Education Loan Interest Subsidy Scheme ---how to claim

What is Education Loan Subsidy?

Education loans are an expensive affair, especially for economically disadvantageous students. These loans turn out to be a considerable burden for those students. Under such schemes, the Government or other authorities offer interest subsidy on the education loans as per the defined terms and conditions. Hence, the Government of India provides various Education loan subsidy schemes for different categories of students starting from minority, scheduled caste and tribe students, Economically weaker sections (EWS) among others. 

CSIS Subsidy

Last Updated 17th Mar 2021

• CSIS subsidy is an education loan subsidy scheme for economically disadvantaged students to pursue technical/professional courses approved by NBA or Institutions of National Importance or Central Funded Technical Institutions in India only.
• Education Loan Subsidy is provided for a cumulative sum of ₹ 7.50 Lakh without any collateral or third-party guarantee.
• Students whose parental/family income does not exceed ₹ 4.50 Lakh p.a are eligible to avail the benefits of this scheme.
• CSIS Interest Subsidy scheme can be availed only once either for undergraduate or postgraduate or combined courses.

Education Loan Interest Subsidy Scheme

Central Sector Interest Subsidy Scheme (CSIS) aims to provide funding opportunities to those sections of the country who are economically, socially, and politically disadvantaged.

• The scheme is available to the applicants whose yearly income doesn’t exceed ₹ 4.50 Lakh.
• The education loan is offered without any collateral and co-applicant for a maximum amount up to ₹ 7.50 Lakh.
• This scheme is available to pursue technical and professional courses in India approved by the concerned authorities such as NAAC, AICTE, etc.
• The Indian government will bear full interest subsidy during the moratorium period, i.e. Course period + one year.
• 1% interest concession is offered to the applicants if the interest is serviced within the specified time of the repayment holiday. This interest concession will come in the ambit of CSIS if the GoI disburses interest-bearing claims to the banks on a semi-annual or annual basis.
• The VidyaLakshmi portal provides you with all the details on the 126 loan schemes of 37 lenders. The interest rates vary; it depends on the lender and the plan, applicant opts.

All other Education Loan Interest Subsidy Schemes

• The National Minorities Development and Finance Corporation Education Loan Scheme

  This scheme is for individuals and is implemented through State Channelizing Agencies.

  • The Education loan upto ₹ 20 Lakh for courses in India and ₹ 30 Lakh for courses abroad is available at 3% p.a. under Credit Line-1.
  • Under credit line 2, the interest charged from boys is 8% p.a. & 5% p.a. from girls.
  • The Education Loan is issued for technical and professional courses with a maximum term of 5 years.
• The National Safai Karamcharis Finance and Development Corporation (NSKFDC) education loan
  • Education loan scheme is offered to the students hailing from Safai Karamcharis\Manual Scavengers community to pursue higher education in professional and technical programs such as Engineering, Medical, Management, Law, Tourism, Nursing, Journalism, etc.
  • 90% of the total expenditure is to be covered by NSKFDC.
  • The student bears the remaining 10%.
  • The rate charged from SCA is 1% p.a, from males 4% and female applicants get 0.5% p.a. rebate.
• National Backward Classes Finance and Development Corporation (NBCFDC)
  • The interest rate offered on Education loan for Boys is 4% p.a. and for Girls is 3.5% p.a.
  • Annual family income to be upto ₹ 3 Lakh.
  • State Channeling Agencies are expected to release at least 50% of overall funding to individuals with an annual family income of up to ₹ 1.50 Lakh.
  • 90% of the expenses are covered for studies in India and the quantum of loan upto ₹ 15 Lakh and 85% of the expenses for studies abroad upto a limit of ₹ 20 Lakh.
• National Scheduled Castes Finance and Development Corporation (NSCFDC)
  • For studies in India, you can take upto 90% of the fee as loan amount upto ₹ 10 Lakh.
  • For study abroad, you are eligible to take 90% of the course fee as loan amount with a limit of ₹ 20 Lakh.
  • Boys are offered an interest rate of 4% and girls 3.5% for both cases.
  • The loan can be repaid up to 10 years (loans below ₹ 7.50 Lakh) and 15 years for loans above ₹ 75 Lakh.
• National Handicapped Finance and Development Corporation (NHFDC)
  • Loan up to ₹ 10 Lakh for study in India and ₹ 20 Lakh for study abroad.
  • Any Indian Citizen with 40% or more disability is eligible to get an education loan under this scheme.
  • 50% of the total funds are reserved for girl candidates.
  • The interest rate offered to boys is 4%, and girls are offered at 3.5%.

