Students from underprivileged parts of society can take out loans from the country’s scheduled banks and demand interest as a subsidy from the government under the Interest Subsidy Scheme. The cumulative loan sum that students can obtain under the scheme is Rs 7.5 lakh. It is also worth noting that students will only use the scheme once in their lives, either at their graduation, post-graduation, or mixed course. The scheme is only available to students studying in technical and vocational courses and whose parent’s annual income is less than Rs 4.5 lac. Here’s all you need to know about the education loan interest subsidy scheme.
Eligibility
- Students with Rs. 4.5 lakhs per annum of parental income.
- Professional/technical students only enrolled in NAAC approved institutions or professional/technical programs accredited to the NBA or NGOs or Centrally Funded Technical Institute (CFTIs). Those technical institutions/programs not subject to the NAAC or NBA require approval from the relevant regulatory authority, approval of the Medical Medical Council of India, Indian Nursing Council for Nursing Courses, the Indian Bar Council for Law, etc.
- Eligible for UG, PG- Also eligible for combined courses only once (graduate + post-graduate).
Interest subsidies for students who interrupt their midstream courses or who are excluded from the school for reasons of discipline or academia shall not be paid for under this Program.
Interest Rates
The interest rates on the education loan are based on the BPLR/Base Rate of the different banks and on the IBA Model education loan interest subsidy scheme rates.
Concession of Interests
Under the IBA Scheme, if the interest is serviced during the time when the repayment holiday is stated for interest repayment under the scheme, a 1 percent interest concession is given for the loans. This 1% interest concession will be extended under the central scheme for interest subsidy on education loans, provided that, on a half-yearly or annual basis, the Government of India disburses interest grant claims to the Banks.
Moratorium Period
In the form of the scheme, the interest due for the moratorium on the educational loan is the Course Length plus the government of India’s one-year duration. Following the moratorium period, the interest subsidy scheme education loan in the balance of a loan outstanding is paid by the student, in compliance with and as may be amended from time to time under the terms of the new Model Educational Loan Scheme. Worrying about the moratorium period of your student loan? Head to UniCreds to solve all your student loan problems by comparing quotes from 10+ banking partners and NBFCs.
Income Limit/Proof
The advantages of the program extend with a parental income of up to Rs. 4.5 lakes a year to students belonging to economically vulnerable areas (from all sources). Evidence of revenue is required by the State Government’s approved Public Authority. The new arrangement would meet the needs of students belonging to socially disadvantaged classes with prescribed higher parental gross family income limits from all sources based on the economic index and not on the social context.
Competent Authority
For the purpose of this scheme, the Ministry of HRD, Government of India has released an Advisory to each State Government asking them, on an economic index basis and not in a social sense, to appoint the required authorizations or authorities that are qualified to grant income certificates.
The banks shall enforce the scheme on the basis of state governments’ note of certification by the advisory committees of the District level (DLCS).
Awards/Certificates
The student’s degree will be marked by his/her refund liabilities. Employers can classify loans through electronic tags.
Nodal Bank
The Scheme shall proceed via Canara Bank, which is the Ministry of Human Resource Development’s Nodal Bank. In consultation with the Canara Bank, applying and tracking strategies are finalized.
Monitoring
The Nodal Bank will be able to set up an Interest Subsidy and Credit Guarantee dashboard with real-time details from banks on an institution’s/category/cursory accreditation/credit ranking, sanctions, grant disclosures and changes, loan refund, NPAs, and others.
Documentation
Documents are required along with your application for the education loan interest subsidy scheme. Original income certificate issued by the State/Union Territory Approved Officer under the scheme.
- Interest Subsidy Agreement, to be executed and stamped by all borrowers as per the State Stamp Act
- Institute’s initial bonafide student letter
- Self-declaration on minority group membership
- Additional information whatever necessary
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