One of the major factors that students consider when researching higher education abroad is the cost of education. The rising cost of education, inflation, the falling value of the rupee, and the increase in interest rate as a result of repo rate hikes has further pushed students to look for smart ways to finance higher education abroad.

One of the best options to save costs on financing abroad higher education is to make use of government loan schemes that offer the lowest interest rates and interest subsidies. Below is a list of government education loan programmes and interest subsidy schemes that students who wish to study abroad can consider:

Education loan schemes 

National Backward Classes Finance and Development Corporation (NBCFDC)

NBCFDC is a non-profit organisation set up under the Ministry of Social Justice and Empowerment, Government of India to uplift the members of the backward classes living below double the poverty line. One of the best schemes by the organisation is an education loan to pursue technical and professional courses abroad (and also in India).

Students admitted to a graduate-level or above course with a family income of up to Rs 3 lakh are eligible under this scheme. The scheme will fund 85 per cent of the expenses subject to a maximum of Rs 20 lakh for abroad education. The remaining expenses, if any, will be borne by the student.

• The interest rate offered under the scheme – 
  • For boys – 4% p.a.
  • For girls – 3.5% p.a.
• Moratorium period – It is set at 5 years irrespective of the type and duration of the course. 
• Loan tenure – The maximum loan period for repayment is 10 years after the moratorium period ends. 

National Minorities Development and Finance Corporation (NMDFC)

A non-profit company under the Ministry of Minority Affairs to provide financial concessions to members of minority communities, living below double the poverty line. There are two education loan schemes depending on the income ceiling. 

• Students with a family income of up to Rs 1.20 lakh p.a. can apply for an education loan of up to Rs 30 lakh for abroad education at an interest rate of 3 per cent p.a. 
• Students with a household income of Rs 8 lakhs p.a. can apply for an education loan of up to Rs 30 lakh for abroad education at an interest rate of 8 per cent p.a. for males and 5 per cent p.a. for females. 
• Students who have taken admission to courses with high employability potential are given preference. 
• The total repayment period for the loan is 5 years after the moratorium period (course period + 6 months) expires. 

Government of Goa interest-free education loan scheme 

The objective of the scheme is to promote higher education by providing interest-free loans to the youth of Goa for higher education abroad. Any student (below the age of 30), who has been a resident of Goa for 15 years or more can apply for a loan to pursue higher education abroad.

Students with a family income of Rs 12 lakh per annum can apply for an education loan of Rs 16 lakh disbursed over two years. Eligible courses under this scheme are engineering, dentistry, medicine, pharmacy, architecture, finance, law, fine arts, home science, management, and computer science. 

Credit Guarantee Fund Scheme for Education Loans (CGFSEL)

This scheme is for students to get an education loan of up to Rs 7.5 lakh without any collateral or third-party guarantee. The credit risk guarantee fund scheme provides a guarantee on education loans given by banks under the Model Education Loan Scheme of the Indian Banks’ Association.

Students can apply for the loan under this scheme if they belong to the Economically Weaker Section (EWS) category, and the family income is less than Rs 4.5 lakh. Students are eligible under this scheme even if the loan amount they require is more than the amount stipulated in the same. 

Features of this scheme – 

1. Eligible students get a subsidy on the loan amount of up to Rs 7.5 lakh.
2. The subsidy is valid during the course period and the moratorium period only. 
3. Students can avail this subsidy only once in their lifetime. 
4. Candidates have to submit income proof. 
5. The lending institution can charge a maximum interest of 2% per annum above the base rate on loans under this scheme. 

Some other organisations under the Government of India providing similar education loan schemes at a lower cost are National Safai Karamcharis Finance and Development Corporation (NSKFDC), National Scheduled Castes Finance and Development Corporation (NSCFDC), National Handicapped Finance and Development Corporation (NHFDC), and National Scheduled Tribes Finance and Development Corporation (NSTFDC). 

Interest subsidy schemes 

The Government of India also launched interest subsidy schemes to help students manage their education loan debt. Under these schemes, the interest is borne by the government for the moratorium period. Some of the schemes providing this benefit are: 

Central Sector Interest Subsidy Scheme

The Ministry of Human Resource Development launched this scheme in 2009 to facilitate higher education financing for students belonging to financially weaker backgrounds. The interest subsidy scheme is applicable only for technical/professional courses in India. The scheme cannot be availed on loans for abroad education. 

Some features of the scheme: 

• The scheme provides a full interest subsidy, that is, the interest is waived off, during the moratorium period. After the period ends, the student will have to pay the interest amount on the loan amount. 
• The scheme is applicable only once, either for undergraduate or postgraduate courses. Integrated courses are also eligible under it. 
• Education loans up to Rs 7.5 lakh taken without collateral and third-party guarantee are eligible under the scheme. 
• The parental income must be up to Rs 4.5 lakh to avail of the scheme. 

Padho Pardesh Education Loan Interest Subsidy Scheme

Established in 2006, the scheme provides an interest subsidy to students belonging to economically weaker sections of notified minority communities to provide better higher education opportunities abroad and enhance their employability. 

Some features of the scheme: 

• Students enrolled in overseas educational studies at Master’s, or MPhil/PhD levels are eligible. 
• Students are eligible under the scheme only once, either for Master’s, MPhil, or PhD levels. 
• Students should apply for the benefits in the 1st year of their study. Applications received during second year of study or subsequent years are not accepted. 
• Total parental income or students with a job should not exceed Rs 6 lakh per year. 
• The interest is waived during the moratorium period. After the period ends, students will have to repay the interest amount on the outstanding loan amount. 
• Students should have enrolled in a course listed under the scheme. 

Dr. Ambedkar Central Sector Scheme of Interest Subsidy

Dr. Ambedkar Central Sector Scheme of Interest subsidy promotes educational advancements for students from Other Backward Classes (OBC) and Economically Backward Classes (EBC). The subsidy is on the interest payable for the period of moratorium on education loans for abroad students at Masters, MPhil, and PhD levels. 

Some features of the scheme: 

• Students applying for the interest subsidy should submit the OBC Caste certificate issued by the competent authority. 
• For OBC candidates, the total income brought home should not exceed the present Creamy Layer criteria. For EBC candidates, the income ceiling is Rs 2.50 lakhs per year. 
• For both categories, students need to submit the income certificate to determine the income ceiling. 
• Students should have enrolled in a course listed under the scheme. 

(The writer is the CEO and co-founder of GyanDhan)

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