CSIS Subsidy in Education Loan: Eligibility, Calculation, Claim

The Government’s main goal is to ensure that financially disadvantaged students have equal access to higher education. In 2009, the Ministry of Human Resource Development (MHRD) introduced the “Central Sector Interest Subsidy Scheme” (CSIS) to achieve this objective. The CSIS subsidy in education loans offers complete interest subsidy on education loans during the moratorium period, without requiring collateral security or third-party guarantee, for students pursuing technical or professional courses in India. Eligibility for the scheme is determined by the student’s annual gross parental or family income, with those earning up to INR 4.5 lakh qualifying. 

Features of CSIS Subsidy in Education Loan

Key features of the CSIS subsidy scheme are as follows:

• Every Scheduled Bank of India has implemented the Scheme, which is connected to the present Model Educational Loan Scheme established by the IBA (Indian Banks Association). 
• It is specifically designed for students enrolled in professional or technical courses offered by institutions accredited by NAAC (National Assessment and Accreditation Council), NBA (National Board of Accreditation), Institutions of National Importance, or Central Funded Technical Institutions (CFTIs).
• The scheme is designed for students from Economically Weaker Sections (EWS), defined as those whose annual gross parental income does not exceed INR 4.50 lakh.
• Under this scheme, education loans are provided without requiring collateral security or third-party guarantee, with a maximum loan amount of INR 7.50 lakh.

Role of Nodal Bank

The implementation of the Scheme will be carried out by Canara Bank, which serves as the Nodal Bank for the Ministry of Human Resource Development. The details and procedures for implementation and monitoring will be determined in collaboration with this nationalised bank of India.

Also Read: Know All About the RBI Guidelines for Education Loan 2023

Objectives

CSIS is an exceptional scheme built upon the principle that financial poverty should not hinder any student’s aspiration to pursue higher education. It caters to economically disadvantaged students from all backgrounds, offering them the opportunity to pursue professional or technical courses within India. 

• The primary objective of this scheme is to make higher education more affordable and accessible.
• By targeting students at the grassroots level, CSIS aims to increase the number of skilled professionals and technicians in the country.
• Furthermore, the scheme also aims to address the existing disparities in the Gross Enrolment Ratio (GER) among Higher Educational Institutions, ensuring a more balanced distribution across different regions.

Eligibility Criteria

The eligibility criteria for CSIS subsidy in education loans are as follows:

• The candidate must have availed of student loans under the IBA Model Education Loan Scheme
• The student’s parents must have an income of up to INR 4.5 lakh per annum
• The candidate must get admission to a technical/professional course from NAAC-certified institutions or Institutions of National Importance or NBA-accredited academic organisations or Central Funded Technical Institutions (CFTIs). 
• For programmes which are not recognised by NBA or NAAC, students must get the approval of the respective regulatory organisations. For example, for Medical courses, Law programmes, and Nursing courses candidates must seek approval from the Medical Council of India, Bar Council of India, and Nursing Council of India, respectively.
• Students can avail of this subsidy only once, either in their UG, PG, or integrated courses. 
• A beneficiary who discontinues their programmes midway is not eligible for CSIS subsidy in education loans. 
• A student who is expelled from the institution on academic grounds or disciplinary accounts is not eligible for subsidy. However, if she/they/he is expelled on account of medical grounds the provision of interest subsidy remains intact. 

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Interest Rate and Interest Concession

The interest rates applied to the educational loan will be based on the BPLR/Base Rate of each bank and in accordance with the interest rate regulations specified in the IBA Model Educational Loan Scheme.

According to the IBA Scheme, borrowers are eligible for a 1% interest reduction if they make interest payments during the specified repayment holiday period. This 1% interest reduction will also be applicable under the Central Scheme of Interest Subsidy if the central government of the country disburses interest subsidy claims to the Banks semi-annually or annually.

Also Read: Interest Rate Parity: Definition, Calculator, Importance in Education Loan

Moratorium Period

The Government of India will cover the interest on the Educational Loan during the moratorium period, which includes the Course Period plus one year, as per the Scheme.

After the moratorium period ends, the student will be responsible for paying the interest on the remaining loan amount, following the guidelines of the current Model Educational Loan Scheme of Banks, which may be updated occasionally.

CSIS Subsidy Claim Disbursement

The Ministry of HRD, Government of India will determine whether the disbursement of interest subsidy claims to the loan offering banks will occur semi-annually or annually.

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