The teenager has flown in for advanced talks with the Bundesliga club and is expected to sign up for the season.
After a disappointing loan spell at Reading last season the Irons are keen for the youngster to put a hard edge on his game and the Bundesliga is an ideal league in which to do so.
The defender is seen as a future West Ham captain with the Irons desperately keen for him to gain regular first team football but there is no chance of him agreeing any permanent deals.
Chelsea centre-half Andreas Christensen has spent the last two seasons on loan at Monchengladbach and the German club believe Oxford can make a similar impression in the Bundesliga next season.
Borussia finished in ninth place in the league of 18 last season.