How to apply for Interest Subsidy for Educational Loan?

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Students who have availed education loan from government-owned banks can submit a request to claim interest subsidy from respective banks from which they have availed educational loans. The officials have told that, almost all of the banks giving educational loans are part of the interest subsidy scheme.

What is the aim of the scheme?

Central Government has formulated this Scheme to provide interest Subsidy for the period of moratorium that is up to one year from the date of completion of the course on Educational Loans taken by students from Economically Weaker Sections from scheduled banks under the Educational Loan Scheme of the lndian Banks’ Association to pursue Technical or Professional Education studies in India.

What is moratorium period?

Period of moratorium is generally means a fixed period in a loan where accrued interest is not needed to serve immediately by the borrower. However, the interest may be added to principal or kept pending as interest receivable in the loan and the same will be collected later.
In educational loan moratorium period is Course Period plus one year or six months after getting job, whichever is earlier.

Who is eligible?

Students from Economically Weaker Sections (EWS) with a parental upper income limit of Rs.4.50 lacs per annum.

What courses are eligible for the scheme?

Approved technical/professional courses in India after class XII,
Courses by Educational Institutions established by Acts of Parliament
Courses by Other institutions recognized by the concerned statutory
Indian Institutes of Management (IIMs) and other institutions set up by the Central Government.

What is the applicable academic years?

This scheme shall be applicable in respect of disbursements made on or after 01st April 2009 and for the academic year 2009-10, irrespective of date of sanction. In case of loans sanctioned prior to 01.04.2009 and for the courses beginning prior to the academic year 2009-10, the interest subsidy is available only to the extent of disbursement made after 1.4.2009

How much amount will be given as subsidy?
Full interest accrued during Moratorium period
What are the documents to be submitted by the student?

1. Subsidy Request Letter
2. Income Certificate
3. Latest Performance Reports (Not mandatory)

Download the sample request letter format here

You can get to your bank before filling it up as some of the banks have their own format for the request letter.

Where can I get Income Certificate?

As per scheme, the income documents of parents will be certified by designated authority/ authorities appointed by District Level Consultative Committee (DLCC) at the district / sub – district / Block etc. level.
Usually it will be Tahsildar or Deputy Tahsildar level officials. Contact your bank branch to know the exact details.

How is the amount is disbursed?

The disbursement of interest subsidy claims to the Banks directly by Ministly of HRD, Govt. of lndia on yearly or half yearly basis.

We hope all of your queries regarding Interest Subsidy to Educational Loans would have been answered. If you have any more questions ask them in the comments below we shall reply to all of the questions without fail.

Share the video with your friends to create awareness about the scheme.

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