Indian government educational loan scheme for students

Looking for educational loan for your child? Will like to know about the endeavours of the Indian government in providing financial assistance to every deserving student of the country? Learn in this article the initiatives of the government in providing educational loan to students.

Ours is a developing country with a billion plus population. It is a country blessed with diversity in culture, tradition, language and a long history. We are blessed with natural resources, rivers, hills and a long coastline. The youth today are ready to take on the world with their dreams and aspirations. However, all these positive facts notwithstanding, a large chunk of the population in the country is still illiterate. In the case of the girl child the scenario is even worse. Even those who take to studies, a large number of them, especially girls, are forced to cut short on their education. It is unfortunate that even after so many years of independence we as a country have not been able to educate its population. Even in this modern age a big percentage of the population in our rural areas still don't have any access to primary education. Some of those who do somehow complete their schooling through government aid and grants are not able to continue further. Their dreams of higher education are simply cut short because of lack of money. They are deprived of the benefits of higher education just because they are not able to afford an education, the costs of which are rising every passing year.

Since independence, successive governments have been taking initiatives in providing education to its people. A number of government aided schools and institutions have been set up, where education is almost free. The government has been providing aid, grants and scholarships to the neediest and the meritorious. But these initiatives alone were not enough. It was then that the government of India took steps in starting up schemes that would be able to provide financial aid to every deserving student. These were momentous steps, as the vision was to see that no one is denied higher education just for the shortage of funds. These financial aid were to be delivered in the form of educational loans that made it possible for every student to continue his or her education.

Educational loan scheme

For setting up these loan schemes, the government of India came to an understanding with the Reserve bank of India and the Indian Banking Association (IBA). Necessary guidelines were framed in this regard. The RBI and the IBA in turn took over the initiative in taking the various banks in the country in confidence. Thus started the various educational loan schemes that are being dished out by every nationalized and private bank these days. The scheme ensures that loans are available for all kinds of educational courses in colleges and universities across the nation as well as abroad. Loans are also available for the vocational and professional courses. The University Grants Commission (UGC) too has taken initiatives in encouraging colleges and universities to provide as much financial aid as possible so that none is deprived of education. The commission has also been proactive in arranging funds through the educational loan schemes that are being offered by the various banking institutions. As on today almost every large bank in the country has joined this scheme and offering loans to deserving students at attractive rates.

Features of the educational loan scheme

  • Loans valued up to Rs 7.5 lakh for studies done in India and Rs 15 lakh to those going abroad for higher studies.
  • There will be no collateral or margin required for loan amounts of up to Rs 4 lakhs.
  • The loan repayment period could be anywhere between 5 to 7 years and there will be a provision for a grace period of one year after completion of one's education.

Tax benefit

There's a tax benefit too while repaying the loan. Under section 80E of the Income Tax Act, an amount of Rs 40,000/- is deductible every year, for both the interest and the principal part. The deduction is available for a maximum period of 8 years after the start of the loan repayment. However the course should be a full-time graduate or postgraduate course in any field or stream.

Find below a list of the banks that are offering educational loans to one and all.
  • Allahabad ank
  • Andhra bank
  • Bank of India
  • Bank f Baroda
  • Canara bank
  • Corporation bank
  • Canara bank
  • Dena bank
  • Indian bank
  • Punjab National Bank
  • State bank of India
  • And so many more like them

While taking help of such educational loans, parents should check the terms and conditions very thoroughly at the the time of application itself. In order to keep pace with the ever-changing capital market conditions, one should always keep track of the interest rates, eligibility conditions and the other rules and regulations.

Article by Dhruv
Dhruv is an electrical engineer by profession. Apart from liking his job, he has a special love for writing and has often dabbled in writing scripts for skits and short plays. As a Content Developer at ISC, Dhruv is having a whale of a time, showcasing his writing skills.

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