About Education Loan
An education loan is a financial aid that students can avail to meet their educational expenses. Education loans are provided by banks and NBFCs and can be availed as a form of funding, rewards, cash, scholarships. The loan has to be repaid to the lender every month with an interest rate. The borrower has to pay back the loan to the lender after the end of the degree or higher education. An additional six month period is given to students to start the repayment tenure after earning the degree.
Education Loan Subsidy
Education Loan Subsidy is launched by the Government to make sure that no potential student is left behind the opportunity to pursue higher education because of their status. The ‘Ministry of Human Resource Development has started the scheme under the name “Central Sector Interest Subsidy Scheme” in 2009. The Scheme gives full interest subsidy during the interim period on education loans without any security against the loan and third-party guarantee.
The scheme profits all sectors of society, including economically weaker students, for seeking professional and technical programs in India only. The CSIS tries to look for the imbalance in the Gross Enrolment Ratio in Higher Education in India and aims to provide students with affordable schemes and increase the number of qualified professionals in the field.
Features of Central Sector Interest Subsidy Scheme
- The Scheme, “Central Sector Interest Subsidy Scheme”, can be utilized by Scheduled Banks.
- It is associated with the current Model Educational Scheme of the Indian Banks Association.
- It is restricted to students enrolled in technical and professional courses only from the recognized NAAC (National Assessment and Accreditation Council) Institutions or certified by NBA (National Board Accreditation) or Institutions of National Importance or CFTIs (Central Funded Technical Institutions).
- The Institutions that do not come under the accreditated NAAC or NBA requires approval from the regulatory body by the Medical Council of India, Nursing Council of India for Nursing courses, Bar Council of India for Law etc.
- This Scheme is available to students whose gross parental income is up to Rs 4.5 Lakhs.
- The Loan amount can be a maximum of Rs. 7.5 Lakhs.
- Education Loan Subsidy is available to undergraduate, postgraduate and integrated courses students.
Interest Rate of Education Loan Subsidy
The interest rates charged on an education loan subsidy depends on the Base Rate of the Individual Banks as per the terms under the IBA Model Educational Loan Scheme.
Education Loan Subsidy – FAQs
✅ What is a moratorium Period in Education Loan Subsidy?
Under the Central Sector Interest Subsidy Scheme, the interest paid during the moratorium period, i.e., Course Period + One Year, will be bear by the Government of India. However, after the end of the moratorium period, the student pays the remaining loan amount as per the terms laid by the Model Educational Loan Scheme.
✅ What is the Income Limit to avail an Education Loan Subsidy?
Students whose parents gross income is up to Rupees 4.5 Lakhs per year can take benefit of the Scheme. Income Proof is needed to avail of the same by the Public Authority of the State Government.
✅ Who launched the Education Loan Subsidy?
Education Loan Subsidy was launched by the Government in 2009 to make sure that no potential student is left behind the opportunity to pursue higher education because of their status. The Ministry of Human Resource Development had originated the Scheme named “Central Sector Interest Subsidy Scheme”. The approval of the main Cabinet revised this scheme in the year 2018.
