Skip to content

Avail Education Loan Subsidy Schemes in India

One of the primary objectives of the Government of India is to ensure that nobody is denied the opportunity to pursue higher education. The education loan subsidy scheme envisages upgrading aspirants from the grassroots level and helping them excel in life.

The Ministry of HRD has launched a Central Government scheme of interest subsidy on educational loans directed to that section of society deprived of education. Under the scheme, students will receive interest on education loans during the moratorium period.

Education loan scheme under the IBA Model Education loan scheme aims to provide education loans to students hailing from weaker sections of society as subsidies and make sure every student can exercise the Right to Education. 

How to avail of education loan subsidy schemes?

The application procedure for an education loan subsidy scheme is simple. Here are a few steps that education loan applicants must follow to avail of education loan interest subsidies:

Step 1:  Keep necessary documents handy while applying for education loan subsidy schemes.

Step 2:  Visit your nearest branch of the lending institutions providing education loans.

Step 3: Fill in the ‘Education loan Subsidy Application Form’ with the necessary credentials.

Step 4: Submit the form along with the required documents.

Track the application by seeking a regular update on it and get the credit sanctioned to your account within the given period. 

What are the features of an education loan?

Education loan is a high-value quantum offered by leading financial institutions to help students achieve their academic dream and scale to newer heights in life. The education loan bestows multiple benefits:

  1. The interest rate on the loan amount will be in accordance with the interest rate covered under the Education loan subsidy scheme.
  2. Students pursuing technical/professional courses from institutions accredited by NAAC or NBA or institutions of national importance or pursuing studies from Centrally Funded Technical Institution (CFTIs) in India can apply for the scheme.
  3. The education loan subsidy scheme is directed to students whose annual gross family income is Rs.4.5 lakhs.
  4. The subsidy will be provided to aspiring students for the moratorium period only. the moratorium period is a course period plus one year borne by the Government of India.
  5. Students must provide income certificates based on an economic index from an appropriate and competent authority designated by the State government. 
  6. Education loan is offered without any collateral submission up to Rs.7.50 lakhs.

Furthermore, students who will discontinue the respective courses midstream or are expelled from institutions on academic or disciplinary grounds are not eligible for interest subsidy. Also, disbursement of the interest subsidy will be on a half-yearly or yearly basis as per the decision of the Ministry of HRD.

An education loan can reduce the strain on family savings and obliterates the need to liquidate one’s investment in fixed deposits and mutual funds. However, an education loan comes with stringent terms and cannot cover manifold expenses like tuition fees, study materials, accommodation, transportation, medical needs, etc. 

Education loans do not suffice to manage extra expenses while one aspires to study abroad or in the country itself. Therefore, in this case, one can opt for an alternative like a loan against property from leading NBFCs which will provide a high quantum to the borrower. However, borrowers need to adhere to the loan against property eligibility criteria before availing it.

Education loan on property caters to the financial need adequately and provide additional funding to the borrower. A loan against property is a secured loan; therefore, one can avail substantial loan amounts at an affordable interest rate.

Borrowers can check the various types of loans against property to aid their educational expenses as well.

Furthermore, borrowers can check the pre-approved offers extended by lending institutions on financial products like loans against property, home loans etc. These offers make the application process permissive. One can check the pre-approved offers by entering the name and contact details.

Overall, an education loan subsidy scheme backs the educational career of an individual. However, if the credit derived from an educational loan does not suffice, one can look for a high-value alternative like a loan against property.

Read Also: Better Ways to Fund Second Hand Car Loan