Dr. Ambedkar Central Sector Scheme of Interest Subsidy for Educational Loans
Central Government-backed subsidy scheme to help reduce the debt burden on students from EBC and OBC categories
The Indian Government offers three main interest subsidy schemes on education loans to help reduce the debt burden on students who are pursuing higher education in India and abroad. Students who avail these interest subsidy schemes on education loans get respite from the debt burden during the loan moratorium since the Central Government pays off the interest during this time. Once the moratorium ends, the student repays the loan as per the repayment schedule of the education loan scheme.
The three interest subsidy schemes offered by the Indian govt. on education loans are:
- Central Sector Interest Subsidy (CSIS) Scheme
- Padho Pardesh Scheme of Interest Subsidy on Education Loans for Overseas Studies for Students Belonging to Minority Communities
- Dr. Ambedkar Central Sector Scheme of Interest Subsidy on Educational Loans for Overseas Studies for Other Backward Classes (OBCs) and Economically Backward Classes (EBCs)
We have already discussed the first two interest subsidy schemes in previous posts. Let’s take a look at the Dr. Ambedkar Central Sector Scheme of Interest Subsidy on Educational Loans for Overseas Studies for Students from OBC and EBC classes.
Dr. Ambedkar Central Sector Scheme of Interest Subsidy on Educational Loans for Overseas Studies for Other Backward Classes (OBCs) and Economically Backward Classes (EBCs)
Under this interest subsidy scheme, the Central Government pays off the interest during the repayment holiday period of an overseas education loan up to Rs. 20 lakh for postgraduate or higher education courses taken by eligible students belonging to Economically Backward Classes (EBC) or Other Backward Classes (OBC). [OBC categories defined as per the Central list of OBCs on the National Commission for Backward Classes (NCBC) website]
Please note that if the loan amount exceeds Rs. 20 lakh, the borrower has to pay the interest levied during moratorium on the amount in excess of Rs. 20 lakh.
Eligibility Criteria for the Dr. Ambedkar Central Sector Interest Subsidy Scheme
- Students belonging to Other Backward Classes (OBCs) and Economically Backward Classes (EBCs) who are pursuing Masters, MPhil or PhD level studies outside India are eligible
- Students must have availed an education loan based on the IBA model loan scheme from an Indian bank
- The gross yearly income of the student, if employed, or the total income of parents/guardians, if the student is unemployed, should be less than that specified for the creamy layer for OBC candidates and up to Rs. 2.5 lakh for EBC candidates
- Only the students who apply for it in their first year of studies can avail this interest subsidy
- Students who give up Indian citizenship or stop pursuing studies cannot avail the benefits of this scheme
- OBC students need to show their caste certificate issued by the competent authority to the lender and all applicants must show an income proof
Other Features of the Dr. Ambedkar Central Sector Interest Subsidy Scheme
- The approvals for this interest subsidy happen on first-come-first-served basis subject to the total budget available in the year for the scheme
- 50% of the approved applications are reserved for girl students
- This subsidy scheme falls under the Ministry of Social Justice & Empowerment which makes a region-wise allocation of funds at the start of each financial year
Eligible Courses for the Dr. Ambedkar Central Sector Interest Subsidy Scheme
- All courses in arts, humanities, social sciences, commerce, pure sciences and related fields
- All engineering and related courses such as marine engineering, petrochemical engineering, cryogenic engineering and so on
- All medical and veterinary courses as well as biomedical courses
- All food and agricultural courses such as plant pathology, horticulture, farm power & machinery, etc.
- IT courses including computer engineering, software, software quality assurance, artificial intelligence and so on
- MCA and MBA programs
How Much You Stand to Benefit?
Let’s look at this arithmetically. Suppose you take a loan of Rs. 20 lakh with an interest rate of 10.5% and a moratorium of 3 years. (Note: moratoriums usually are for the study period and an additional time which is the earlier of 1 year after passing out or 6 months after getting a job).
Now, the total interest you will accrue on the loan during the 3 years is either Rs. 6,98,465.25 (compound interest) or Rs. 6,30,000 (simple interest), both of which are nearly one-third of the loan amount.
If you apply and are approved for the Dr. Ambedkar Interest Subsidy Scheme, you don’t have to pay it. Applying does not mean you will get the subsidy but if you do, you stand to benefit significantly if you get approval.
A Final Word
Now that you know about the Dr. Ambedkar Central Sector Interest Subsidy Scheme on education loans for students of the OBC and EBC communities studying post-graduate courses abroad, you may want to know which education loan option would be best suited for you. Please check our Education Loans page for details of loans from different banks.