Looking to Reduce Your Education Loan Interest Bill?

Look no further. This page contains all the information you will need on Government of India’s Interest Subsidy Schemes for Education Loans as offered by Indian Overseas Bank.

IOB Government of India Interest Subsidy Schemes for Education Loans

Indian Overseas Bank allows its education loan applicants to apply for interest rate subsidies under one government schemes, viz.

  1. Central Scheme of Interest Subsidy for Education Loan

We look at each in some detail.

Features of Central Scheme of Interest Subsidy for Education Loans Provided by Indian Overseas Bank

Why this Scheme?

Under this scheme, the Central Government takes care of any interest component that arises during the moratorium phase of an education loan for professional or technical courses taken by economically weaker students. The moratorium usually comprises of the duration of the course and an additional time of 12 months after completion of the programme or 6 months after landing a job, whichever is earlier.

Loan Amount

  • The maximum loan amount provided without any collateral security and third-party guarantee under this education scheme is Rs. 7.5 lakhs


  • The scheme is only available for economically weaker students who are pursuing technical or professional education studies in India. Economically weaker sections refer to families that earn a gross yearly income of Rs. 4.5 lakh or less
  • The students will have to show an income proof from such public authorities as are authorised by the state governments for certification of income status for this scheme and other central and state sector schemes
  • The scheme will be available to eligible students only once, either for their first undergraduate or post-graduate degree or diploma courses in the country. The subsidy shall also be applicable to integrated graduate and post-graduate courses
  • The scheme will not apply to students who stop pursuing studies

Eligible Courses

  • The Central Scheme for Interest Subsidy will apply to courses from all accredited universities and institutions and professional or technical courses such as graduate and under-graduate courses in engineering, medical, para medical, agriculture, law, management, computers, etc. accredited by UGC, AICTE and other central/state government bodies


  • The interest rates charged on the educational loan shall be as per the BPLR or Base Rate of Indian Overseas Bank and as per the provisions for interest rates under the IBA Model Educational Loan Scheme
  • Once the moratorium phase ends, the student will be liable to pay the interest on the outstanding loan amount in accordance with the provisions of the Educational Loan Scheme of Banks

Tags with Certificates

  • The certificates of students who have availed the scheme will have a tag or a marker that indicate their repayment liabilities to future employers

Other Features to Know

  • This is a comprehensive model educational loan scheme that was formulated by the Indian Banks’ Association (IBA) for adoption by all scheduled banks and aims at providing financial support from the banking system to deserving or meritorious students to pursue higher education in the country or abroad
  • The nodal bank for the scheme is Canara Bank
  • The student can apply under this interest subsidy scheme only through the branch where he/she availed the loan

Reference Facts

  • Indian Overseas Bank Website: www.iob.in and www.iobnet.co.in (net banking)
  • Headquarters: Chennai,Tamil Nadu
  • Call Centre Toll-Free Number: 1800 425 4445

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