How To Check Education Loan Subsidy Status?
Education Loan – Subsidies and CGFSEL
|CENTRAL GOVERNMENT INTEREST SUBSIDY SCHEME:
The Ministry of HRD, GOI has launched a scheme of Interest Subsidy on educational loans for economically weaker sections of the society. The students who satisfy all the following parameters would only be eligible for the interest subsidy:
The scheme is applicable for inland studies only. The student should secure admission after Class XII in any of the professional/technical courses approved by NAAC accredited Institutions or Professional Technical Programmes accredited by NBA or Institutions of National Importance or Central Funded Technical Institutions (CFTIs). Those Professional Institutions /Programmes, which do not come under the ambit of NAAC or NBA, would require approval of the respective regulatory body viz, approval of Medical Council of India for Medical Courses, Nursing Council of India for Nursing Courses, Bar Council of India for Law etc. Only those education loans are eligible which are sanctioned without any collateral security or third-party guarantee. Subsidy is available up to a maximum amount of Rs.10.00 lakh irrespective of the sanction amount from academic session starting from 01.04.2022. Annual gross parental/ family income from all sources should not exceed Rs.4.50 Lakh. To Avail the benefit of Government Subsidy schemes, Income certificate/proof from the designated officials of the respective states/Competent Authority is mandatory before sanctioning of the loan and applicant need to submit the same to the branch from where the loan is availed and also execute the documents as required. (Ref: IBA model Scheme 2021 Page no.6) Aadhaar no. is mandatory for claiming the subsidy.
The interest subsidy is towards the interest charged in the loan account during the course and moratorium period only. As the scheme is on-going basis, it is advisable that all the branches may collect the income certificate (for parental income up to Rs.4.50 Lakh per annum) at the time of submission of application form by the student. However, this should not be construed as a pre-condition for sanction of the loan. In other words, the loan has to be processed/sanctioned/disbursed as per norms and the student / parents should be advised that the claim for subsidy can only be lodged upon submission of income certificate.
|PADHO PARDESH SCHEME
Scheme to provide interest subsidy on educational loans for overseas studies for the students belonging to the minority communities. The students should satisfy all the following parameters:
Secured admission to higher studies abroad viz. Masters, M-Phil and Ph.D. levels only The student belongs to the Economically Weaker Section (EWS) of Minority communities with an annual gross family income not exceeding Rs.6.00 Lakh. The student has to submit income certificate issued by authorized officers appointed by the respective State Governments Eligible loan amount is up to Rs.20.00 Lakh only. Subsidy is available for interest charged on the loan amount disbursed during a financial year Available for course and moratorium period only The scheme is applicable for higher studies abroad. Note: As per recent communication received from IBA, the Scheme has been discontinued from FY 2022-23. The existing beneficiaries as on 31/03/2022 will continue to receive the interest subsidy during the moratorium period of the loan, subject to the compliance with the extant guidelines.
|ACSISOBCEBC SCHEME – DR. AMBEDKAR CENTRAL SECTOR SCHEME OF INTEREST SUBSIDY ON EDUCATIONAL LOAN FOR OVERSEAS STUDIES FOR OTHER BACKWARD CLASSES (OBCS) & ECONOMICALLY BACKWARD CLASSES (EBCS):
Scheme to provide interest subsidy on educational loans for overseas studies for the students belonging to the other backward classes (OBCs) & Economically Backward Classes (EBCs). The students should satisfy all the following parameters:
Secured admission to higher studies abroad viz. Masters, M. Phil and Ph.D. levels only The student belongs to the other backward classes (OBC) & economically backward classes (EBC) with an annual gross family income not exceeding Rs.8 Lakh & Rs.5.00 Lakhs respectively.
The student has to submit income proof either of Form-16/ITR/certificate issued by authorized officers appointed by the respective State Governments Eligible loan amount is up to Rs.20.00 Lakh only. Subsidy is available for interest charged on the loan amount disbursed during a financial year Available for course and moratorium period only The scheme is applicable for higher studies abroad
|CREDIT GUARANTEE FUND SCHEME FOR EDUCATIONAL LOANS (CGFSEL):
Government of India through Ministry of Human Resource Development, Department of Higher Education has notified Credit Guarantee Fund Scheme for Educational Loans (CGFSEL) vide Gazette Notification No.18-1/2013-U.5 (Vol. III) dated September 16, 2015. The objective of scheme is to provide guarantee for educational loans up to Rs.7.50 lakh (where no collateral security or third-party guarantee is available, and the applicable ROI is not more than External Benchmark Rate + 2%) National Credit Guarantee Trustee Company Ltd. (NCGTC) has been set-up by the Department of Financial Services, Ministry of Finance, Government of India to, inter alia, act as a common trustee company to manage and operate various credit guarantee trust funds.
