Looking to Reduce Your Education Loan Interest Bill?

Look no further. This page contains all the information you will need on Government of India’s Interest Subsidy Schemes for Education Loans as offered by Bank of Baroda.

Government of India Interest Subsidy Schemes for Education Loans

Bank of Baroda allows its education loan applicants to apply for interest rate subsidies under three government schemes, viz.

  1. Central Scheme of Interest Subsidy for Education Loan,
  2. Padho Pardesh Scheme of Interest Subsidy for Education Loans, and
  3. Dr. Ambedkar Central Sector Scheme of Interest Subsidy for Educational Loans

We look at each in some detail.

Features of Central Scheme of Interest Subsidy for Education Loans

Why this Scheme?

Under this scheme, the Central Government takes care of any interest component that arises during the moratorium phase of an education loan taken by economically weaker students. The moratorium usually comprises of the duration of the course and an additional time of 12 months after completion of the programme or 6 months after landing a job, whichever is earlier.

Loan Amount

  • The maximum loan amount provided without any collateral security and third-party guarantee under this education scheme is Rs. 7.5 lakhs

Eligibility

  • The scheme is only available for economically weaker students who are pursuing technical or professional education studies in India. Economically weaker sections refer to families that earn a gross yearly income of Rs. 4.5 lakh or less
  • The students will have to show an income proof from such public authorities as are authorised by the state governments for certification of income status for this scheme and other central and state sector schemes
  • The scheme will be available to eligible students only once, either for their first undergraduate or post-graduate degree or diploma courses in the country. The subsidy shall also be applicable to integrated graduate and post-graduate courses
  • The scheme will not apply to students who stop pursuing studies, unless it was for a medical reason

Eligible Courses

  • The subsidy scheme will apply to courses from all accredited universities and institutions, and professional courses recognised by UGC, AICTE, etc.
  • The Interest Subsidy Scheme on Education Loans will also apply to courses in Central Institutes of Hotel Management and Catering Technology, State Institutes of Hotel Management and Catering Technology, Food Craft Institutes and Indian Institutes of Tourism and Travel Management that are administered by the Ministry of Tourism

Interest

  • The interest rates charged on the educational loan shall be as per the BPLR or Base Rate of Bank of Baroda and as per the provisions for interest rates under the IBA Model Educational Loan Scheme
  • Once the moratorium phase ends, the student will be liable to pay the interest on the outstanding loan amount in accordance with the provisions of the Educational Loan Scheme of Banks

Tags with Certificates

  • The certificates of students who have availed the scheme will have a tag or a marker that indicate their repayment liabilities to future employers

Other Features to Know

  • This is a comprehensive model educational loan scheme that was formulated by the Indian Banks’ Association (IBA) for adoption by all scheduled banks and aims at providing financial support from the banking system to deserving or meritorious students to pursue higher education in the country or abroad
  • The nodal bank for the scheme is Canara Bank

Features of Padho Pardesh Scheme of Interest Subsidy for Education Loans

Why this Scheme?

Under this scheme, the Central Government takes care of any interest component that arises during the moratorium phase of an overseas education loan for postgraduate or higher studies taken by students belonging to minority communities. The moratorium usually comprises of the duration of the course and an additional time of 12 months after completion of the programme or 6 months after landing a job, whichever is earlier.

Eligibility

  • The scheme is only available for students belonging to the minority communities who are pursuing Masters, MPhil or PhD level studies outside India. Minorities will refer to communities declared as such under section 2 (c) of National Commission for Minorities Act, 1992
  • The maximum number of students who can avail this subsidy in a year is capped at 400 for the whole country, with specific numbers assigned to each community in each state or union territory. However, reading details in the Ministry of Minority Affairs website shows that the number of approved students are usually in excess of the cap of 400
  • 35% of the approved applications will be assigned to girls. This means that of the 400 students who become eligible for the subsidy in a year, 140 will be earmarked for girls
  • The student (if employed) or his parents (if the student is unemployed) must have yearly income of Rs. 6 lakh or less
  • The scheme will be available to eligible students only if they apply for it in their first year of studies and not later
  • The payment of the benefit may be linked with the student’s Aadhaar Number if available
  • The benefit will be provided for only one course, either for post-graduate degree or higher degree levels
  • The scheme will not apply to students who stop pursuing studies, unless it was for a medical reason, or to those who give up Indian citizenship

Eligible Courses

  • Courses in arts, humanities, social sciences, commerce, pure sciences and related fields are eligible
  • All engineering and related courses such as marine engineering, petrochemical engineering, cryogenic engineering, etc. are eligible
  • All medical and veterinary courses as well as biomedical courses are eligible
  • Food and agricultural courses such as plant pathology, horticulture, farm power & machinery, etc. are eligible
  • IT courses, MCA and MBA courses are also eligible for the Padho Pardesh Interest Subsidy Scheme for loans taken from Bank of Baroda

Interest

  • The interest rates subsidy will be available for the moratorium period. This time usually comprises of the duration of the course and an additional time of 12 months after completion of the programme or 6 months after landing a job, whichever is earlier
  • Once the moratorium phase ends, the student will be liable to pay the interest on the outstanding loan amount in accordance with the provisions of the Educational Loan Scheme of Banks

