Central Sector Interest Subsidy Scheme (CSIS) on Education Loans
A government-backed subsidy scheme to help reduce the debt burden of students with education loans.
The Indian Government started an interest subsidy scheme in 2009 to support students from economically weaker sections of society. It works by reducing their debt burden when they pursue higher education loans. It is known as the Central Sector Interest Subsidy (CSIS) Scheme since the Central Government takes care of the interest component arising during loan moratorium for eligible students who avail it. Once the moratorium ends, the students are liable to repay the loan.
Let us take a look at the CSIS scheme in some detail.
What is the Central Sector Interest Subsidy Scheme?
The Central Sector Interest Subsidy (CSIS) scheme, as the name suggests, is an interest subsidy scheme under which the Central Government pays off the interest component that arises during the moratorium phase of the study loan on behalf of students. Eligible students have to apply for the CSIS scheme to get its benefits.
For most higher education loans, the moratorium period includes the duration of the course and an additional time of 1 year after completion of the programme or 6 months after landing a job, whichever is earlier.
Most people don’t know that the interest component keeps accruing during this moratorium and some banks even ask you to repay the interest during this time. The CSIS scheme helps to prevent this as the government takes care of the loan interest, freeing the student to focus on studies. Students only have to pay the interest and the principal once the moratorium period ends after the aforementioned 1 year or 6 months.
What are the eligibility criteria for Central Sector Interest Subsidy Scheme?
Students are eligible to avail the CSIS scheme if these conditions are met:
- The education loan is taken under IBA Model Education Loan Scheme. Most Indian banks offer a loan scheme that is based on the IBA Model Education Loan Scheme and the students who avail one of these loan schemes can avail the benefits of CSIS if all other conditions are met
- The total income of the family is up to Rs. 4.5 lakh per annum. Students need to submit documents to show income proof
- The student is enrolled in technical or professional courses at NAAC or NBA accredited institutions. However, for courses that do not come under the scope of NAAC or NBA, students can get approval from the respective governing bodies such as the Medical Council of India for medical courses, Nursing Council of India for nursing courses and Bar Council of India for law courses to avail this scheme
- The scheme can only be availed once for undergraduate, post-graduate or integrated (undergraduate + postgraduate) courses in India
Students who stop pursuing studies or are expelled from the college/university cannot avail the benefits of this scheme. However, if the student stops pursuing studies for a medical reason and provides a satisfactory documentation to the Head of the educational institution, the CSIS benefits can still be availed.
Frequently Asked Questions about CSIS:
Q: Can I avail CSIS for studying abroad?
A: No. CSIS can only be availed for undergraduate, post-graduate or integrated (undergraduate + postgraduate) courses in India.
Q: I am eligible for CSIS. How can I get the benefits of the Central Sector Interest Subsidy Scheme?
A: All eligible students are not automatically entitled to receive the benefits of CSIS. You have to apply for CSIS and submit documents including income-proof before being approved for the subsidy.
Once your application is approved, the Central Govt. will start repaying the interest accruing during the loan moratorium.
Q: I availed CSIS for an education loan for my undergraduate course. Can I avail it for my postgraduate course?
A: No. The scheme can only be availed once for undergraduate, post-graduate or integrated (undergraduate + postgraduate) courses in India. If you have availed it for an undergraduate course, you cannot avail it for any other education loan in the future.
Let us know if you have any more questions about the Central Sector Interest Subsidy (CSIS) scheme.
A Final Word
Now that you know about the Central Sector Interest Subsidy (CSIS) scheme on education loans, you may want to know which education loan option would be best suited for you. Please check our Education Loan page for details if you are interested.