New Delhi, August 27
Professional education in India is all set to shed its elitist tag, with the Cabinet Committee on Economic Affairs (CCEA) on Thursday approving the much-awaited interest-free education loan scheme for poor students, which was recently promised by the Prime Minister in his Independence Day address. With this announcement, Human Resource Development Ministry fulfilled one of the major promises made in its 100-day agenda.

To be serviced by Canara Bank from the current academic session, the scheme would enable students from economically weaker sections (families with annual incomes below Rs 4.5 lakh) to undertake technical or professional courses in any recognised institute without having to pay a penny as interest during the period of study.

This means the poor can finally study in IITs, IIMs, all recognized medical, dental and law colleges. The period of moratorium of the scheme would be the course period, plus one year or six months after getting a job, whichever is earlier. “This is not a caste-based scheme. Anyone who is eligible can apply,” HRD Minister Kapil Sibal today said.

About five lakh students are expected to benefit from the scheme conceived by Indian Banks Association, with the government saying today that the beneficiaries could be much more. “Every year, three lakh students are being added to the professional stream. We expect to cover several lakhs of students under the scheme,” Sibal said, clarifying that the government would accrue the interest at prime ending rate and Canara Bank would be paid one per cent service charge for offering the scheme.

As for applicability — subsidised loans would be valid for all technical and professional courses in India; interest subsidy will be linked to IBA’s existing Educational Loan Scheme and restricted to students in recognised professional courses (after Class XII) in institutions established by Acts of Parliament, recognized by statutory bodies, IIMs and other central government institutions.

During the moratorium, the government will pay the interest on the loan availed of by the student. Afterwards, the interest on the outstanding loan amount will be paid by the student in accordance with the provisions of the existing educational loan scheme. The same may be amended from time to time, said the government, adding that no guarantee on education loan was needed.

Importantly, the interest subsidy will be available to the eligible students only once, either for the first undergraduate degree course or the post graduate degrees/diplomas. It will also be admissible for combined undergraduate and postgraduate courses. The service won’t be available for those who discontinue the course midstream, due to any reason except on medical grounds, or for those who are expelled on disciplinary or academic grounds.

The government further subsidised during moratorium period the education loan schemes being offered by National Minorities Development and Finance Corporation and the National Safai Karamcharis Finance and Development Corporation.