Other Features to Know

  • The application process happens through a specific portal that is opened once every fiscal year for fresh applications by Bank of Baroda on the direction of Ministry of Minority Affairs
  • The portal may be opened every quarter for renewal cases
  • The list of eligible applications will be screened by a Selection Committee comprising of an Additional Secretary or Joint Secretary who is in-charge of the scheme and will Chair the committee, Joint Secretary and Financial Advisor or his or her representative, a representative of the Designated Bank and the Director or Deputy Secretary who handles the scheme
  • The nodal bank for the scheme is Canara Bank
  • The Padho Pardesh Scheme is linked to the comprehensive model educational loan scheme that was formulated by the Indian Banks’ Association (IBA) for adoption by all scheduled banks and aims at providing financial support from the banking system to deserving or meritorious students to pursue higher education in the country or abroad

Features of Dr. Ambedkar Central Sector Scheme of Interest Subsidy for Educational Loans

Why this Scheme?

Under this scheme, the Central Government takes care of any interest component that arises during the moratorium phase of an overseas education loan for postgraduate or higher education courses taken by students belonging to economically backward classes (EBCs) or other backward classes (OBCs). The moratorium usually comprises of the duration of the course and an additional time of 12 months after completion of the programme or 6 months after landing a job, whichever is earlier.

Loan Amount

  • The interest subsidy scheme is available on only up to Rs. 20 lakh of the loan amount. This means any interest accruing during the moratorium period on the loan amount in excess of Rs. 20 lakh will have to be paid for by the applicant. To take an example, if loan is for Rs. 30 lakh, interest on Rs. 20 lakh will be covered under the scheme and the interest on the remaining Rs. 10 lakh will be paid for by the applicant as per the terms of the Bank of Baroda loan

Eligibility

  • The scheme is only available for students belonging to economically backward classes (EBCs) or other backward classes (OBCs) who are pursuing Masters, MPhil and PhD Level education studies outside India.
  • For OBC candidates, gross yearly income of the student (if employed) or family (if student is unemployed) should be less than that specified for the creamy later
  • For EBC candidates, gross yearly income of the student (if employed) or family (if student is unemployed) should be Rs. 2.5 lakh or less
  • OBC students need to show their caste certificate issued by the competent authority to Bank of Baroda
  • The students will have to show an income proof such as Form 16, Income Tax Return, Audited Accounts or an income certificate from authorities of the state or UT governments
  • 50% of the approved applications will be earmarked for girls
  • The scheme will be available to eligible students only once, either for their postgraduate or higher degree and not for every one of them
  • The scheme will not apply to students who stop pursuing studies or to those who give up on Indian citizenship

Eligible Courses

  • Courses in arts, humanities, social sciences, commerce, pure sciences and related fields are eligible
  • All engineering and related courses such as marine engineering, petrochemical engineering, cryogenic engineering, robotics etc. are eligible
  • All medical and veterinary courses as well as biomedical courses are eligible
  • Food and agricultural courses such as plant pathology, horticulture, farm power & machinery, etc. are eligible
  • IT courses including computer engineering, software, software quality assurance, artificial intelligence, MCA and MBA courses are also eligible for the Dr. Ambedkar Central Sector Scheme of Interest Subsidy for educational loans taken from Bank of Baroda
  • Any course that has classes in India and abroad will be eligible if the degree is awarded by the foreign university

Interest

  • The interest rates subsidy will be available for the moratorium period. This time usually comprises of the duration of the course and an additional time of 12 months after completion of the programme or 6 months after landing a job, whichever is earlier
  • Once the moratorium phase ends, the student will be liable to pay the interest on the outstanding loan amount in accordance with the provisions of the Educational Loan Scheme of Banks

Other Features to Know

  • The list of OBC categories will be defined as per the Central list of OBCs which can be seen from the National Commission for Backward Classes (NCBC) website (www.ncbc.nic.in)
  • The approvals happen on first-come first-served basis which is further dependent on the total budget available in the year for the scheme
  • The scheme falls under the Ministry of Social Justice & Empowerment which shall make a region-wise allocation of funds at the start of each fiscal year
  • The list of eligible applications will be screened by a Selection Committee comprising of a Joint Secretary in-charge of Backward Classes, representatives from the Finance division, a representative of the Nodal Bank and the Director or Deputy Secretary who handles the scheme
  • The nodal bank for the scheme is Canara Bank
  • The Dr. Ambedkar Central Sector Scheme of Interest Subsidy is linked to the comprehensive model educational loan scheme that was formulated by the Indian Banks’ Association (IBA) for adoption by all scheduled banks and aims at providing financial support from the banking system to deserving or meritorious students to pursue higher education in the country or abroad

Reference Facts

  • Bank of Baroda Website: www.bankofbaroda.com and www.bobibanking.com (net banking)
  • Headquarters: Baroda (Vadodara), Gujarat
  • Education Loan Number: 846 700 1122 (to give a missed call)
  • Call Centre Toll-Free Number: 1800 223 344, 1800 102 4455