|CREDIT GUARANTEE FUND SCHEME FOR SKILL DEVELOPMENT (CGFSSD):
Government of India through Ministry of Skill and Entrepreneurship has notified Credit Guarantee Fund Scheme for Skill Development (CGFSSD) vide Gazette Notification No.8-8/2014-SD&E (Vol. II) dated November 20, 2015. The objective of scheme is to provide guarantee for skill development loans up to Rs.1.50 lakh (where no collateral security and third-party guarantee is available, and the applicable ROI is not more than External Benchmark Rate + 1.50%) National Credit Guarantee Trustee Company Ltd. (NCGTC) has been set-up by the Department of Financial Services, Ministry of Finance, Government of India to, inter alia, act as a common trustee company to manage and operate various credit guarantee trust funds. Details of CGFSSD are available on website of NCGTC.
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What is inland studies?
INLAND STUDIES: Any courses leading to degree/diploma from reputed Institutes/Colleges/Universities for studies in India.
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How is education loan amount disbursed?
What is the Education Loan Disbursement Process? – After the loan sanction letter formalities are finalized, students relax in the misbelief that the hard part of the loan process is done. It is not. The next stage is equally, if not more, crucial. The disbursement of funds begins now, and it takes place in 3 steps
- Document Collection for Disbursement – The student arranges documents which act as proof of expenses. The amount the bank disburses hinges upon these documents. Therefore, it is critical to gather all the papers beforehand for incidentals that the bank has to cover. It avoids hassles of reimbursement. List of documents an applicant will need to submit for the student loan disbursal –
- University’s demand letter with a clear fee structure.
- In case the student has on-campus housing, the accommodation fee breakup. In case the student opts for off-campus stay, the rent agreement.
- An estimate of average living costs. It includes food, clothing, study material, gadgets, and so on.
- A guesstimate of miscellaneous charges. Always provide a clear breakdown encompassing health insurance, study aids, travel costs, and assorted incidentals.
- Education Loan Disbursement Letter – After the bank has evidence of expenses, it issues a study loan disbursement letter containing the final loan amount to be paid out to the applicant. The disbursement letter has to be signed before disbursal.
- Actual Disbursement – In the very last step of the education loan disbursement process, SBI pays the tuition fee by transferring the money directly to the university’s account. If the student chose on-campus housing, then that is sent too. For all other expenses such as off-campus accommodation charges and living costs, the funds are transferred to the student’s bank account. The student also has the option to get the funds loaded in a prepaid Forex card, provided that a clear breakdown is submitted upfront before disbursement.
How is money disbursed in an education loan?
Loan Disbursement Process: Government Bank Education Loans – All the episodes in the Loanflix web-series begin with an elaborate explanation of the two major types of education loans in India. Since government bank education loan is the most sought-after category of abroad study loans, let us try and understand the education loan disbursement process of secured education loans from government banks.
Government banks approve the education loan by issuing a sanction letter to the respective students. On receiving the sanction letter, students and their co-applicants are expected to visit their respective branches for creation of mortgage and signing of the education loan agreement. Once the agreement has been signed by the students and their co-applicants, the education loan is ready to be disbursed. However, the education loan disbursement process does not commence immediately after students have signed the education loan agreement. In the next step, students are required to submit an education loan disbursement letter to their lending bank stating the method of payment of the tuition fees preferred by their respective universities. At certain times, international universities, especially those in the USA, prefer the payment of tuition fees via third-party payment services like Flywire, Globalpay, etc. Similarly, many students who are in need of an early disbursement of loan to study in countries like Germany and Canada also prefer paying their living expenses through third-party payment services. For the purpose of getting their education loans transferred at the right time, students are required to mention details of the preferred payment method to their respective government banks in an education loan disbursement letter which has to be submitted to their respective government banks post signing the loan agreement. On receiving the education loan disbursement letter, most government banks disburse the tuition fee component of the abroad studies education loan either directly into the university’s tuition fee accounts or via a third-party payment software the credentials of which are to be mentioned in the education loan disbursement letter by the students. All students need to bear an important point in mind. Government banks do not transfer tuition fees for the entire course at one go. The money is released as and when students submit a request to the bank which is either yearly or semester-wise, whichever is the interval preferred by universities for tuition fee payment. Coming to the loan disbursement process one of the most important parts of the study abroad loan, the living expenses, most government banks transfer a student’s living expenses into a FOREX card. This FOREX card is issued to students to make it easier for them to withdraw money during their stay abroad. However, the FOREX card comes with an expiry date. Most banks, like the SBI and Bank of Baroda, lease this FOREX card to higher education aspirants for a period of three months. Students are expected to open a savings account in their country of stay within this time period. Their respective government banks will then disburse the education loan into this savings account, as per the directions mentioned by students in the education loan disbursement letter to the bank, for the remainder of their course of higher studies.
