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Education loans in India for OBCs and EBCs

Deserving students from the various backward classes can enjoy special rates for education loans with the help of several schemes in India. Find out which schemes offer loans with attractive features for studies in India and abroad.

There are a few generous education loans that are offered by central government and state government schemes to students of the backward classes, to pursue higher studies. While there are several scholarships that can help towards financing your education if you belong to Other Backward Classes (OBCs) or Economically Backward Classes (EBCs), there are two education loan programs that you should know about.

NBCFDC's 'New Akanksha' loan

This loan at special rates is offered by the National Backward Classes Finance and Development Corporation or the NBCFDC. It goes towards technical or professional education, with the following features:

  • Only members of the backward classes are eligible for the loan. The applicant should also have obtained admission for professional courses that are approved by authorities like the UGC, Medical Council of India, and AICTE etc.
  • To be eligible for the loan, the family of the applicant should be below twice the poverty line. This means that the cutoff for the family income should be below ninety-eight thousand rupees per annum, in rural areas and one lakh twenty thousand in the cities.
  • The loan is available to cover tuition, admission fee, examination fee, stationary, books and instruments, boarding and lodging costs, insurance premium for the period of the loan. Students, who apply for education abroad, which the loan also covers, can also borrow travel expenses for their overseas journey.
  • The loan allowed under the scheme for higher education in India is capped at 90 percent of the costs of the student, to a maximum of rupees ten lakhs or a sum of two and a half lakh per annum.
  • For education abroad, the loan can go towards 85 percent of the education cost up to a maximum of rupees twenty lakhs lakh lump sum. The rest of the cost – i.e. 10 percent for an Indian education or 15% for a foreign education – must be covered by the student or SCA. SCA is the state channelizing agency that has the authority to implement loans to the beneficiaries.
  • The loan is available at a highly subsidised rate of 1% to the SCAs (which gets a 0.5% rebate if the loan is repaid timely). The SCA passes on a still-low interest of 4 percent per annum to the loan beneficiary. Girl students enjoy a special interest rate of 3.5% per annum.
  • The loan repayment period typically starts six months after completion of the course. The SCAs are responsible for tracking the loan and loan security.

Find details of the National Backward Classes Finance and Development Corporation sponsored New Akanksha loan.

Dr. Ambedkar Central Sector Scheme of Interest Subsidy for overseas studies for OBCs and EBCs

Students belonging to OBC and EBC categories can use this scheme to obtain a loan for overseas studies. The scheme is available to students who want to pursue education for Masters, M.Phil. or Ph.D., studies. The loan should be obtained from a scheduled bank to be eligible. An OBC Caste certificate must be deposited with the loan application.

There is also an income ceiling on the family income of the applicant. For OBC students, total household income (whether the student is employed or unemployed) should not be more than three lakh rupees per year. For EBC students, the income ceiling is rupees one lakh per annum. An income certificate should be provided by the student.

According to the scheme, the student will not have to pay interest during their studies and the rest of the moratorium period. The interest will be borne by the government. After the moratorium, the student shall begin the repayment, according to the loan agreement.

You can gather more information about the "Interest Subsidy for overseas studies for OBCs and EBCs.

Also, check the tax benefits under Section 80E of the Income Tax Act, 1961 that you will be eligible for when you start repaying the education loan.

The Ministry of Human Resource Development (MHRD) also offers education loan interest waiver under Central Scheme to provide Interest Subsidy (CSIS).

Article by Juana
Juana is a freelance writer, with years of experience, creating content for varied online portals. She holds a degree in English Literature and has worked as a teacher and as a soft skill trainer. An avid reader, she writes on a variety of topics ranging from health, travel, education and personality development.

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