Education loan scheme: Know all about Loan schemes and Criteria

13 Jun 2020 Read 195 Views

Wandered for hours and hours in the market, scrutinized and compared bank interest rates for availing an education loan to pursue higher studies? Confused in between choosing, either a government bank or a private bank, where the government banks and schemes are not hassle-free. Private banks favor power through connections and this is what crossed your mind, right? I agree with your opinion, and to understand the schemes and availing methods of obtaining an education loan, Let us dive in further into 3S.

Schemes, Sources & Subsidy 

A mutual fund can be utilized as a collateral source, for availing education, loan If your income slab is lower than the requisite for the loan, then mutual fund investment can compensate for the lower-income and also enhance your eligibility for a loan. For availing a loan against a mutual fund, an application must be filled by the mutual fund holder and submitted along with all the required important documents while applying for an education loan.

The loan amount to be sanctioned will be a percentage of the value of the mutual fund units held on the date of sanctioning the loan. Recurring deposit, saving account, SIP in mutual funds, are one amongst the saving modes of procuring the loan. 

Education Loan Scheme-

  • CGFSEL scheme means that the bank can finance up to 100% loan if the loan is up to the limit of Rs. 7,50,000. In this scheme, you can get a loan up to Rs 10 lakh for study in India and up to Rs 20 lakh for studying abroad. But, if you take a loan of more than Rs 7.5 lakh, the bank may ask for collateral for the loan amount. The bank may also ask you to deposit margin money and seek a third-party guarantee.

  •  VidyaLakshmi Portal, it helps a student in providing ease of access to a loan and also scholarships, which might help him to achieve greater heights in life.It provides various access to education loans, even in the remotest and rural areas. 

  • Central Government Scheme of Interest Subsidy on educational loans is provided for economically weaker sections of the society. In this the students must provide all the enlisted points:

  1. Admission must be secured in a recognized college of India.

  2. Gross income must not exceed 4.5 lakhs.

  3. The subsidy loan amount is offered up to Rs.7.50 Lakhs (even if the loan is more than Rs.7.50 Lakhs).

  4. An income of proof must be submitted.

  5. Scheme applicable must be mentioned and data must not be fake.

  6. Subsidies must be provided for the course and moratorium period only.

  7. Students are eligible for an interest subsidy only after the first undergraduate degree course or the postgraduate degree or diploma course in India.


Schemes provide subsidies on education loans for overseas studies to the students belonging to the minority communities.

  1. Admission for higher studies in abroad viz. Masters, M. Phil, and Ph.D. levels only are eligible.

  2. Minority community students must have an annual gross family income not exceeding Rs.6 lakh.

  3. Income certificates to be submitted must be legal, authentic, and verified.

  4. The subsidy is available for interest charged on the loan amount disbursed during a financial year

  5. Available for the course and moratorium period only

  6. The scheme is applicable for higher studies abroad.

  7. The students obtaining benefits under this scheme shall not be given an interest subsidy if he doesn't qualify as a member of Indian Citizenship during the tenure of the loan.

  • Dr. Ambedkar Central Sector Scheme of Interest Subsidy on Educational Loan for Overseas Studies for Other Backward Classes & Economically Backward Classes.

  1. Scheme to provide interest subsidy on educational loans for overseas studies for the students belonging to the other backward classes (OBCs) & economically backward classes (EBCs).

  2. Admission must be secured at a higher level or postgraduate level.

  3. OBC and EBC students with an annual gross family income should not exceed Rs.3 Lakh & Rs.1 Lakh respectively for the loan availed.

  4. The student has to submit income proof either of Form-16/ITR/certificate issued by authorized officers appointed by the respective State Governments. The subsidy is available for interest charged on the loan amount disbursed during a financial year

  5. Available for the course and moratorium period only.

  6. The scheme is applicable for pursuing higher studies in abroad.

  • Central Government Interest Subsidy Scheme (CSIS)

The economically weaker students who satisfy all the following parameters can avail for the interest subsidy:

  1. The scheme is applicable for inland studies.

  2. The student should secure admission after Class XII in any of NAAC accredited Institutions or Professional Technical Programmes accredited by NBA or (CFTIs) and Nursing Council of India for Nursing Courses, Bar Council of India for Law, etc.

  3. Under this scheme, education loans are availed without any collateral security or a third-party guarantee and are available up to a maximum extent of 7.50 lakh irrespective of the availed amount.

  4. Annual gross income should not exceed Rs.4.50 Lakh.

  5. The student should present the income certificate issued by Tehsildar and submit the same to the financial institute, where the loan is availed and also execution of the documents takes place as and when required.

  6. The interest subsidy is towards the interest charged in the loan account during the course and moratorium period only, which is dependent upon the interested candidate as and when he wants to pay.

Aadhar number is mandatory for applying, availing, claiming, receiving the disbursed amount for scheme or subsidy.

Bureaucracy Talks-

Bureaucracy is noticed even when banks charge a lesser interest rate for Ivy league institutes just because the brand name of the college will lead to security of repayment of education loan for the specified tenure. Such was the case of SBI loan sanctioned fraud of 2019, fake IDs were created to proceed with the documentation part. As the data suggests, As of now 126 students, who in the past had already received and fabricated fake loan sanction letters for rs. 40,000 to rs. 50,000. Just to fulfill the unmet loan targets, are we as a society trying to strip students of their virtue, or are we discriminating because money is worth more than life and quality education? "Seventy-six thousand people have committed this fraud", as per the data mentioned in Forbes. Till now three cases of such education loan fraud have surfaced, what about the ones that lurk behind the veil of money, power, and authority? 

Scheme serving statement-

Education is more precious than bureaucracy, services offered must be fair and just to all, not only to the ones offering high ticket size loans because their repayment seems promising? Ask yourselves if promoting literacy rate is a prominent concern or promoting fraud a noteworthy concern? And if this is the case, Lets go Vocal for Local for our Indian Ivy league institutes or any other colleges apart from Ivy league.

About the Author: Noorlen Kaur Bhatia | 4 Posts

Noorleen is an introvert bibliophile with a creative side. Apart from creative and content writing, she loves to paint her emotions over a canvas. She is a curious learner and keens on decoding logic behind everything she does

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