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What is education loan subsidy?

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Ava White

Updated on March 21, 2026

What is education loan subsidy?

Central Government of India has launched an Interest Rate Subsidy scheme for Education Loan for students who belong to Economically Weaker Sections (EWS) of the society. The interest subsidy under the Scheme is available to the eligible students only once during his lifetime.

Furthermore, what is the scheme of education loan?

The scheme provides full interest subsidy during the moratorium period on modern education loans without any collateral security and third-party guarantee, for pursuing technical/professional courses in India. Students whose annual gross parental/ family income is up to Rs. 4.5 lakhs are eligible under the scheme.

Furthermore, can I get education loan without interest? There is no bank which will offer you education loan with zero percent interest rate. The total payable amount depends on the bank from which you take a loan. If you take a loan from SBI you can repay through EMIs. No penalty for early repayment and you can repay the loan until 15 years.

Also know, what is an interest subsidy on student loan?

Unsubsidized Loans – You, the student loan borrower, are responsible for interest that accrues at all times, including while you're in school. Subsidized Loans – The government may pay your interest during certain periods, such as when you're in school or in deferment. This benefit is called your interest subsidy.

Which bank has lowest interest rate on education loan?

For foreign studies, SBI grants educational loans of Rs. 20.00 Lakhs to Rs. 1.50 Crores through SBI Global Ed Vantage scheme. SBI also offers one of the lowest interest rates for education loan in India.

How do I get a government student loan?

To apply for a federal student loan, you must first complete and submit a Free Application for Federal Student Aid (FAFSA®) form. Based on the results of your FAFSA form, your college or career school will send you a financial aid offer, which may include federal student loans.

Which bank is best for educational loan?

Top education loans providers in India:
  • State Bank of India: State Bank of India offers a term loan to Indian students aspiring to continue their higher education abroad.
  • Axis Bank:
  • HDFC Bank:
  • Punjab National Bank:
  • Canara Bank:
  • IDBI Bank:
  • Bank of Baroda:
  • Avanse Financial Services:

What is the education loan interest rate?

9.85%

Can we take education loan?

Applicable for all: Any student who wants to study can apply for an education loan. Even the economically backward sections of the society can take education loans under the government-sponsored subsidy schemes such as 'Central Scheme to provide Interest subsidy' (CSIS). To study abroad, the loan amount goes up to Rs.

How can I get a education loan?

WHAT YOU NEED FOR AN EDUCATION LOAN
  1. Co-applicant is a must; can be parents, spouse, siblings.
  2. For loans between Rs 4-7.5 lakh third-party guarantor is required.
  3. For loans above Rs 7.5 lakh lender will ask for collateral.
  4. Repayment starts six months to one year after completion of the course.

Which bank is better for education loan?

The repayment tenure can be up to 10 years for loans up to INR 7.5 lakhs. For loans above INR 7.5 lakhs, it can extend up to 15 years. IDBI bank is the best bank for education loan to provide maximum academic expenses of any applicant.

How many days does it take for education loan to be approved?

After loan approval, it can take 2 weeks to 2 months for the lender to send the loan proceeds to the college or to you, as applicable. If the money is sent directly to the college, it typically takes 1-2 weeks before the remaining money is refunded to you.

Does education loan have interest?

The loan is repaid by the student. Generally, the repayment starts when the course is completed. During the course period, the bank charges simple interest rate on the loan. The payment of simple interest during the course period lessens the equated monthly instalment (EMI) burden on the student for future repayments.

Can I get 20 lakhs education loan?

You can get education loan upto 20 lakhs by getting into admission into best colleges of managament,engineering and medical in India. SBI has a scholarship loan programme where certain listed colleges in management,engineering and medical can avail loan without any collateral.

How is education loan interest calculated?

Step 1: Enter the principal amount for education loan that you wish to borrow from the lender. Step 2: In the next section, you need to input the interest rate that has been offered to you for the education loan. Step 3: In the last section, you will have to enter the loan tenure that you would like opt for.

How can I lower my education loan interest rate?

Here are 5 ways to lower your student loan interest rate.
  1. Refinance student loans. Student loan refinancing is the most effective way to lower your student loan interest rate.
  2. Have strong credit.
  3. Choose a variable rate loan.
  4. Choose the shortest repayment term.
  5. Apply with a co-signer.

What is the purpose of student loans?

A student loan is a type of loan designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses.

How can I get education loan from SBI online?

How to Apply for State Bank of India Education Loan
  1. Got to the Education Loan Platform of State Bank of India.
  2. Select the type of education loan you want to apply for.
  3. On the new page click on 'Apply Now Online' tab.
  4. Fill up the form with all the required information and submit it.

Who is eligible for student loan?

Your age. Your age may determine whether you can apply for certain student finance. There is no age limit for tuition fee loans or grants. To get a maintenance loan, you must be under the age of 60 on the first day of the first academic year of your course.

Is there any loan without interest?

