✓ Education Loan Interest Subsidy
✓ Application Process For Schemes
For many students, funding is a major cause of worry when it comes to higher education. Education loan schemes offered by many nationalized banks have enabled extremely bright students to pursue their dreams of studying abroad. However, another stress factor for such students is their education loan repayment. It is to lighten this financial load that the Indian government has introduced a number of education loan interest subsidy schemes for the benefit of such students.
The Indian Government has introduced several schemes to support students who want to pursue higher education abroad. These schemes provide financial assistance or interest subsidies to qualifying students.This article will discuss the Central Sector Interest Subsidy Scheme (CSIS), Padho Pardesh Subsidy Scheme, Dr. Ambedkar Central Sector Scheme (ACSIS), and the Credit Guarantee Fund Scheme for Education Loan (CGFSEL) as well as education loans for studying abroad in India and abroad.
The following education loan interest subsidy schemes were introduced by the Govt. of India for students belonging to specific social groups. All the schemes majorly focus on students coming from economically backward sections.
The Central Sector Interest Subsidy Scheme (CSIS subsidy scheme) is for students who wish to pursue their higher education in India only. Since the Padho Pardesh scheme and the Dr. Ambedkar Central Sector scheme are of more relevance to students who wish to pursue their higher studies abroad, these will be explained in detail in this article.
Under any central government education loan interest subsidy scheme, the interest for the entire moratorium period is paid off by the government. This moratorium period is the course duration, plus one year or six months after getting employed, whichever happens, earlier. Since these subsidy schemes are only applicable to candidates who are financially weak, being able to save on any education loan-related expenses can provide them with huge relief.
Read More on Margin Money: Loan Margin in Education loan
The biggest highlight of these subsidy schemes is the education loan interest waiver. Another important provision is that meritorious students who come from limited economic backgrounds are given priority under these schemes. In any case, these interest subsidy schemes offer a subsidy on a loan amount of Rs.20 Lakhs only. This means that even if the loan amount is higher, the subsidy will be applicable on Rs.20 Lakhs only.
The subsidy schemes mentioned above can help eligible students save an amount of Rs.6 Lakhs from their entire repayable loan amount. Read on to know more!
The CSIS scheme, implemented by the Department of Higher Education, Ministry of Education, provides interest subsidy during the moratorium period (course period plus one year) for education loans taken from scheduled banks under the Model Education Loan Scheme of the Indian Banks Association
The scheme aims to support students belonging to economically weaker sections, with an annual parental income of up to INR 4.5 lakhs, who want to pursue higher education in professional or technical courses from NAAC accredited institutions or professional/technical programs accredited by NBA or institutions of national importance
The Padho Pardesh Subsidy Scheme, introduced by the Government of India, provides interest subsidy on education loans for students belonging to minority communities who want to study abroad
Note:- As per recent communication received from IBA, the scheme has been discontinued from FY 2022-23. The existing beneficiaries as on 31/03/2022 will continue to receive the interest subsidy during the moratorium period of the loan, subject to the compliance with the extant guidelines
The ACSISOBCEBC (Dr. Ambedkar Central Sector Scheme of Interest Subsidy on Educational Loan for Overseas Studies for Other Backward Classes & Economically Backward Classes) Scheme, implemented by the Ministry of Social Justice and Empowerment, provides interest subsidy on education loans for students belonging to Other Backward Classes (OBCs) and Economically Backward Classes (EBCs) who want to study abroad
Note:- Fresh applications for interest subsidy under this scheme have been discontinued until further notice
The CGFSEL, notified on September 16, 2015, provides a third-party guarantee for education loans availed by students without any collateral security
The scheme aims to promote access to higher education for students from economically weaker sections.
On the directions of the governing body, all the member banks will open the subsidy portal. The application portal for these schemes will be opened only once in a financial year by nodal banks. They may reopen it again if they do not receive a sufficient number of applications that satisfy the yearly quota.
Subsidy schemes have been introduced for your benefit, and as someone who wishes to avail of their benefits, it is essential that you should be informed about them. A decision taken on the basis of incomplete information can prove to be bad for you in the future. We hope this article has answered most of your queries regarding interest subsidies. We are planning to come up with a series of articles that will focus on the education loan procedure requirements for different countries. So keep a lookout for this section on the website.
Is there any limit to the education loan amount for which I can avail the interest subsidy?
Yes, there are certain limits on the education loan amount for which you can avail of the interest subsidy under the government schemes. For example, the Central Sector Interest Subsidy Scheme provides interest subsidies for education loans up to Rs. 7.5 lakhs only. Similarly, the Padho Pardesh scheme provides interest subsidies for education loans up to Rs. 20 lakhs only. You should check the specific guidelines of the government scheme to know the applicable loan amount limit.
Can I avail education loan interest subsidy for an overseas education loan?
Yes, some of the government schemes provide education loan interest subsidies for overseas education loans as well. For example, the Padho Pardesh scheme provides an interest subsidy for education loans taken for pursuing higher education abroad. However, the eligibility criteria, loan amount limit, and other details may differ from those applicable to education loans taken for domestic courses.
What is the difference between education loan subsidy and education loan interest subsidy?
Education loan subsidy and education loan interest subsidy are two different concepts. Education loan subsidy refers to a grant or financial assistance provided to students from economically weaker sections to pursue higher education. Education loan interest subsidy, on the other hand, refers to a subsidy provided by the government to reduce the burden of interest repayment on education loans availed by students.
Can I avail education loan interest subsidy if I have taken a loan for a diploma or a certificate course?
It depends on the specific government scheme under which you are applying for the education loan interest subsidy. Some of the schemes provide a subsidy for diploma or certificate courses as well, while others may limit the subsidy to degree-level courses. You should check the guidelines of the scheme to know the eligibility criteria for your course.
How can education loan interest subsidy benefit me as a student and what are its long-term advantages?
Education loan interest subsidies can benefit students in multiple ways. It reduces the burden of repayment and helps students pursue higher education without worrying about the financial burden. It also encourages students to pursue courses of their choice and helps in the overall development of the country
The central government's Padho Pardesh scheme, which provided education loan subsidies to minority students for studying overseas, has benefited more than 15,500 students in the past five years.
However, the Ministry of Minority Affairs (MoMA) has decided to discontinue the scheme from 2022-23, citing limited benefits and overlapping schemes from other ministries. According to Minister Smriti Zubin Irani, the number of beneficiaries gradually increased from 1,711 in 2017-18 to 4,622 in 2021-22.
The discontinuation of the scheme has raised concerns about educational opportunities for minority students, especially as the recent budget witnessed significant cuts in scholarships for minority communities. As of March 17, 2023, three scholarship schemes for minority children for the academic year 2022-23 were yet to be implemented. The decision's impact on minority students aspiring to study abroad and access higher education has sparked discussions about the support for their educational aspirations.
Last Updated - 20/07/2023