any other government-issued identity document.
  2. Proof of Age: A birth certificate or any other age-proof document may be required.
  3. Academic Records: Mark sheets, degree certificates, or transcripts from previous academic years, along with admission letters or offer letters from the desired educational institution.
  4. Income Proof: Income tax returns, salary slips, or bank statements of the student and/or their parents or guardians may be requested to assess financial capacity.
  5. Fee Structure: A detailed fee structure from the educational institution outlining tuition fees, hostel charges, and other expenses.
  6. Admission Confirmation: An official admission letter or confirmation from the educational institution is crucial.
  7. Residence Proof: Utility bills, rent agreements, or any other document proving the residential address of the student and their family.
  8. Collateral Documents: Depending on the loan amount and the bank's policies, students may need to provide collateral documents, such as property papers or fixed deposit receipts.
  9. Application Form: A correctly filled and signed student loan application form, as prescribed by the respective bank or financial institution.

IBA Model Education Loan Scheme Overview

Before applying for a student loan, here are important factors of the IBA model education loan scheme you must consider:

  • Margin Cash: There is no margin for loans up to ₹7.5 lakhs. Nevertheless, in this instance, the loan has to qualify for a credit guarantee in order for the margin to be NIL.
  • Collateral Requirements: Does not require security for loans up to ₹4 lakh. For loans between ₹4 lakhs and ₹lakhs, the parents will have the option to get a third-party guarantee in addition to becoming co-borrowers. Over ₹7.5 lakh loans, there should be physical collateral.

Expenses Covered in IBA Model Education Loan Scheme

By considering a wide range of expenditures, the scheme aims to alleviate the financial struggles of students and their families. In return, this allows them to focus on their academic endeavors without worrying about the financial implications. Here is a list of expenditures typically covered under the IBA Model Education Loan Scheme:

  1. Tuition Fees: IBA education loan covers tuition fees charged by the educational institution. This includes fees for admission, course enrollment, and any other mandatory fees required by the institution.
  2. Examination Fees: The scheme covers fees related to examinations, such as registration fees, examination fees, and any other associated costs.
  3. Library and Laboratory Fees: Students can avail of the loan to cover expenses related to library usage, laboratory fees, and other charges.
  4. Hostel and Accommodation Charges: For students pursuing education away from their hometowns, the loan can be utilized to cover hostel fees or rent for accommodation.
  5. Travel Expenses: The scheme recognizes the importance of travel for educational purposes, such as attending conferences, seminars, or field trips. Expenses related to travel within India or abroad can be covered under the loan.
  6. Purchase of Study Materials: Students can use the loan to purchase necessary study materials, including books, stationery, and other educational resources required for their course.
  7. Purchase of Laptop or Computers: It enables you to buy laptops and computers.
  8. Costs for Differently-abled Students: The scheme acknowledges the additional expenses faced by differently-abled students and covers costs related to special equipment, assistive devices, or other necessary accommodations.
  9. Insurance Premium: Some banks may include insurance premium amounts as part of the loan, providing financial protection and security to the student and their family.

Apply for a Successful Education Loan through Propelld

IBA's educational loan scheme is a socially and economically relevant plan that helps students fuel their educational dream. The process, however, involves a complex process. At Propelld, we ensure successful approval with expert guidance and assistance. From forms to documents, we prepare you for everything. 

If you want to improve your chances of successful student loan approval, you can make use of Propelld's:

  • Extensive Banking Partners: Propelld has partnered with numerous lending and banking partners. Our partners guarantee a lightning-fast loan process and enable quick loan disbursal.
  • Expert Finance Team: Our experts not only guide you through the entire student loan application process but also negotiate with the partners for better deals.
  • Income Share Agreement: The agreement allows you to repay the student loan only after you get a job.

Final Takeaways 

The IBA Model Education Loan Scheme allows students to pursue their educational goals without financial restraints. The initiative ensures that students receive full support during their academic journey. The scheme achieves this by covering a wide range of expenses such as tuition, housing, study materials, and travel costs.

If you are struggling to apply for an education loan, let Propelld make the process easier for you. We are India's leading education loan support provider, committed to ease the application process. By guiding you through the entire process, we improve your chances of successful loan application.

IBA Model Education Loan Scheme: Eligibility & Rates 2024

Raghuvamshi Kanukruthi
April 11, 2024
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Shivam Bhardwaj
March 15th 2022

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About IBA Model Education Loan Scheme

The high expense of education in India prevents students from low-income families from pursuing their goals. The challenge of funding their education always pertains to students coming from economically disadvantaged sections. That's why the Indian Banks' Association (IBA) has come up with an educational loan scheme to help these students pursue technical and professional education.

IBA model education loan scheme enables students to cover tuition fees and expenses associated with education in both India and abroad. The central scheme offers interest subsidies during this period of moratorium. Today, we will explore 'What is IBA model education loan scheme?' along with its benefits, eligibility, and application process.

