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Interest Subsidy on education loan

Date: 05 Dec 2015   Posted By: Ns Rao     Group: Education    Category: India Educational Consultants   

Government had announced interest subsidy on education loan in the year 2009, wherein the interest charged by commercial banks on education loan is fully being subsidised by the government for four years degree course ( The principal loan amount in general works out to Rs. 3,75,000/ to 4,00,000/ lakh for full term )

Students who have obtained loan for the purpose in the year 2006, got their subsidy amount credited which is ranging between Rs. 19,000/ to Rs. 60,000/ Now, the question is why this big difference ?

(1) What is the calculation method of interest subsidy?

(2) If principal education loan of Rs, 4,00,000/ is sectioned and disbursed in the year 2006, what is the amount of interest subsidy the student is eligible ? ( A regular category of student/s and not SC / ST or any other special category )

(3) The interest subsidy is to be claimed by the lending bank to their respective noddle bank on behalf of the student/s. In case, if the lending bank has not claimed the interest subsidy, during the stipulated time frame, who is responsible for this loss to the student ?

These are some of the points which no lending bankers are replying satisfactorily, they simply reply that this is the amount that we have received from our H.O. And / or they say that the student/s is not eligible for interest subsidy at all. ( In case the bank have not claimed subsidy within stipulated time frame.)

Seeking clarification on interest subsidy on education loan? Know the calculation procedure and other information from here.

Author: Kailash Kumar    05 Dec 2015      Member Level: Platinum     Points : 2  (Rs 2)    Voting Score: 0

As per the guidelines available on the website of MHRD, the scheme is applicable from the academic year 2009-10 starting w.e.f. 01.04.2009. The loan amount starting from the academic year 2009-10 only will be considered for the interest subsidy scheme. Interest on any amount disbursed for the courses starting before the academic year 2009-10 will not be considered for the subsidy.

Author: Venkiteswaran.    06 Dec 2015      Member Level: Diamond     Points : 5  (Rs 5)    Voting Score: 0

Educationloan is disbursed in stages, mostly once at start of the academic year as demanded by the institution. The amount to be disbursed each year will be kept scheduled and the balance amount of demand has to be contribute by the student/parent.
So if it is a 4 year course and maximum loan sanctioned is 4 lakhs, the disbursement every year may be around 1 lakh roughly. (The actual may vary, but let us take it so for convenience now) So for a loan sanctioned and first disbursed in year 2006, the loan disbursed in year 2009 will be 1 lakh though by including that the total loan accumulated may be 4 lakhs. Hence for 2009 academic year the interest subsidy eligible for the interest proportionate to 1 lakh only.

Moreover there is a limit of annual family income of the student(max 4.5 lac. There are some non-eligible courses also. There was a last date for applying to the bank.

If the student has applied for the subsidy in the proper format given by the bank and submitted before the last date, then the bank is responsible to get the subsidy if otherwise everything is correct and eligible. I do not see any difficulty for the concerned bank to clearly tell the correct factual details.

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