Education Loan

Clarifications On Education Loan

Interest Subsidy Scheme

ELTF has been getting lot of enquirers from different part

of country seeking clarifications on 'Interest Subsidy
Scheme'.

There are two types of Interest Subsidy scheme for

students pursuing education in India.

1. First Scheme: For Loans granted / disbursed on or after

1st April 2009;

2. Second Scheme: For Loans granted / disbursed prior to

1st April 2009;

For Loans granted prior to 1.4.2009

In Feb 2014, Shri P Chidambaram (then Finance Minister) announced in

the Parliament that Government would reimburse 100% of the interest
outstanding as on 31.12.2013.

In this scheme, the students who availed loan prior to 1.4.2009 and who
paid the interest regularly, were in a disadvantageous position.

Since interest component was either nil or negligible, they did not get any
benefit of the interest subsidy. Similarly the students who closed the
education loan account before 31.12.2013 were also not eligible to get
interest subsidy.

Now this scheme is closed. Now the students cannot claim any interest
subsidy under this scheme. We are writing this only for information.

For Loans granted / disbursed on or after 1.4.2009

Government of India (Ministry of HRD) provides 100% interest subsidy for the eligible
students (as given earlier) for all the loans disbursed on or after 1.4.2009 during the
moratorium period.

If a loan has been sanctioned in 2007 for Rs.4 lakhs, to be disbursed @ Rs. 1 lakh
every year, the student is eligible for interest subsidy for the disbursements made in
2009 (if it is after 1.4.2009) and 2010.

Moratorium period is the study period + one year of six months after getting
employment whichever is earlier.

Interest subsidy is available for either Under Graduation or Post Graduation. From the
same family, brothers and sisters can avail the subsidy individually.

Students can avail the subsidy under only one scheme. Students who availed subsidy
under the second scheme (loans prior to 1.4.2009) are not eligible for subsidy under
the first scheme.

Problems faced by students

The students were required to submit the Income Certificate to the Bank to claim interest subsidy.
Since the Banks did not intimate many of the students in the early years, many eligible students did
not get interest subsidy.

It is the duty of the Banks to identify the eligible students and advise them to get the income
certificate. Also, it is the duty of the Bank to submit the claim through the Nodal Bank portal to the
Government of India within the time stipulated by the Government. Due to the fault of many of the
Branches, claims were not submitted in the past claiming interest subsidy by the Banks.

Even the students who got subsidy, received only a small portion of the interest debited by the Bank.
In many cases, Banks failed to submit the claim for few years. For example, banks might not have
claimed for 2009-10, but claimed for other years. Also, they might have claimed for 2009-10, 2010-11,
but might not have claimed for other eligible years during the moratorium period.

ELTF has been taking up this issue through supporting MPs in the Parliament and with the
Government for the past three years.

Government of India opens the portal as one time measure

In order to resolve the confusion of the past

disbursement of Interest Subsidy, the Government of
India (MHRD).

Accordingly, all the pending claims, unclaimed interest

subsidy for the period from 2009-10 to 2013-14 can now
be claimed by the Banks. Though the portal was
supposed to have been opened on 1st Sep 2015, due to
some technical reasons, it is likely to be opened next
week.

What students can do

If you have any education loan disbursement on or after 1.4.2009

(irrespective of your date of sanction say 2008 or 2007) and if you
are eligible for interest subsidy as given in the early paras, then
check your statement of account and also through the link given
above for the subsidy claimed by the Bank.

Please compare the actual interest debited by the Bank during that
Financial Year with the interest credited or not credited.

If the students find that either interest subsidy for that year has not
been claimed or shortly credited, please write a letter giving the
complete details and hand over to the Manager. Please request
the Manager to claim the interest subsidy, when the portal opens.

ELTF will not follow up individual cases. If the students

find any difficulty, they have to send complaint to
Chairman of the Bank and to Reserve Bank of India.
Please do not write to ELTF for individual issues. They
can personally meet the Regional Managers and sort out
the issues.

Source : http://www.eltf.in/2015/09/clarifications-oneducation-loan.html

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you !!!