Education loan subsidy schemes in India(2021) - Everything you need to know

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Introduction

Students are facing multiple issues due to the rising cost of education. As parents and students are facing such an increase in education fees, they are turning to education loans. Education loans allow students to afford their expenses related to studies which includes their tuition fees, travel, food, rent, and all mandatory expenses which are required to complete the course whether in India or abroad. Sooner or later, the loan is repaid by the student after the completion of the course, and in many cases after getting a job when they opt for a moratorium period. But do you know that there are several subsidies and tax benefits offered on education loans by the banks? Yes, there are several such subsidies and schemes offered on education loans in order to make it more feasible for students who come from economically weaker sections of the society. This article will cover all the education loan subsidy schemes in India. Read the article till the end to gain a clear insight on the schemes, features, eligibility criteria, etc. 

Types of Education Loan Subsidy Schemes

There are a few education loan interest subsidy schemes introduced by the Government of India to support students belonging to specific social groups. These schemes majorly focus on the students coming from economically backward sections. 

  1. Central Sector Interest Subsidy Scheme for Education loans (CSIS)
  2. National Minorities Development & Finance Corporation (NMDFC)
  3. The National Safai Karamcharis Finance and Development Corporation (NSKFDC)
  4. National Scheduled Castes Finance And Development Corporation (NSCFDC)
  5. National Backward Classes Finance and Development Corporation (NBCFDC)
  6. Padho Pardesh Scheme of Interest Subsidy for education loans
  7. Dr. Ambedkar Central Sector Scheme of Interest Subsidy for Education loans

Padho Pardesh Scheme of Interest Subsidy and Dr. Ambedkar Central Sector Scheme of Interest Subsidy is more applicable for students who aspire to pursue their study abroad and the Central Sector Interest Subsidy Scheme is more applicable for students who aspire to pursue their study in India only. NMDFC, NSKFDC, NSCFDC, NBCFDC have a few education loan subsidy schemes in India applicable for both study in India and abroad as well. Read this article till the end to know about Education loan subsidy schemes in India which will be explained in the article in detail.

Central Sector Interest Subsidy Scheme for Education Loan

The Ministry of Human Resource Development was launched by the Central Sector Interest Subsidy Scheme (CSIS) in 2009 where the objective of the Government is to ensure that students coming from economically weaker sections get the opportunity to pursue higher education in India. Education loans without any collateral or third-party guarantee, the scheme provides a full interest subsidy during the moratorium period for students pursuing technical/ professional courses in India.

Objectives of the scheme

  1. an opportunity for students to pursue higher technical or professional courses in India
  2. benefits students from all categories of economically weaker section
  3. intends to provide affordable education for students
  4. to uplift the students from the grassroots level and amplify the number of qualified technicians and professionals in the country

Features of the scheme

  1. Restricted to the students enrolled in professional or technical courses only from NAAC or NBA accredited institutions
  2. Students who do not come under the ambit of NAAC or NBA would require approval from their respective regulatory body like for medical courses approval from the Medical Council of India is required, for law studies approval from Bar Council of India is required, etc. 
  3. As the scheme is applicable for students coming from economically weaker sections, therefore the annual gross parental income should not exceed more than 4.5 lakhs. 
  4. Student can avail this Government subsidy for education loan only once i.e. either for an undergraduate or postgraduate course or integrated course
  5. Upto 7.5 lakhs loans are provided without any collateral security or third-party guarantee 
  6. Interest charged during the moratorium period of the education loan is borne by the Government. Moratorium period is usually your course period plus 6 months or 1 year

Interest rates
Students are charged interest rates on the basis of BPLR/Base rate of the banks and as per the provisions for interest rates under IBA Model    Education Loan Scheme. 

National Minorities Development & Finance Corporation (NMDFC)

With the aim to provide concessional finance for families under the poverty line, the National Minorities Development & Finance Corporation (NMDFC) was incorporated on 30th September 1994. NMDFC is functioning under the administrative control of the Ministry of Minority Affairs, Government of India. The NMDFC is registered as a “ Company, not for profit” under Section 25 of the Companies Act 1956.

Objective

  1. To promote the economic and developmental activities for the welfare of the “Backward Sections” amongst the minorities 
  2. To encourage self-employment and other ventures for the benefits of minorities
  3. To grant loans and advances where the rate of interest may be determined from time to time in accordance with the guidelines or schemes prescribed by the Reserve Bank of India
  4. To extend loans to the students belonging to the Minorities for pursuing general or professional or technical education at graduate and higher level in India or abroad

Education loan Scheme of NMDFC

S.no

Parameters

Scheme Details

 1. 

