One of the government’s main priorities is to ensure that no student is missed the chance to learn because of the unavailability of finances. In 2009 a scheme named ‘Central Sector Interest Subsidy Scheme’ (CSIS) was initiated to meet this goal by the Ministry of Human Resource Development (MHRD) to increase interest subsidy for educational loans. During the moratorium on modern training loans without collateral protection and without third-party guarantee, the program offers full interest subsidies for education loan to aspirants of technical/professional training in India. The scheme makes students with annual parent/family gross income of up to Rs. 4.5 lakhs. Here’s all you need to know about the education loan interest subsidy scheme.
The objective of the scheme
CSIS is a unique initiative that focuses on the vision that if students are financially disadvantaged, they will not be able to study higher education. In order to provide affordable university education in the Indian market, this education loan interest subsidy scheme would help all economically weaker students in vocational or technical courses alone. The Scheme aims to boost the numbers of students from the grassroots level and increase the number of skilled professionals in the region. CSIS seeks to track the current regional disparity of Higher Educational Institutions with respect to the Gross Enrolment Ratio (GER).
Features of the scheme
The scheme is implemented by all scheduled Banks and is related to the current Indian Banks Association Model education loan interest subsidy scheme, limited to students enrolled only from NAAC approved Institutions or professional/technical programs accredited by NBA or national institutions or Centrally Funded Technical Institute (CFTIs). Technical establishments and programs under the authority of the NAAC or NBA need the approval of regulation in compliance with the relevant regulatory institution; consent for courses in medicine of the MHK, India for nursing courses, law board in India, etc. The education loan interest subsidy scheme extends to students of the Economic Poorer Groups, i.e., those whose gross parental income per annum is as high as Rs 4.5 lakhs. Just once for a benchmark, the post-graduate or blended course is the subsidy admissible. The scheme provides an interest subsidy for educational loans without protection and assurances from third parties and up to Rs 7.5 lakhs.
• IBA Model School Loan Scheme Education Loans.
• Students with Rs. 4.5 lakhs per annum of parental income.
• Professional/technical students only enrolled in NAAC approved institutions or professional/technical programs accredited to the NBA or NGOs or Centrally Funded Technical Institute (CFTIs). Those technical institutions/programs not subject to the NAAC or NBA require approval from the relevant regulatory authority, approval of the Medical Medical Council of India, Indian Nursing Council for Nursing Courses, the Indian Bar Council for Law, etc.
• Eligible for UG, PG- Also eligible for combined courses only for once (graduate + post-graduate).
interest subsidy for education loan for students who interrupt their midstream courses or who are excluded from the school for reasons of discipline or academia shall not be paid for under this Program.
The interest rates on the education loan are based on the BPLR/Base Rate of the different banks and on the IBA Model education loan interest subsidy scheme rates.
Concession of Interests
Under the IBA Scheme, if the interest is serviced during the time when the repayment holiday is stated for interest repayment under the interest subsidy for education loan scheme, a 1 percent interest concession is given for the loans. This 1% interest concession will be extended under the central scheme for interest subsidy for educational loans provided that, on a half-yearly or annual basis, the Government of India disburses interest grant claims to the Banks.
In the form of the scheme, the interest due for the moratorium on the educational loan is the Course Length plus the government of India’s one-year duration. Following the moratorium period, education loan subsidy in the balance of a loan outstanding is paid by the student, in compliance with and as may be amended from time to time under the terms of the new Model Educational Loan Scheme.
The advantages of the program extend with a parental income of up to Rs. 4.5 lakes a year to students belonging to economically vulnerable areas (from all sources). Evidence of revenue is required by the State Government’s approved Public Authority. The new arrangement would meet the needs of students belonging to socially disadvantaged classes with prescribed higher parental gross family income limits from all sources based on the economic index and not on the social context.
For the purpose of this education loan subsidy, the Ministry of HRD, Government of India has released an Advisory to each State Government asking them, on an economic index basis and not in a social sense, to appoint the required authorizations or authorities that are qualified to grant income certificates.
The banks shall enforce the scheme on the basis of state governments’ note of certification by the advisory committees of the District level (DLCS).
The student’s degree will be marked by his/her refund liabilities. Employers can classify loans through electronic tags.
The Scheme shall proceed via Canara Bank, which is the Ministry of Human Resource Development’s Nodal Bank. In consultation with the Canara Bank, applying and tracking strategies are finalized.
The Nodal Bank will be able to set-up an Interest Subsidy and Credit Guarantee dashboard with real-time details from banks on an institution’s/category/cursory accreditation/credit ranking, sanctions, grant disclosures and changes, loan refund, NPAs, and others.
Documents are required along with your application for the education loan interest subsidy scheme.
Original income certificate issued by the State/Union Territory Approved Officer under the scheme
- Interest Subsidy Agreement, to be executed and stamped by all borrowers as per the State Stamp Act *
- The institute’s initial bonafide student letter.
- Self-declaration on minority group membership
- Additional information whatever necessary
Individuals who have previously submitted interest subsidy scheme on education loan documents and obtained interest subsidy documents should not resubmit those documents. Students applying for the first time under the defined education loan interest subsidy scheme are expected to send, as applicable on or before 20 October’20, the aforementioned interest subsidy documents to the nearest Retail Loan Service Center to demand interest subsidies for the moratorium period from 1 April’19 to 31 March’20.
Eligibility for subsidy is as per the central sector scheme of interest subsidy on educational loans by MoHRD.*Conditions apply. Disbursement at the absolute discretion of MoHRD of interest subsidy.
The National Minorities Development and Finance Corporation (NMDFC) has an Individual Beneficiary Educational Loan Scheme introduced by State Channeling Agencies (SCAs). Under the Ministry of Social Justice and Empowerment, the National Safai Karamcharis Finance and Development Corporation (NSKFDC), the National Backward Classes Finance and Development Corporation (NBCFDC), the National Scheduled Castes Finance and Development Corporation (NSCFDC) and the National Handicap Finance and Development Corporation (NHFDC) also provide educational loans to the students of the Ministry of Social Justice and Empowerment of interest subsidy for education loan issued under the educational loan schemes of these four companies shall also be subsidized for the duration of the moratorium, in compliance with the terms and conditions of this Scheme, if the loans are for the pursuit of technical courses after the XII Class. The interest charged to NMDFC, NSKFDC, NBCFDC, NSCFDC, and NHFDC shall be paid directly to the respective Companies by the Government.