In today’s extremely competitive world, pursuing higher education from top colleges has become a major goal for most Indian students. However, with the cost of education sky-rocketing, funding higher education on your own can burn a hole in your savings. Student loans are the quickest way to fulfill your dream, easing all your financial worries.
To ensure the availability of quick funds to aspiring students, the government of India has also launched education loan subsidy schemes for eligible students. One such scheme is the Central Sector Interest Subsidy Scheme, which was launched to bridge the gap between quality education and affordability of funds.
Here’s what you need to know about education loans for abroad studies by the Indian government – CSIS subsidy.
What is the Central Sector Interest Subsidy Scheme?
The Ministry of HRD launched the CSIS subsidy scheme, aiming to provide a full interest subsidy on education loans during the moratorium period. Students from the economically weaker sections with an annual family income of Rs. 4.5 lakhs can claim interest subsidies on student loans from the government. This scheme is available to students planning to take admission to technical or professional courses in India.
Access to quality education is the right of every student. Keeping this in mind, CSIS was launched with a vision that no student wishing to pursue higher education should not be denied the opportunity based on his financial status. CSIS aims to address the geographical imbalance in terms of the Gross Enrolment Ratio (GER) in higher educational institutions.
This student financing scheme is aimed to uplift the students from weaker sections of society and increase the number of qualified professionals in the country.
The student financing scheme is linked with the Model Education Loan Scheme of the Indian Bank’s Association and several top lending institutions are affiliated with this student loans scheme.
Here are the key features of availing of CSIS subsidy-
- The provision for subsidy on the interest rates is either available for a period of 12 months, post completion of the course, or six months after landing a job, whichever is early.
- You can avail of this subsidy during the moratorium period, which is the waiting period after which you have to start paying the EMIs on your education loan.
- Once this period is over, the student has to repay the interest on the loan as per the provisions of the education loan scheme.
- Under this scheme, you can avail a collateral-free loan of up to Rs. 7.5 lakhs.
- You can avail the benefits of CSIS subsidy only once, either for the undergraduate, postgraduate, or integrated course.
- You can claim the interest subsidy on a half-yearly or yearly basis depending upon the lending institution.
Before you decide to apply for an education loan for abroad studies by the Indian government, you must check the eligibility criteria to qualify for the subsidy scheme.
- The scheme is available only to Indian students.
- Any student loan taken under the IBA model education loan scheme.
- Students with an annual parental income of Rs. 4.5 lakhs.
- Under CSIS, students pursuing any technical or professional courses from any NAAC accredited institution in India can avail of the subsidy benefits.
- For professional and technical courses that aren’t covered under this scheme, you will have to get approval from the respective regulatory body.
- Interest subsidy is not available to students if they discontinue the course or are expelled from the institution.
- Moreover, if a student discontinues the course for a medical reason, the interest subsidy will still be available after relevant documents are submitted.
Rate of Interest
The interest rate available on the student loan differs for various lending institutions. It depends upon the base rate of individual financial institutions and the interest rate provisions under the IBA Model Education Loan scheme.
Moreover, this scheme offers a concession of 1% on the interest rate if the interest is paid during the repayment holiday or moratorium period.
Apart from CSIS, you can also apply for various other loan schemes offered by the government of India to help students pursue higher education in India. Some of the schemes are as follows-
National Backward Classes Finance and Development Corporation
Under this student financing scheme, students with an annual family income of Rs. 3 lakhs can avail of affordable loans. This scheme covers 90% of expenses for a loan of up to Rs. 15 lakhs for studies in India. While for students studying abroad, it covers 80% of loan expenses up to Rs. 20 lakhs.
Padho Pradesh Scheme
If you want to study abroad, you can apply for the Padho Pradesh Scheme which offers a 100% interest subsidy on loans for overseas studies to students of minority communities. This scheme is available to students pursuing higher education, who have secured admission to Masters, Ph.D., and M. Phil courses only. The benefits of subsidy are available for the moratorium period to students with annual family income not exceeding Rs. 6 lakhs.
Dr. Ambedkar Central Sector Scheme of Interest Subsidy
This is another interest subsidy scheme on education loans for abroad studies by the Indian government. The scheme is available to students of other backward classes as well as economically backward classes, with an annual income of Rs. 3 lakhs and Rs. 1 lakh respectively. Under this scheme, eligible students can avail of a subsidy on the interest amount charged on the loan during a financial year. The interest subsidy is only applicable for the course and moratorium period only.
The bottom line
When it comes to financing your higher education, an education loan helps you follow your dreams without having to worry about the expenses. And with the government launching such attractive schemes, you can easily get the education you deserve.
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