Home Strategy Finance What is Education Loan Subsidy & How it is Beneficial for Students?

What is Education Loan Subsidy & How it is Beneficial for Students?

Education Loan Subsidy: An Overview

Quality education plays a major role in shaping your career. But with the cost of education skyrocketing with each passing day, it has become extremely difficult for students, especially those belonging to the economically weaker sections of the society, to be able to afford a decent education. Keeping this in mind, the Govt. of India has introduced various schemes on education loan subsidies for eligible students.

The subsidies allow one to avail of an education loan with an interest subsidy for the moratorium period. 

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Education Loan: Features and Benefits 

An education loan comes with exclusive features that you can benefit from. Here is a look at the key benefits:

  • A high-value loan amount for both salaried and self-employed individuals
  • Flexi loan facility that helps bring down your monthly EMIs significantly
  • Flexible repayment tenors up to 20 years, as per the borrower’s convenience
  • Easy, hassle-free balance transfer facility to provide you with the best interest rates
  • Under Section 80(E) of the Income Tax Act 1961, interest paid on education loans can be claimed as tax exemption
  • Such loans not only cover your course fees but can also be used to fund other expenses, such as exam fees, hostel and travel expenses, library/laboratory fees, cost of uniforms, books and other essentials, as well as refundable fees if any
  • Some reputable lenders provide pre-approved offers to ease the process of availing education loans, making it less time-consuming for borrowers

Popular Education Loan Subsidy Schemes 

Central Scheme of Interest Subsidy (CSIS)

This education loan scheme is a boon for students belonging to the economically weaker section, having an annual family income of not more than Rs. 4.5 Lakh. It was introduced with a vision that no deserving candidates should be denied the right to education due to a lack of funds. Students can apply for the CSIS to finance studies in technical or professional courses. Besides, they can also take advantage of an additional moratorium period equivalent to the course period and 1 year after completion of up to 6 months after landing a job. 

Padho Pardesh Scheme 

Launched in 2013, the Padho Pardesh Scheme is designed for students with an annual family income of up to Rs.6 Lakhs. It offers the minor community an opportunity to pursue education abroad. Under the education loan scheme, eligible candidates can get a 100% interest subsidy on education loans.

Vidyalakshmi Scheme

The scheme sanctioned by the Govt. of India aims to help students from middle-class and lower-income families to pursue higher education without the fear of financial obstacles. 

Ambedkar Central Sector Scheme 

This particular scheme is for students belonging to backward and economically backward classes. Individuals can opt for it to pursue higher studies abroad. 

A Guide to Applying for an Education Loan 

The easiest way to apply for an education loan is online. You can do so by following these steps:

  • Visit the chosen lender’s online portal, enter your details to fill in the application form and submit the same
  • Furnish all necessary documents for verification
  • Wait for the lender to get in touch with you once you are done submitting the form
  • You can expect your loan application to get approved in less than 48 hours
  • Upon successful verification and approval, you will receive the loan amount within 4 working days

Education loans can help eligible students access a sizable amount of funds with no end-use restriction. One can make the most of these funds as and how they need to complete their academic courses without any financial constraint.

Frequently Asked Questions

Can I apply for a study loan for studying abroad?

You can apply for an education loan for abroad studies by meeting the eligibility criteria and completing the documentation procedure as stated by your lender.

How can determining education loan EMIs in advance help you?

Determining your monthly cash outflow towards loan repayment can help you plan your finances better. This ensures your financial stability in the long run. Thus, over the entire loan tenor, you have a clear idea of the monthly amount to be paid. An education loan calculator can come in handy in such situations. 

Does an education loan cover expenses of pursuing overseas studies?

Yes, an education loan for abroad covers all your additional expenses including travelling, accommodation and academic expenses. 

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