Education Loan Interest Subsidy Scheme : Final Opportunity

Sunday, September 06, 2015 by Mr.Banker 0 Comments A⁺ a^-

Tell me about the Interest Subsidy Scheme

To help the students from the weaker section of the society, Ministry of Human Resources Development (HRD) introduced this Central Scheme. The main objective of the government is to ensure nobody is denied professional education because he or she is poor. This comprehensive model education loan scheme is formulated by Indian Banks Association (IBA) for adoption by all banks.

What is its use to students?

Students who avail education load are worried about the interest that needs to be paid by them for the loan availed. Those students who are eligible for this scheme don’t have to pay the interest for the loan availed up to a maximum of 1 year after they complete the course. This interest will be compensated to the banks by the government.

What was the problem faced by students?

It is the duty of the concern banks to inform the eligible students about the scheme and submit the claim for subsidy to the government through the nodal agency portal. The nodal agency for implementing the scheme is Canara Bank. However, many banks have not informed the students; as a result eligible students were not provided with the benefit. In some cases, the interest subsidy was claimed for a year and missed for another year. Whatever it is, it is the students who are asked to pay more by the fault of the bankers.

Types of Interest Subsidy Scheme

There are two types of interest subsidy scheme,

Loans Sanctioned / Disbursed on or after April 1, 2009
Loans Sanctioned / Disbursed before April 1, 2009

Loans Sanctioned / Disbursed before April 1, 2009

Any loan taken before April 1, 2009 and the outstanding interest as on December 31, 2013 was reimbursed by the government to the respective loan accounts. This was announced by then Finance Minister in Parliament in February 2013. However this scheme is closed as of now.

Loans Sanctioned / Disbursed on or after April 1, 2009

For loans sanctioned on or after April 1, 2009, 100% interest subsidy for the Moratorium Period will be paid by government for eligible students to their loan accounts. Since loans are disbursed in instalments, the banks need to submit the interest subsidy claim yearly on behalf of the student.

What does it mean by Moratorium Period?

The period till which, interest subsidy will be provided by the banks. It is the duration of course plus 12 months or 6 months after getting employment whichever is earlier.

Illustration- 1

Peter availed loan in September 2010 and pursues 4 years Engineering Degree. He completes the course in May 2014. However he fails to get any job even after 1 year. How interest subsidy calculated for him?

Interest during duration of Course – From the date of disbursal to May 2014

Since he did not get job – From May 2014 to April 2015 he will get interest subsidy.

So in this case the Moratorium period is 4 years + 12 months

Illustration- 2

Aisha availed loan like Peter in September 2010 and pursued the same 4 year engineering degree course. She completes the course in May 2014 and gets placed immediately though campus. She joins the organisation in September 2014

Interest during duration of course - From the date of disbursal to May 2014

Since she got the job – she will get interest subsidy up to 6 months from the time she gets job. So she will get interest subsidy till February 2015.

The maximum period one can get interest subsidy after graduation is 12 months or 6 months after getting job, whichever is earlier.

Who are eligible?

The Annual Income of the parents from all sources should be less than Rs.4.5 Lakhs. Students need to provide income certificate from the authority designated by the state government.

Irrespective of community and religion all candidates within the ceiling specified are eligible for interest subsidy.

Students who discontinued the course are not eligible. However if the student discontinued due to medical reason, reimbursement will be available till his the period he studied.

A student can get only once. It means if he already got for UG, then he cannot avail for PG.

There is no limit within a family. All the children’s in the family are eligible separately.

One Time Window opportunity if you missed

As a one-time opportunity to students (actually bankers), Government of India has asked the nodal agency (Canara Bank) to open the portal for submission of unclaimed interest for the period from 2009-10 to 2013-14. The portal is expected to open in September 2015. As per the previous notification the last date for bankers to submit the claim is September 2015.

What should students do now?

Students can go to their respective banks and check whether the scheme is applied to them. If not submit a request to the concern manager asking him to include you. If the manager denies that no such facility is available, submit a copy of the IBA circular which will be provided at the end of the article. If the manager doesn’t accept further send a letter to the Regional Manager of the bank or the Head office of the bank citing the denial of your request. Either meet in person if the headquarters or regional office is nearby or send your complaint by registered post. Go to your concern branch at the earliest.