Loan Amount Maximum

In India- 15 Lakhs

In Abroad- 20 Lakhs

 2.  

Rate of Interest for beneficiaries

3% per annum

 3.  

Rate of Interest for SCA

1% per annum

 4. 

Moratorium period

6 months after completion of the course or getting a job, whichever is earlier

 5. 

Repayment period for beneficiaries

5 years

 6.  

Repayment period for the SCA

5 years

The National Safai Karamcharis Finance and Development Corporation (NSKFDC)

NSKFCC schemes are implemented through State Channelizing Agencies (SCAs) proposed by the State Government/ Union Territory administrations, Regional Rural Banks (RRBs), and Nationalized Banks. The main motive of the schemes under NSKFDC is to uplift the socio-economic structure of the Safai Karamcharis, Scavengers, and their dependents across the country. 

Education Loan (EL) of NSKFDC 

S.no

Parameters

Scheme Details

 1. 

Loan Amount Maximum

In India- 10 Lakhs

In Abroad- 20 Lakhs

 2. 

Rate of Interest for beneficiaries

4% per annum

 3. 

Rate of Interest for SCA

1% per annum

 4. 

Repayment period

5 years after co-termination of course with the moratorium period of one year.

National Backward Classes Finance and Development Corporation (NBCFDC)

NBCFDC is a Government of India undertaking under the Ministry of Social Justice and Empowerment. Under this scheme, the main aim is to provide financial assistance for the members of Backward classes through SCAs in various states. 

Eligibility for Education Loan

  1. For students belonging to Backward Classes from rural areas, the annual family income should be less than 98,000/- and for students belonging to Backward Classes from urban areas, the annual family income should be less than 1,20,000/-.
  2. The loan is applicable only for meritorious students among the Backward Classes. 
  3. Students having less than 60% marks are not eligible for an Education Loan
  4. The courses and the Universities should be recognized by the Government of India
  5. The candidate should have procured admission for any professional courses approved by a pertinent authority such as AICTE, UGC, Medical Council of India, etc. 

S.no

Parameters

Scheme Details

 1. 

Loan Amount Maximum

In India- 10 Lakhs

In Abroad- 20 Lakhs

 2. 

Loan Margin

90% of the expenditure in India

85% of the expenditure inAbroad

 3. 

Rate of Interest for beneficiaries

4% per annum

 4. 

Rate of Interest for SCA

1.5% per annum

 5. 

Repayment period

The moratorium, besides co-termination with the course for which loan has been obtained by the students will have a further 6 months period for starting repayment after the completion of the course

National Scheduled Castes Finance And Development Corporation (NSCFDC)

National Scheduled Castes Finance And Development Corporation NDCFDC was setup by the Government of India on 8th February, 1989. Under Section 8 of the Companies Act, 2013, it was incorporated as a fully owned Government of India Company. (Previously Section 25 of the Companies Act, 1956).

S.no

Parameters

Scheme Details

 1. 

Loan Amount Maximum

In India -Upto  90% of the Course Fee or 10 Lakhs, whichever is less

In Abroad- Upto  90% of the Course Fee or 20 Lakhs, whichever is less

 2.  

Rate of Interest for beneficiaries

4% per annum

 3. 

Rate of Interest for SCA

1.5% per annum

 4. 

Repayment period

Up to 10 years (for loans up to Rs.7.50 lakh) & Up to 15 years (for loans above Rs7.50 lakh)

Conclusion

An education loan can help you pursue your dream career without compromising on the quality of education. Eligible students can avail education loan subsidy schemes in India which have been introduced for their benefit and can ease the financial burden from their shoulders. These schemes will give students a much-needed break in the time period between finishing their education and getting a job. We hope this article has answered all your questions on Education Loan Subsidy schemes in India. If you are facing any trouble in availing an education loan in India, connect with our team at VidyaLoans, and they will guide you through the entire process. 

About the organization- VidyaLoans is an organization which helps Indian students in India to secure a non-collateral loan from Government banks up to 7.5 Lakhs. We have a dedicated team of professionals who assist students with queries and guide them throughout the loan process. Our Team at Vidyaloans is committed to sanction the best loan option suiting the applicant's profile and needs, in a stipulated time frame.