Government Education Loan Subsidy: Central Sector Interest Subsidy Scheme

Higher education is a valuable investment; however, it comes with several expenses such as tuition fees, books, accommodation, and living costs. An Education Loan can help students achieve their academic goals, though they include a significant cost of borrowing in the form of the payable interest amount. To ease this burden, the Government launched the Central Sector Interest Subsidy (CSIS) Scheme in the academic year 2009-10. Many students are not aware of this scheme. In this blog, we will explore the CSIS scheme in detail.

What is the Central Sector Interest Subsidy (CSIS) Scheme?

The Central Sector Interest Subsidy scheme is one type of Government Education Loan subsidy. It is to provide financial support to students from the economically weaker section of society. The scheme offers an interest subsidy on Education Loans during the moratorium period.

The moratorium period includes the course duration and an additional period. This additional period can be either one year after completing the course or 6 months after securing employment, whichever occurs earlier.

Important Features of CSIS Scheme

Here are some key features of the CSIS scheme, helping you understand it in more detail:

• Only those students who are pursuing technical or professional courses in India can take advantage of this scheme.
• No collateral security or third‑party guarantee is required for interest subsidy eligibility on Education Loans up to ₹7.5 Lakh.
• If the institute is not covered under NAAC or NBA, then approval is required from the regulatory body.
• Subsidy will only be available once for undergraduate, postgraduate or integrated courses.
• The maximum loan amount is capped at ₹10 Lakh.

Eligibility Criteria of CSIS Scheme

You need to fulfil the following eligibility criteria to qualify for the CSIS Scheme:-

• Education Loans must be taken under the IBA Model Educational Loan Scheme.
• Applicable to students from economically weaker sections with a gross parental/family income up to ₹4.5 Lakh per annum.
• Only students enrolled in professional or technical courses at NAAC-accredited institutions, NBA-accredited programmes, Institutions of National Importance, or Centrally Funded Technical Institutions (CFTIs) are eligible. Institutions/programmes outside NAAC/NBA require approval from the regulatory body.
• The benefit is available only once per student, including undergraduate, postgraduate, or integrated courses.
• Students receiving any other central/state scholarship or fee reimbursement are not eligible.
• Interest subsidy is not available if the student discontinues the course midstream or is expelled for disciplinary/academic reasons. An exception applies if discontinuation is due to medical reasons, with proper documentation approved by the institution.

Documents Required for CSIS Scheme

Here are the documents required to apply for the CSIS scheme: -

1. Identity proof, i.e., Aadhaar Card
2. PAN Card
3. Income proof (Issued by Competent Authority)
4. Educational Certificates
5. Proof of admission to the course
6. Bank account details
7. Any other documents, as required

Disbursement of CSIS Scheme

Disbursement Process of CSIS Scheme is as follows: -

• The Government of India prepares the schedule for disbursing interest subsidy claims to ensure the timely allocation of funds.
• Disbursement is made through the PFMS portal or Direct Benefit Transfer (DBT), ensuring efficiency.
• The Ministry of Education decides the frequency of disbursement – it may be quarterly, half-yearly, or yearly.
• Scheduled banks credit the subsidy directly to the borrower’s Education Loan account.
• Beneficiaries receive the subsidy only if the bank submits the claim correctly and on time. Failure to follow the process may delay or prevent subsidy payment.

To Conclude

The Central Sector Interest Subsidy (CSIS) Scheme helps make education more accessible, especially for students from economically weaker sections. The scheme provides an interest subsidy during the study period and for one year after course completion. This ensures that students can focus on their academics without the added burden of accumulating interest. Opt for Poonawalla Fincorp’s hassle-free Education Loan with competitive interest rates and quick approval for your higher education dreams.

Read Also: Understanding How Education Loan Works: Types, Benefits, and Process

FAQs

Who is responsible for applying for CSIS?

The lender of the Education Loan is responsible for applying for CSIS. No application shall be made by students. The lender has to verify the student’s eligibility and fill out the subsidy claim through the portal.

What is the maximum loan amount eligible for interest subsidy under the CSIS Scheme if my sanctioned loan is ₹15 Lakh?

Interest subsidy under the CSIS scheme is only provided for a maximum loan amount of ₹10 Lakh. If the sanctioned loan amount exceeds ₹10 Lakh, then you will get the interest subsidy benefit only up to ₹10 Lakh.

Are there any income criteria under this scheme?

Yes, the gross family income should be ₹4.50 Lakh per annum to avail this scheme. Otherwise, you will not qualify for an interest subsidy.

Where is the interest subsidy credited?

The interest subsidy under the CSIS scheme is credited directly to the student’s Education Loan account. Note that the Ministry of Education is not responsible for any delays or errors arising from the bank’s side.

Is it necessary to submit the income certificate every financial year?

The income certificate needs to be submitted only at the time of disbursing the first instalment of the Education Loan by the lender. There is no requirement to submit it every year.