Interest on education loans issued under the education loan programmes of these four companies (NSKFDC, NBCFDC, NSCFDC, and NHFDC ) shall also be subsidised for the moratorium period as provided for per the terms and conditions of this scheme, for the pursuit of technical courses after the Xll class. The Government shall pay the interest charged by NMDFC, NSKFDC, NBCFDC, NSCFDC and NHFDC directly to the respective companies.

Central Scheme of Interest Subsidy for Education Loan

Government's key priority is to ensure higher education is accessible to all so that no student since he or she is disadvantaged, is refused the opportunity to obtain higher education. In 2009, the Ministry of Human Resource Development (MHRD) initiated a programme called the 'Central Sector Interest Subsidy Scheme' (CSIS) to meet this goal.

The scheme offers full interest subsidies for the pursuit of technical/professional courses in India during the moratorium period on modern education loans without any collateral protection and third-party guarantee. Students whose parents or family income does not cross ₹ 4.50 Lakh p.a are eligible to avail this scheme. With the consent of the Cabinet on March 28th, 2018, the existing plan was amended. This subsidy benefit is available only once. Canara Bank, Bengaluru, is the appointed Nodal Bank for the scheme.

Objective of the Scheme

• CSIS is a unique interest subsidy program that revolves around the view that if a student is financially disadvantaged, he/she should not be denied the chance to seek higher education.
• The CSIS subsidy scheme is advantageous to students belonging to economically weaker sections to pursue professional/technical higher education courses in India only.
• The plan aims to elate students from the grass-root level and help the country to increase the number of trained technicians/professionals.
• The goal of the CSIS is to verify the existing geographical imbalance concerning Gross Enrolment Ratio (GER) in institutions of Higher Education.

Features of the Scheme

• The Scheme is implemented by all Scheduled Banks and is related to the current Indian Banks' Association Model Education Loan Scheme and is limited to students participating in professional/technical courses only from NAAC approved institutions or professional/technical programmes approved by the NBA or Nationally Significant Institutions or Central Funded Technical Institutions.
• Approval of the respective regulatory agency, approval of the Medical Council of India for Medical Courses, the Nursing Council of India (NCI) for Nursing Courses, the Bar Council of India for Law (BCI), etc., will be needed for those technical institutions/programmes which do not fall under the framework of NAAC or NBA.
• Students belonging to Economically Disadvantaged Groups, i.e. students whose annual gross parental income is up to ₹ 4.50 Lakh, are entitled to the programme.
• Subsidies are admissible for undergraduate or postgraduate or integrated courses only once.

According to the framework, Education Loan is given without any collateral protection and third party guarantee and for a maximum sum of ₹ 7.50 Lakh lakhs.

Eligibility Criteria to Avail Education Loan Subsidy

The following eligibility criteria to be fulfilled to avail Education Loan Subsidy:

• Education loans availed under the Indian Banks' Association (IBA) Model Education Loan Program.
• Students with total family earnings up to ₹ 4.50 Lakh.
• Students enrolled in professional/technical courses only from NAAC approved institutions, or NBA approved professional/technical programmes or CFTIs (Central Funded Technical Institutions or National Significance Institutions).
• Such Technical institutions/programmes that do not fall under the framework of NAAC or NBA will require approval by the respective regulatory agency viz, approval by the Medical Council of India (MCI) for Medical Courses, Nursing Council of India (NCI) for Nursing Courses, Bar Council of India (BCI) for Law, etc.
• Admissible only once for UG or PG or integrated courses (graduate + postgraduate).
• Interest subsidies under this programme shall not apply to students who have abandoned their studies midstream or are expelled for administrative or academic purposes.
• The interest subsidy will, however, be available only if the discontinuation were due to medical conditions for which it is appropriate to provide the necessary paperwork to the satisfaction of the education institute's head.

FAQs

✅How can I get a subsidy for education loan?

You can avail the subsidy for education loan by applying through the VidyaLaxmi Portal if you fulfil the prescribed eligibility criteria.

✅What is an interest subsidy scheme for an education loan?

In the interest subsidy scheme for an education loan, the Government provides interest subsidy (discount on the interest paid to the lender) for the eligible students planning to pursue technical and professional courses in India.

✅How is the subsidy calculated for education loans?

The interest rates paid on an education loan shall comply with the BPLR/Base Rate of the individual banks and the interest rate requirements of the IBA Model Education Loan Scheme. If the interest is serviced during the repayment holiday is stated for interest/repayment under the scheme, a 1% interest concession is given to the borrowers. The interest concession will be extended under the CSIS Subsidy System, provided that, on a semi-annual or annual basis, the Government of India disburses interest subsidy claims to banks.