What is IBA Model Education Loan Scheme?

The IBA Model Education Loan Scheme is a comprehensive project that aims to provide financial help to aspirants seeking higher education in India and abroad. The initiative was developed to answer the growing need for accessible and inexpensive education loans, enabling students from various socio-economic backgrounds to pursue their academic goals without financial restraints

Objectives and Purpose of the Scheme

The IBA Model Education Loan Scheme provides financial help to aspirants seeking higher education in both India and abroad. The initiative was developed by the Indian Banks’ Association (IBA) to answer the growing need for accessible and inexpensive education loans. The objective was also to allow students and aspirants from various backgrounds to pursue their academic goals without financial restraints.

IBA Model Education Loan Scheme Interest Rate and Features

The Indian Banks' Association (IBA) developed a complete model educational loan plan that banks are encouraged to follow. The Indian government has now approved a plan to fully subsidize interest on loans taken out by students from economically disadvantaged sections. When you apply for the student loan, you get access to the following IBA model education loan scheme features:

Details India Abroad
Loan Amount ₹10 lakh ₹20 lakh
Interest Rates Starting from 5% 15%
Repayment 15 years after course completion 15 years after course completion
Moratorium Period Course duration + 1 year Course duration + 1 year
Margin No margin required for loans up to ₹4 lakh No margin required for loans up to ₹4 lakh
Collateral No collateral required for loans up to ₹7.5 lakh Tangible collateral required for loans above ₹7.5 lakh

IBA Model Education Loan Scheme Eligibility

For you to apply for IBA model education loan scheme, you must first fulfill specific student loan eligibility criteria. It includes:

  • Aspirants must be Indian citizens who have secured admission to professional courses in India or foreign through an entrance test or merit-based selection process.
  • Students must achieve certain academic benchmarks, such as a certain percentage or grade point average, to be eligible for the loan.
  • Applicants may be subject to age limitations or higher age limits, depending on the course and level of study.
  • The plan takes into account the applicant's and their family's financial situation when determining loan eligibility and interest rates.

Besides eligibility, you must also understand varying interest rates. The IBA model education loan scheme interest rate is charged based on the individual banks and their provisions for interest rates. It can start from 9.25% per year.

Courses Eligible

The IBA Model Education Loan Scheme offers a comprehensive choice of courses to meet the academic interests and career goals of students. The policy recognizes the need to provide financial support at many stages of education, ranging from professional degrees to vocational training programs.

Courses in India Courses in Studies

Graduation courses: BA, B.Com., B.Sc., etc

Graduation: For job-oriented professional/ technical

Post Graduation courses: Masters & Ph.D.

Post graduation: MCA, MBA, MS, etc.

Engineering, Management, Medical, Veterinary, Agriculture, Law, Dental, Computer Science

Courses offered by reputed universities.

ICWA, CA, CFA, etc.

Courses conducted by CIMA- London, CPA in the USA, etc.

Courses conducted at IIM, IIT, IISc, XLRI, and NIFT etc.

To pursue the course overseas, the Institute must be recognized by the relevant local aviation/shipping authorities.

Director General of Civil Aviation-approved aviation and pilot training

 

Colleges and universities accredited by UGC, Govt., AICTE, AIBMS, and ICMR offer diploma and degree courses.

 

Participating Banks and Financial Institutions

The IBA Model Education Loan Scheme is implemented through a network of participating banks and financial institutions across India. These include public sector banks, private sector banks, and non-banking financial companies (NBFCs). Some of the major participating institutions are:

  1. State Bank of India (SBI)
  2. Punjab National Bank (PNB)
  3. Bank of Baroda
  4. HDFC Bank
  5. ICICI Bank
  6. Axis Bank
  7. Kotak Mahindra Bank
  8. Bajaj Finserv

Interest Rates For Education Loan

The interest rates applied to the educational loan will be determined by the IBA Model Educational Loan Scheme's interest rate rules as well as the BPLR/Base Rate of each individual bank. Here is a breakdown of bank-wise interest rates for the IBA model education loan scheme:

Name of Bank Interest Rates % (Per Annum)
Union Bank of India 11.30% Onwards
Federal Bank 12.55% Onwards
Axis Bank 13.70% Onwards
State Bank of India 8.55% Onwards
HDFC Bank Preferential rates as per the college/university
ICICI Bank 9.55% Onwards
Canara Bank 9.25% Onwards
Punjab National Bank 9.25% Onwards
Bank of Baroda 9.15% Onwards

Documents Required for IBA Model Education Loan Scheme

To ensure a smooth and swift loan application process, the IBA Model Education Loan Scheme requires students to submit a set of essential documents. Here are the key documents typically required for education loans in India:

