Education loan subsidy scheme finalised

NEW DELHI - To make education loans cheaper, a scheme was finalised Thursday to provide full interest subsidy on the loans taken by students with annual family income below Rs.4.5 lakh to pursue technical and professional courses.

The format for the scheme was finalised after a meeting between the Human Resource Development (HRD) ministry and the Indian Banks’ Association (IBA).

“The scheme provides interest subvention to students for the period of their course. The interest for this period will be paid to the banks by the government,” a ministry official said.

The Canara Bank was finalised as the nodal bank for IBA member banks to claim the subsidy amount reimbursement.

The scheme, which was approved by the cabinet last year, provides interest subvention to students with annual family income below Rs.4.5 lakh for the period till there course finishes.

It will provide interest subvention from the academic year 2009-10.

“The moratorium period also covers the time taken by the student to get a job, or one year, whichever comes first,” the official said.

The scheme will be valid for all loans from scheduled banks for pursuing courses in professional and technical streams from recognised institutes in India.

“All eligible students who wish to avail the benefits should approach the respective bank branch from where they availed of the education loan and complete the necessary formalities, including obtaining the certification in respect of annual family income from the competent authority at the local level,” the official said.

The individual student accounts will then be credited with the interest due on the loan for the academic year 2009-10 onwards, the official added.

The scheme is effective for all IBA-approved educational loans.