CCEA nod for interest subsidy on education loans

The Centre has decided to provide full interest subsidy on education loans taken by students belonging to the economically weaker sections for pursuing technical and professional courses.

The interest subsidy, during the period of moratorium, will be available to those students with parental income limit of Rs 4.5 lakh a year. The scheme for interest subsidy was approved by the Cabinet Committee on Economic Affairs (CCEA) at a meeting here today.

Moratorium period

The moratorium period refers to the course period, plus one year or six months after the student gets a job. Under the scheme, the interest payable (for the moratorium period) by the student availing the educational loan scheme of the Indian Banks’ Association will be borne by the Government, the Union Home Minister, Mr P. Chidambaram, told reporters after the meeting here today.

Once the moratorium period is over, the interest on the outstanding loan would have to be paid by the student borrower according to its provisions.

Mr Chidambaram said that the interest subsidy scheme would benefit over five lakh students in pursuing higher education in technical and professional streams.

The number of education loans was 16 lakh as on March 31 and the outstanding amount was Rs 24,000 crore.

Source: The Hindu

Education loans spread ambit & tax benefits

If you are a student or parent of a student looking at taking an education loan and suspect that your choice of subject could stand in the way of your getting a loan, don’t give up hope. The finance minister is on your side. This year’s Budget includes a proposal to expand the definition of higher education in the country to cover a broader spectrum of courses. In addition, the FM, in one of his latest speeches, also proposed to widen the definition of relative vis-à-vis claiming tax deductions on education loans.

So what is the likely impact of the FM’s decision on your educational plans? SundayET keeps you abreast of all the changes, even as it tells you all that you need to keep in mind while applying for an education loan.

Measuring the impact
Fundamentally, experts say the existing guidelines regarding higher education favour those who are engaged in graduate or post-graduate studies in engineering, medicine, management, applied sciences and pure sciences, including mathematics and statistics.

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