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Education Loan Subsidy Schemes

Education loans are availed by many students to be able to afford the expenses related to higher studies, whether in India or abroad. Rising education costs often make it impossible to afford higher education without the help of an education loan. This loan is provided to students by both public and private sector banks in India. The loan is repaid by the student after the course is completed and, in many cases, after getting gainfully employed. There are several interest subsidies and tax benefits offered on education loans in order to make it more affordable for students from even economically weaker sections of society.

Padho Pardesh Scheme

The Padho Pardesh Scheme is offered by the Government of India under the Ministry of Minority Affairs for the educational advancement of students who belong to minority communities. The interest payable by the students during the period of moratorium of the education loan will be borne by the Government of India.

Features

The features of this scheme are as given below:

  • Government will pay the interest rate on the education loan for course period + one year or 6 months after getting a job, whichever is earlier
  • Loans are provided for studies overseas
  • For students belonging to communities declared as minority under Section 2 (c) of National Commission for Minorities Act, 1992
  • For Master’s, M.Phil, and PhD. levels
  • Interest subsidy shall not be availed from other state or central government schemes for educational purposes

Eligibility

The eligibility criteria for this scheme is as given below:

  • Indian citizens
  • Should have secured admission in approved courses at the Master’s, M.Phil, and PhD. levels
  • For loans availed from a scheduled bank under the Indian Banks Association Education Loan Scheme
  • Application should be made during the first year of the course
  • Total income of applicant and guardian/parent should not exceed Rs.6 lakh per annum

Central Sector Interest Subsidy Scheme for Education Loan

The Central Sector Interest Subsidy Scheme was launched by the Ministry of Human Resource Development in 2009.

Features

The features of this scheme are as given below:

  • The interest on the education loan during the moratorium period is borne by the government
  • Moratorium period is course period plus one year
  • No collateral required
  • No third-party guarantee required
  • For professional and technical courses within India only
  • Maximum loan amount is Rs.7.5 lakh

Eligibility

  • For education loans taken under the Indian Banks Association Education Loan Scheme
  • Parental income not exceeding Rs.4.5 lakh per annum
  • Professional or technical courses from NAAC accredited institutions
  • Professional or technical programs accredited by NBA
  • Courses or institutions which do not come under the NBA or NAAC should get approval from respective regulatory bodies
  • For undergraduate, postgraduate, and integrated courses
  • Based on economic index and not on the social background

Dr. Ambedkar Central Sector Scheme of Interest Subsidy for Educational Loans

This scheme provides interest subsidy on education loans for Other Backward Classes (OBC) and Economically Backward Classes (EBC). This scheme is provided by the Ministry of Social Justice and Empowerment, Government of India.

Features

The features of this scheme are as given below:

  • The scheme can be availed for courses in India and abroad
  • For education loans taken under the Indian Banks Association Education Loan Scheme
  • An MoU between the National Backward Classes Finance & Development Corporation and banks makes this possible
  • Interest subsidy is provided by the government during the course duration or loan moratorium period
  • For courses at the Masters, M.Phil, and PhD. levels.

Eligibility

  • Total income of candidate or thier parents/guardians shall not exceed Rs.8 lakh per annum for OBC category and Rs.2.5 lakh per annum for EBC category
  • Indian citizens

Conclusion

An education loan can improve your prospects in life and employability with chances of earning a higher income with higher-paying jobs. It can also help you pursue your dream career without compromising because of lack of finances. The interest subsidy offered by the Government of India through these schemes for eligible education loans can help to ease the financial burden a great deal. It can also help put more disposable income in the hands of students during the course period as well as increase savings. It can also give students a much-needed breather in the time period between finishing the course and getting their dream job.

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