Everything you need to know about education loan subsidy scheme

One of the biggest roadblocks for aspiring students nowadays is the rising cost of education. Students, especially from an underprivileged background, often face a financial crunch. This does not allow them to apply for higher education. For making higher education available to less fortunate and deserving students, the Indian Government has launched the education loan subsidy scheme.

Objective:

The economically weaker section who avails a student loan through banks registered under Indian Banks’ Association is eligible for interest subsidy. The Government-sponsored interest subsidy entirely pays for the loan interest accrued during the holiday or moratorium period. The phase includes the duration of the course plus an additional six months after getting employment for a maximum period up to a year after course completion.

Eligibility:

The scheme is open to meritorious students who belong to the EWS category. Such students are qualified as EWS if the total annual income of the family is less than or equal to INR 4.5 lakh. The interest subsidy would be available to all students who fall under the EWS category irrespective the social background. It sets the scheme apart from other social security schemes which apply to the socially backward classes like SC, ST, minorities, etc. The plan is eligible for loans disbursed post-April 1, 2009 onwards. Loans which were sanctioned partially before the concerned date will receive subsidy only on the portion disbursed after the cut off date.

Documentation:

You need to obtain the family income proof by the student from an appropriate authority assigned by the State Government according to the advisory issued by the Indian Government Ministry of Human Resource Development. Once they receive a valid income proof, the education loan subsidy scheme gets implemented according to the appropriate rules and regulations.

Eligible courses:

Any EWS student can enrol for professional and technical courses in Indian institutes. They need to get recognised as UGC/AICTE, been established by Parliamentary Acts, are IIMs, or established by a Central or State Government.

Additional features:

The student should apply for an undergraduate or postgraduate course post the higher secondary education. An exception here would be integrated courses for which the interest subsidy is available for both under-graduate and post-graduate portions of the course.

Exclusions:

The scheme for education loans in India have some exclusions in place such as –

• Students who want to pursue courses outside India
• Students who drop out of their course before completion for any reason apart from medical purposes
• Students who get expelled from an institute on the grounds of academic or discipline

Students who are enrolled in the following courses are also ineligible for the subsidy:

• Vocational training
• Skill development
• Teacher training
• Non-technical courses like music, sociology, commerce, science, etc.
• Any student enrolled in a course without passing their 12th standard examination

Maximum limit:

The scheme applies to all student loan, irrespective of the amount. However, the programme has a loan amount limit on interest, which is up to INR 10 lakh.