If you have any further doubts regarding the education loan disbursement process, do get in touch with the financial team of WeMakeScholars at the earliest possible instance. Our financial officers have a good grip on the topic and will be able to guide and assist you along the entire process. Read more on Can You Borrow Abroad Study Loan From Multiple Lenders?
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How long does it take for education loan to get sanctioned?
Basic Criteria for Educational Loan One of the most vital questions that you may wonder about is the amount of the educational loan. In general, you can get up to 4 lakhs of educational loan for higher studies without any collateral. Under education loan scheme, you can get a maximum of 15 lakhs for studies in India and more 25 lakhs for abroad studies.
- When you take education loan up to 4 lakhs, only the student and the parent have to sign the document and no collateral are necessary.
- However, if your loan amount is between 4 lakhs and 7.5 lakhs, you will have to provide third party guarantee to the bank.
- If the loan is above 7.5 lakhs, you will have to furnish the bank with collateral documents.
These are documents of any securities like NSC which the bank can sell to recover the amount if you fail to pay. How to apply for an educational loan for higher studies? In order to apply for an educational loan, you will have to prepare a number of documents beforehand.
The process goes as follows: Once you have determined to study at an institution and completed the process of admission, then you will have to concentrate on taking out an educational loan. Here are the documents which you should keep ready: You will have to provide a proof of admission to the selected recognized institution.
Proof of your consistently high academic performance along with the last mark sheet will need to be produced. The cut-off marks generally differ from general students to reserved students. You need to produce a schedule of fees. Depending on the amount that you are applying for, you will need to produce income statement, statement of assets and liabilities etc.
If you are going to study abroad, you need to produce your passport with a valid visa also. Your education loan will cover a number of things in addition to your tuition fees. These include hostel fees, exam fees, library fees, purchasing books, travel and other expenses for educational projects. After all the documents have been submitted and verified, you will have to appear for an interview.
It is best to know as much as possible about the course and the institutions that you have chosen. It takes around 15 days for an educational loan to be sanctioned. Once it has been sanctioned, you will get a promissory note which you will have to sign.
- In most cases, banks pay the institution directly and or to you.
- You should check the repayment clause.
- In most cases, repayment starts six months after the end of the course or as soon as you get a job – whichever comes earlier.
- Interest rates on educational loans depend on a number of factors.
- In general, they vary between 10% and 15% rates of interest.
You can claim tax deduction on the interest of the education loan. However, no deduction can be claimed on the principal. : Basic Criteria for Educational Loan
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What is a tuition fee subsidy?
A May 3, 2013, press release from the Department of Education The Department of Education (DepEd) has increased by 24% the number of slots for Grade 7 students availing of tuition fee subsidy in private schools under the education service contracting scheme (ESC).
- Secretary of Education Armin A.
- Luistro said that from 250,896 slots in school year 2012-2013, the ESC slots for Grade 7 students has been increased to 310,709 slots for school year 2013-2014.
- ESC is a scheme under the Government Assistance to Students and Teachers in Private Education (GASTPE) wherein the government subsidizes the tuition fee of students who enroll in private schools because public secondary schools cannot accommodate them anymore.
It is jointly implemented by DepEd and the Fund for Assistance to Private Education (FAPE). The subsidy is P6,500 per student in participating schools outside the National Capital Region and P10,000 per student in private schools in the NCR. “The decision to accommodate more students under the ESC is part of our continuing thrust to democratize access to quality education across the country,” added Luistro.
DepEd and FAPE determined the distribution of Grade 7 slots under the ESC based on public school shortage in the regions, schools division and municipalities. “We also put weight in the participating schools’ compliance to performance-based standards. Based on DepEd Memo No.65, series of 2013, the total number of Grade 7 slots comprises the actual number of grantees in the previous school year, which are fixed, plus additional slots in areas where there are serious overcrowding.
Another basis for the allocation of additional slots is the certification/accreditation ratings given to compliant schools as of March 18, 2013. deped.gov.ph
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