By TwoCircles.net Staff Correspondent,
New Delhi: The Central Government today decided to bear full interest during the period of moratorium on professioal education loans taken by students of the weaker sections. About 5 lakh students are expected to benefit from the scheme approved at the Cabinet meeting.
The Cabinet Committee on Economic Affairs on August 27 approved the scheme to provide full interest subsidy during the period of moratorium on loans taken by students belonging to economically weaker sections from scheduled banks under the Educational Loan Scheme of the Indian Banks’ Association, for pursuing any of the approved courses of studies in technical and professional streams, from recognized institutions in India.
The Prime Minister Dr Manmohan Singh in his Independence Day Speech on 15th August, 2009 had, among other things, announced that “a new scheme will be started to help students form economically weaker sections of society by way of reduced interest rate on their education loans. This will benefit about 5 lakh students in getting technical and professional education”. Earlier, the Finance Minister Pranab Mukherjee had made the same announcement in his budget speech 2009-2010.
“To enable students from economically weaker sections to access higher education, it is proposed to introduce a scheme to provide them full interest subsidy during the period of moratorium. It will cover loans taken by such students from scheduled banks to pursue any of the approved courses of study, in technical and professional stream, from recognised institutions in India. It is estimated that over 5 lakh students would avail of this benefit,” the Finance Minister had said.
Under the Scheme announced today, interest payable by the student availing of the Educational Loan Scheme of the Indian Banks’ Association for the period of moratorium (i.e. course period, plus one year or six months after getting job, whichever is earlier) as prescribed under the Educational Loan Scheme of the Indian Banks’ Association, shall be borne by the Government. After the period of moratorium is over, the interest on the outstanding loan amount shall be paid by the student, in accordance with the provisions of the existing Educational Loan Scheme and as may be amended from time to time.
The scheme would be applicable for studies in technical and professional courses in India. The interest subsidy shall be linked with the existing Educational Loan Scheme of IBA and restricted to students enrolled in recognized professional courses (after Class XII) in India in Educational Institutions established by Acts of Parliament, other Institutions recognized by the concerned Statutory Bodies, Indian Institutes of Management (IIMs) and other institutions set up by the Central Government.
The benefits under the Scheme would be applicable to those students belonging to economically weaker sections, with an annual income upper limit of Rs. 4.5 lakh per year.
The interest subsidy under the Scheme shall be available to the eligible students only once, either for the first undergraduate degree course or the post graduate degrees/diplomas. Interest subsidy shall, however, be admissible for combined undergraduate and post graduate courses.
Interest subsidy under this scheme shall not be available for those students who either discontinue the course midstream, due to any reason except on medical grounds, or for those who are expelled from the Institutions on disciplinary or academic grounds.
The Cabinet today also decided that interest on Educational Loans provided by the National Minorities Development & Finance Corporation (NMDFC) through State Channelizing Agencies (SCAs) and the national Safai Karamcharis Finance and Development Corporation under the Ministry of Social Justice and Empowerment shall also be subsidized for the period of moratorium.
The scheme shall be applicable from the academic year 2009-2010.
Modalities for implementation and monitoring mechanism shall be finalized in consultation with the Canara Bank. There would be a tag/marker on the degree of the student indicating his repayment liabilities.
The Scheme is expected to ease the financial burden on the target group of students to pursue technical and professional studies (after Class XII) in recognized institutions in India and thereby increase their access in these streams of education. This Scheme will benefit about 5 lakh students in getting technical and professional education.