Guide to Education Loan Subsidy Scheme for Students

Higher education is one of the biggest steps toward building a secure and successful future. However, the dream of studying in a reputed college or university often comes with financial stress. To ease this pressure, the Indian government offers Education Loan subsidy scheme. In this blog, we will walk you through the several types of subsidy scheme, benefits and how you can apply for it. Read on!

What is an Education Loan Subsidy Scheme

An Education Loan subsidy scheme is a government initiative that helps reduce the financial loan on students who come from economically weaker sections. When you apply for an Education Loan under such a scheme, the government pays the interest on your behalf during the moratorium period. You repay the principal amount once your course ends. This gives you the time and the breathing room to find a job before you begin the loan repayment.

Types of Education Loan Subsidy Scheme

Here are the different types of schemes:

Central Sector Interest Subsidy Scheme (CSIS)

It is one of the most widely used Education Loan support schemes. It helps you by covering the entire interest on your Education Loan. To qualify, your family income should be a minimum of ₹4 lakh per annum and must have taken a loan under the Indian Banks’ Association (IBA). The institution you choose must be approved by bodies like AICTE, NAAC, or other government-recognized authorities.

Dr. Ambedkar Central Sector Scheme of Interest Subsidy

You should consider this scheme if you come from OBC or EBC and wish to pursue higher education abroad. To be eligible for this scheme, your annual family income must be a minimum of ₹8 lakh per annum. This Education Loan scheme covers courses like doctoral and postgraduate.

With this scheme you can focus on your education without worrying about interest payments for the duration of your course.

State-specific Education Loan Subsidy Schemes

Several Indian states offer their own interest subsidy schemes to help local students manage Education Loan repayments. This scheme differs across states but is generally designed for those who come from a limited family income source. For instance, in Bihar, the student credit card scheme helps you finance your education with interest support based on your financial background. In Kerela, if your family earns a minimum of ₹9 lakh per annum then you might be eligible for an interest subsidy.

Therefore, if you’re applying for such support schemes, ensure to check with your state’s education department or welfare board to find the latest information and eligibility criteria.

Benefits of Opting for an Education Loan Scheme with Subsidy

Choosing an Education Loan scheme with a subsidy can offer you the following benefits:

• Easy Repayment: You begin repaying the loan only after completing your course, this gives you financial stability.
• Low Overall Loan Cost: You save on interest that is paid during the moratorium. This reduces your total repayment burden.
• Financial Support without Delay: You don’t need to postpone your dreams due to lack of funds, these schemes ensure timely support.
• Encouragement for Higher Education: These schemes motivate you to pursue quality education without any stress.

How to Apply for an Education Loan Subsidy Scheme

Applying for an Education Loan subsidy scheme involves a few simple steps:

Step 1: Check Your Eligibility

Before applying, ensure that:

• Your family income meets the scheme’s criteria.
• You have secured admission to a recognized institution.
• The course is eligible under the scheme.

Step 2: Apply for an Education Loan

Approach your preferred lender and submit the basic documents like admission proof, academic records, income certificate, identity proof, address proof and your loan application form.

Step 3: Fill the Subsidy Application

Once your loan gets approved, ask your lender for the subsidy form. Complete and submit it along with the supporting documents.

Step 4: Wait for Subsidy Confirmation

Your lender will forward your documents to the relevant authority. Once approved, the subsidy will automatically be credited against interest during the moratorium.

To Conclude

If you’re aiming for higher education but worried about the expenses, an Education Loan backed by a government subsidy scheme can offer the financial support you need. These schemes not only reduce your burden during the course period but also give you the confidence to study without any hassle. Before choosing a loan, explore your subsidy options and speak with your lender. This will help you make an informed decision and take a confident step towards your academic goals.

Frequently Asked Questions

1. What is an Education Loan Subsidy Scheme?

An Education Loan Subsidy Scheme is a government initiative where interest on your education loan is paid by the government during the moratorium period, easing the financial burden on students from economically weaker sections.

2. Do I need to repay the interest covered under the subsidy scheme?

No, the interest paid by the government during the moratorium period is a subsidy and does not need to be repaid.

3. Can I apply for both a state and central subsidy scheme?

In most cases, you can only benefit from one subsidy scheme at a time. It’s best to consult your lender or the respective scheme authority for clarification.