  1. Proof of Identity: Students must provide valid identity proof, like a passport, Aadhaar card, or any other government-issued identity document.
  2. Proof of Age: A birth certificate or any other age-proof document may be required.
  3. Academic Records: Mark sheets, degree certificates, or transcripts from previous academic years, along with admission letters or offer letters from the desired educational institution.
  4. Income Proof: Income tax returns, salary slips, or bank statements of the student and/or their parents or guardians may be requested to assess financial capacity.
  5. Fee Structure: A detailed fee structure from the educational institution outlining tuition fees, hostel charges, and other expenses.
  6. Admission Confirmation: An official admission letter or confirmation from the educational institution is crucial.
  7. Residence Proof: Utility bills, rent agreements, or any other document proving the residential address of the student and their family.
  8. Collateral Documents: Depending on the loan amount and the bank's policies, students may need to provide collateral documents, such as property papers or fixed deposit receipts.
  9. Application Form: A correctly filled and signed student loan application form, as prescribed by the respective bank or financial institution.

IBA Model Education Loan Scheme Overview

Before applying for a student loan, here are important factors of the IBA model education loan scheme you must consider:

  • Margin Cash: There is no margin for loans up to ₹7.5 lakhs. Nevertheless, in this instance, the loan has to qualify for a credit guarantee in order for the margin to be NIL.
  • Collateral Requirements: Does not require security for loans up to ₹4 lakh. For loans between ₹4 lakhs and ₹lakhs, the parents will have the option to get a third-party guarantee in addition to becoming co-borrowers. Over ₹7.5 lakh loans, there should be physical collateral.

Expenses Covered in IBA Model Education Loan Scheme

By considering a wide range of expenditures, the scheme aims to alleviate the financial struggles of students and their families. In return, this allows them to focus on their academic endeavors without worrying about the financial implications. Here is a list of expenditures typically covered under the IBA Model Education Loan Scheme:

  1. Tuition Fees: IBA education loan covers tuition fees charged by the educational institution. This includes fees for admission, course enrollment, and any other mandatory fees required by the institution.
  2. Examination Fees: The scheme covers fees related to examinations, such as registration fees, examination fees, and any other associated costs.
  3. Library and Laboratory Fees: Students can avail of the loan to cover expenses related to library usage, laboratory fees, and other charges.
  4. Hostel and Accommodation Charges: For students pursuing education away from their hometowns, the loan can be utilized to cover hostel fees or rent for accommodation.
  5. Travel Expenses: The scheme recognizes the importance of travel for educational purposes, such as attending conferences, seminars, or field trips. Expenses related to travel within India or abroad can be covered under the loan.
  6. Purchase of Study Materials: Students can use the loan to purchase necessary study materials, including books, stationery, and other educational resources required for their course.
  7. Purchase of Laptop or Computers: It enables you to buy laptops and computers.
  8. Costs for Differently-abled Students: The scheme acknowledges the additional expenses faced by differently-abled students and covers costs related to special equipment, assistive devices, or other necessary accommodations.
  9. Insurance Premium: Some banks may include insurance premium amounts as part of the loan, providing financial protection and security to the student and their family.

Apply for a Successful Education Loan through Propelld

IBA's educational loan scheme is a socially and economically relevant plan that helps students fuel their educational dream. The process, however, involves a complex process. At Propelld, we ensure successful approval with expert guidance and assistance. From forms to documents, we prepare you for everything. 

If you want to improve your chances of successful student loan approval, you can make use of Propelld's:

  • Extensive Banking Partners: Propelld has partnered with numerous lending and banking partners. Our partners guarantee a lightning-fast loan process and enable quick loan disbursal.
  • Expert Finance Team: Our experts not only guide you through the entire student loan application process but also negotiate with the partners for better deals.
  • Income Share Agreement: The agreement allows you to repay the student loan only after you get a job.

Final Takeaways 

The IBA Model Education Loan Scheme allows students to pursue their educational goals without financial restraints. The initiative ensures that students receive full support during their academic journey. The scheme achieves this by covering a wide range of expenses such as tuition, housing, study materials, and travel costs.

If you are struggling to apply for an education loan, let Propelld make the process easier for you. We are India's leading education loan support provider, committed to ease the application process. By guiding you through the entire process, we improve your chances of successful loan application.

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Frequently Asked Questions

Can students pursuing distance education or online courses benefit from the IBA Model Education Loan Scheme? 

Yes, the scheme covers approved distance education courses offered by recognized universities and institutions.

Are there any age restrictions for availing education loans under this scheme?

Most banks and financial institutions have age limits or upper age caps for loan applicants, depending on the specific course and level of education. 

How are the loan repayment terms and interest rates determined under the IBA Model Education Loan Scheme? 

The repayment terms, including the loan tenure and interest rates, are generally determined by individual banks and financial institutions based on various factors.

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