Education Loan Subsidy Schemes
Education is a powerful tool for social and economic mobility, but the rising cost of higher education can make it inaccessible for many. To bridge this gap, the Government of India and various state governments offer education loan subsidy schemes to help students pursue their academic dreams without financial burdens.
1. Padho Pardesh Scheme
The Padho Pardesh Scheme is made available by the Indian government's Ministry of Minority Affairs to help students from underrepresented groups progress academically. The Government of India would pay the interest owed by the students during the term of the education loan moratorium.
Features of the Padho Pardesh Scheme
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 subsidies shall not be used availed from other state or central government schemes for educational purposes
Eligibility for the Padho Pardesh Scheme
The eligibility criteria for this scheme are 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
2. 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 of the Central Sector Interest Subsidy (CSIS) Scheme for Education Loans
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 the Central Sector Interest Subsidy (CSIS) Scheme for Education Loans
The eligibility to apply for Central Sector Interest Subsidy Scheme for education loan is mentioned below -
- 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
3. Dr. Ambedkar Central Sector Scheme of Interest Subsidy for Educational Loans
This program offers Other Backward Classes (OBC) and Economically Backward Classes interest subsidies on education loans (EBC). The Government of India's Ministry of Social Justice and Empowerment is responsible for this program.
Features of the Dr. Ambedkar Central Sector Scheme of Interest Subsidy for Education Loans
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 for the Dr. Ambedkar Central Sector Scheme of Interest Subsidy for Education Loans
The eligibility for an applicant for Dr.Ambedkar Central Sector Scheme are mentioned below -
- Total income of candidate or their 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
FAQs on Education Loan Subsidy Schemes
- Who is eligible for an education loan subsidy?
In order to qualify for the programme, a family's or parent's annual income cannot exceed Rs.6 lakh (which may be changed from time to time). The notified authority in the State or Union territory must provide an income certificate.
- Can I submit applications for several student loan subsidy programs at once?
Multiple subsidies for the same education loan cannot often be used at the same time. Based on your qualifications and needs, you should select the best programme.
- How to Minimize Interest Payments on Student Loans ?
Here is some advice on how to repay a student loan without paying interest. After you graduate, if you find a well-paying job, talk to your lender about changing the repayment plan for your student loans. Consider increasing the EMI amount to reduce the loan term.
- Are student loans available for living expenses?
Unsecured loans for education can be used to pay for living expenses, books, tuition, and other related expenditures, as well as other costs like transportation.
- How can I obtain a student loan without a proof of income?
If there is no parental income to substantiate, having a financial co-applicant is the best option. Most financial institutions will allow Parents, Parents-in-law, Siblings, Parents Siblings, Spouse, and First Cousins as financial co-applicants to meet the loan application requirements.
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