While there's no such thing as an interest-free personal loan, it is possible to borrow money without paying any interest whatsoever. There are a number of truly interest-free loans available on the market that will help you borrow money cheaply or simply keep existing debt in check.

How can I get a student loan without my parents?

Generally, it's easy to get federal student loans without a cosigner, since there's no credit check involved. However, you do need to fill out the Free Application for Federal Student Aid (FAFSA) in order to apply for federal student loans so you can get financial aid.

What happens when you reach your student loan limit?

What happens if you reach your limit. If you reach your limit while you're still enrolled in school, there are two consequences: You're no longer eligible to take on any additional subsidized loans, but you can still borrow unsubsidized loans. You lose the interest subsidy on any loans you currently have.

How is interest subsidy calculated?

Government subsidy amount
The interest subsidy amount will not be the differential of interest amount (of actual and subsided rate) but will be the net present value (NPV) of the interest subsidy amount. It is to be calculated at a discount rate of 9 per cent.

What is the maximum subsidized student loan?

$57,500 for undergraduates—No more than $23,000 of this amount may be in subsidized loans. $138,500 for graduate or professional students—No more than $65,500 of this amount may be in subsidized loans. The graduate aggregate limit includes all federal loans received for undergraduate study.

What is a subsidized interest rate?

Interest rates: The current APR for undergraduate subsidized and unsubsidized loans is 4.45% (between July 2017 and July 2018), according to the U.S. Department of Education. The unsubsidized graduate degree loan interest rate is 6.00%.

Who is eligible for Repaye?

Who is eligible for the REPAYE program? All Direct Loan, Stafford, and Graduate PLUS borrowers are eligible for REPAYE, regardless of when the money was borrowed. Other types of student loans that are consolidated into Direct Loans can also qualify.

Does subsidized loans have interest?

Subsidized Loans are loans for undergraduate students with financial need, as determined by your cost of attendance minus expected family contribution and other financial aid (such as grants or scholarships). Subsidized Loans do not accrue interest while you are in school at least half-time or during deferment periods.

How can I get subsidy for education loan?

Education loan Interest Subsidy
  1. Interest paid on education loan for study can be claimed as deduction under Section 80E of the Income Tax Act, 1961.
  2. Central Government of India has launched an Interest Rate Subsidy scheme for Education Loan for students who belong to Economically Weaker Sections (EWS) of the society.

What does loss of subsidy mean?

Loss of Subsidy-The borrower has one or more Direct Stafford Subsidized (SULA Eligible) (D0) and/or Direct Consolidation Subsidized (SULA Eligible) (D9) loans that have lost interest subsidy. Reaffirmation(s)-The borrower has an active reaffirmation on one or more loans.

Is interest subsidy taxable?

Interest Subsidy is Capital Receipt, not chargeable to Income Tax; ITAT Kolkata [Read Order] The assessee treated the interest subsidy as a capital receipt by directly crediting it to reserves and surplus in the original return of income. Later on based on the assessment order framed u/s 143(3) of the Act dated 18.3.

What happens if education loan is not paid in India?

However, if you are unable to make education loan repayment, then the lender will send you and the guarantor notices and warnings. If you both fail to comply and start the repayment, then the lender will send notices to the guarantor again.

How can I get a loan without security?

How to get a personal loan without Salary Account/Slips or Income Tax Returns certificate
  1. Submit Form 16.
  2. Submit alternate source of income.
  3. Submit collateral.
  4. Have a relationship with the bank.
  5. Get a guarantor on board.

Do we need collateral for education loan?

Many banks and non-banking financial institutions provide education loans without for collateral which are known as unsecured loans. Since the risk factor associated with secured loans is lower, the interest rate of a secured loan may be lesser than unsecured loan. For loans up to Rs. 4 Lakh, no collateral is required.

Can I get education loan without ITR?

Yes, getting an education loan without IT Returns or Pay slips is possible. However, it will not be easy as according to the norms of the industry, you will need a co-applicant (usually a parent, guardian, and/or spouse) when applying for an education loan.

Can I get education loan if I have personal loan?

Yes, you can apply for a personal loan even if you have an education loan. To avail a personal loan, you must have a credit score of 750 and above. Your income must be more than 20,000 per month. You should have 2 years of total work experience with a minimum tenure of 1 year with your present employer.

Is it easy to get education loan?

Easily available: Education loans are widely and easily available. In fact, they are a priority product in all banks as per the RBI's guidelines. Varied loan amounts: Banks can offer loans anywhere between Rs. 2 lakhs and Rs.

How much interest are student loans?

The average student loan interest rate is 5.8% among all households with student debt. With a 5.8% interest rate on $30,000 of student loans, a borrower would pay about $9,600 in interest throughout 10 years.

What is margin money in education loan?

The margin money in terms of Education loan is the amount that is paid by the borrower while the rest of the amount is paid by the bank. RBI has agreed to consider the Model scheme prepared by IBA in the year 2001 which had a significant modification about the margin money to be paid.

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