The Government of India has decided to provide interest subvention on education loans, for all students admitted for undergraduate and the 5-year integrated degree programmes in IITs.
The scheme will be covering period of study plus one year of moratorium under the Vidyalaxmi Scheme.
Interest subvention is a kind of subsidy offered on interest rates. Students who secured admission into the undergraduate courses of IITs starting from the academic year 2016-17 are eligible to apply for loan under this scheme.
Interest subvention on the education loans are subject to the following condition:
1. Students whose household income does not exceed Rs. 9 lakh per annum are eligible to avail this facility.
2. This education loan will cover only the tuition fee payable by the student as per his eligibility. The portion of the tuition fee paid by the student from his own sources at the time of securing admission could be reimbursed from the overall loan.
3. The term of the loans sanctioned under this dispensation shall be 10 years.
4. After the expiry of the above period, the interest on the outstanding loan amount shall be paid by the student, at par with existing educational loan scheme of the banks.
5. There will be no collateral for sanction of the loan except the personal guarantee of the student (applicant) and the parent/guardian (co-applicant).
6. The subvention of interest on equated basis will be applicable for a maximum period of 5 years (which may include a one year moratorium).
7. The interest subvention is subject to the satisfactory performance of the student in the institution.
8. Payment of the interest subvention shall be from the internal accruals of the IIT.
However, a Central Sector Scheme to provide interest subsidy on educational loan is presently operational which provides full interest subsidy during the period of moratorium.