What is the Education Loan Interest Subsidy Scheme?

With the escalating cost of education, borrowing funds continues to be a viable option to finance a child’s higher studies. However, many people find it difficult to get a loan because of their financial capability. An education loan interest subsidy scheme aims to make credit affordable for economically weak and minority communities.

Under such schemes, eligible applicants can avail of an education loan in India at a subsidized rate of interest.

Interest Subsidy Schemes Available on Education Loans

The government of India has increased its efforts to enhance the quality and accessibility of education for students. Here are three major education loan interest subsidy schemes that eligible borrowers can avail of:

Interest Subsidy Schemes Purpose Eligibility
Dr. Ambedkar Central Sector Scheme Finance for higher education outside India Economically backward classes (EBC) and various other backward communities
Padho Pardesh Scheme Finance for higher education outside India Minority communities including Jains, Parsis, and others
Central Scheme of Interest Subsidy Finance for professional or technical courses Economically weaker sections of society

Dr. Ambedkar Central Sector Scheme of Interest Subsidy

This interest subsidy scheme on education loans is available for students belonging to economically backward classes who wish to continue their studies overseas. Some of its conditions are:

  • Candidate must be a Ph.D. or Masters student.
  • The annual income of the candidate’s family must be within Rs.1 lakh, in the case of EBC candidates. For OBC candidates, the family’s income must be Rs.3 lakh or less.
  • The Dr. Ambedkar Central Sector Scheme is also available with a moratorium period, which is the course duration, plus 1 year or 6 months after getting recruited for a job.

Padho Pardesh Scheme

This is an education loan interest subsidy scheme available for meritorious students from the minority communities and economically weaker sections, to help them study abroad. With Padho Pardesh, the Government of India aims to offer educational opportunities, and thus increase employability. Some of its conditions are:

  • Candidates from minority communities as declared in Section 2(c) of the National Commission for Minorities Act, 1992 are eligible for this benefit.
  • Only courses at Masters, M.Phil. or Ph.D. levels are covered under this education loan interest subsidy program.
  • Students cannot enjoy this subsidy benefit if they give up Indian citizenship while pursuing the course.
  • The annual family income of the borrower must not be above Rs.6 lakh.
  • This interest subsidy is available for the moratorium period comprising of the course duration and 6 months after becoming employed, or 1 year after the course period, whichever comes first.

Central Scheme of Interest Subsidy

This scheme is for students belonging from the society's economically weaker sections. Eligible candidates can avail of a subsidy on education loan interest rate to pursue any technical or professional course. They must be enrolled at an accredited institution in India for a graduate or post-graduate course. Some other conditions include:

  • The annual income of the applicant’s household must not be more than Rs.4.5 lakh.
  • Loans under this scheme can go up to a maximum of Rs.7.5 lakh.
  • The moratorium period to avail interest subsidy is the course period, plus 1 year.

Considering the increasing cost of education in India or abroad, you can avail of a loan against property for education and get a higher sanction. Bajaj Finserv offers credit at competitive interest rates with additional benefits that help you make repayments conveniently and give your child the best education possible.