Many students are concerned about affording higher education. The good news is that many nationalised banks’ education loan programmes have enabled brilliant pupils to study overseas. Unfortunately, repaying student loans is another source of stress for many students. Thankfully, there are many Government Interest Subsidy Scheme Projects in India to help such students in need.
Interest Subsidy On Education Loans Under The Padho Pardesh Scheme For Abroad Studies
Who is it for?
Students from Muslim, Christian, Sikh, Buddhist, Jains, and Zoroastrian (Parsis) minority communities are eligible for this scheme. Students who qualify for this programme are relieved from paying interest during the moratorium time. After the moratorium period, the candidate must pay the outstanding interest and principal loan amount.
Eligibility Criteria
- The student should be accepted into accredited Master’s, PhD, and MPhil programmes overseas.
- The student should have obtained an overseas education loan from an Indian Banks Association member bank. All major public banks and a few notable* private banks are included.
- Students must apply for this interest subsidy during their first year. The banks will not accept new applications during the second year.
Income Cap & Required documents
- The candidate’s gross annual income from all sources, including family, must not exceed Rs.6 lakh.
- Students must prove they are members of a minority group.
- The candidate must also provide income proof from a state/UT authority validating the income declared to the bank while applying for the Padho Pardesh interest subsidy scheme.
Yearly intake
Obtaining an interest subsidy under the Padho Pardesh scheme is not straightforward since there is a state and religion-based quota for students who can receive it. As an effect, the number of eligible pupils is limited.
The government has set aside 35% of seats for female candidates. In the absence of female applicants, male candidates are assigned these seats. Download the PDF file that shows the state-wise quota for the Padho Pardesh scheme from the official site.
For OBC or Other Backward Classes and EBC or Economically Backward Classes: Dr. Ambedkar Central Scheme of Interest subsidy On Education Loans
Who is it for?
This policy exempts meritorious students from paying interest during the moratorium period. After the moratorium period, the candidates must pay their education loan charges.
Eligibility Criteria
- Like the Padho Pardesh scheme, this one is reserved for IBA member banks’ overseas education loans. Students must be accepted into Masters, PhD, or M.Phil programmes overseas.
- No two family members (parents, siblings, spouses) can get the same interest subsidy.
- If you are from an OBC group, you must present an OBC certificate from the appropriate government together with your income certificate to the lending bank.
How Can Students Take Advantage of These Interest Subsidy Education Loan Scheme?
The primary benefit of these programmes is the interest-free college loan. These programmes also offer attention to meritorious kids from low-income families. In any event, these interest subsidy schemes only cover loans up to Rs.20 lakhs. Even if the loan amount is larger, the subsidy is limited to Rs.20 lakhs.
The above-mentioned programmes can assist qualified students to save Rs.6 lakhs on their total repaid loan amount.
Education Loan Subsidy: Why Is It Beneficial?
As stated above, only Rs.6 lakhs are subsidised for qualifying candidates, and the discount is only applied to loans up to Rs.20 lakh. The Padho Pardesh project had a budget of Rs.24 Cr for an annual intake of 400 students.
Mathematically, this clause can only pay a subsidy of Rs.6 lakhs to each of the 400 qualifying students. As you may have seen, most banks set an average interest rate of 10% on school loans. Using a 10% interest rate of Rs.20 lakhs and a three-year average moratorium duration, the accrued interest is Rs.6 lakhs, which is any qualifying candidate’s total subsidy under any government college loan interest subsidy programme. The next strategy helps two categories of applicants.
Application Process For Availing of A Loan Against Property For Both Schemes
The application process for both college loan interest subsidy programmes is non-specific. Following the receipt of an education loan, qualifying students must:
- After taking out an education loan, students must tell their banks that they are qualified for the interest subsidy programme.
- Most banks advise you to apply for an education loan via. a third party website. However, many students face issues when they use this site owing to long applications and service delays. This is why any finance staff never recommends students to do the same.
- An applicant’s chosen lending institution will then notify the subsidy scheme’s site of the eligible students. Students are chosen based on particular criteria.
One can now apply for a loan against a property or education loan using the official bank webpage instead of the interest subsidy programmes.
