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New Delhi: The government may introduce its revised education loan scheme before the start of the festive season, two people aware of the matter said.
The education department is finalising the details of the scheme in collaboration with the finance ministry and it is likely to be implemented by October, the people cited above said.
Finance Minister Nirmala Sitharaman announced a new scheme offering loans up to Rs 10 lakh. In the annual budget presented in July, a provision has been made to give Rs 10 lakh to 100,000 students to pursue higher education.
Maximum collateral-free loan will be provided under the new scheme. An additional amount of Rs 7.5 lakh will be given to each student, who can further receive additional pension. 2.5 lakh via normal route.
There will be a benefit of 3% annual interest rate discount on the entire loan repayment, i.e. the interest rate on the loan will be reduced.
Currently, one can avail higher education loan up to Rs 10 lakh. For loans up to Rs 7.5 lakh, no collateral is required, while for loans above that, no collateral is required. Upto Rs 7.5 Lakh Such loans require a third party guarantee up to a limit of Rs 10 lakh. Under the new system, the student will have to provide security only for the amount that exceeds this limit. Rs 7.5 lakh
Current plan
The existing scheme provides interest subsidy, which is given during the moratorium period, i.e. one year after the loan tenure, on education loans taken from scheduled banks. The interest subsidy is credited directly to the student’s loan account.
Under interest subsidy, the government pays a part of the interest earned. Under interest subsidy, the interest rate will be reduced for the borrower.
In the new education loan scheme, the revised education loan benefit will not be provided to students from families who have availed any government scheme as the Centre wants to target economically weaker sections and first-time beneficiaries with this scheme, the first person mentioned above said.
“Many issues are still being worked out. For example, earlier education loans could only be availed by children from families whose parents’ income was less than Rs 10 lakh. “It’s Rs 4.5 lakh per annum,” the first person said.
“A decision on increasing the household income limit for availing loans will be taken soon,” the source said.
“Under the revised scheme, it is yet to be decided whether the interest subsidy will be applicable for the entire loan tenure or just for the first few years or for a shorter period. These things are being worked out,” the second source said.
Both the people cited above spoke on condition of anonymity. They said these details would be worked out over the next few months.
Meanwhile, the Department of Financial Services has alerted banks to provide loans to students without any collateral once the scheme is finalised.
The Credit Guarantee Fund, which is already operational under the earlier loan scheme, will continue under the new scheme as well, with additional central assistance to enable banks to disburse collateral-free loans up to Rs 10 lakh. Both the above persons said that Rs 7.5 lakh will be given to the students.
He said the Education Department would reimburse the amount given to banks for granting loans to students at interest rates lower than the market rate.
Spokespersons for the Finance Ministry and the Education Department did not respond to emailed queries.
“Union Budget 2024 demonstrates strong commitment to advancing education “A provision of Rs 1.20 lakh crore has been made for education, employment and skill development,” said Syed Sultan Ahmed, founder and chief learner, LXL Ideas.
“Launch of e-voucher scheme, which provides loan up to Rs 10 lakh.” “The Rs 10 lakh aid for students will go a long way in helping those who are facing financial hurdles in pursuing higher education,” Ahmed said.
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