Interest Subsidy Scheme for Education Loan Abroad

Education is the great equalizer but only when equally accessible. The walls separating privileged students from their less-advantaged peers become particularly formidable when considering international education. India's interest subsidy schemes for overseas education represent powerful tools for dismantling these barriers, particularly for OBC, EBC, and female students.

These initiatives recognize that financial constraints shouldn't determine who accesses global knowledge and opportunities. This article details how these equity-focused programs work, including the recent PM-Vidyalaxmi Scheme, and identifies the public and private financial institutions committed to making international education an inclusive reality.

About Interest Subsidy Scheme for Education Loan Abroad in India

India has introduced several interest subsidy schemes to support students aspiring to pursue higher education abroad, particularly those from economically weaker sections and specific communities. These initiatives aim to ease the financial burden of education loans.

One such scheme is the Dr. Ambedkar Central Sector Scheme of Interest Subsidy on Educational Loans for Overseas Studies for OBCs and EBCs. This scheme provides interest subsidies to students belonging to Other Backward Classes (OBCs) and Economically Backward Classes (EBCs) on educational loans for pursuing Masters, M.Phil., and Ph.D. programs abroad. Implemented through specific banks, it covers the interest payable during the moratorium period, which includes the course duration plus one year or six months after securing employment, whichever is earlier.

To qualify, OBC candidates must ensure that their total family income does not exceed the Creamy Layer threshold. In contrast, EBC candidates must have an annual family income of less than ₹5 lakh. Additionally, 50% of the financial assistance under this scheme is reserved for female candidates. Once the moratorium period ends, students are responsible for repaying the principal loan amount and any interest accrued. Students from minority communities can now access education loans at lower interest rates through the National Minorities Development & Finance Corporation (NMDFC).

In November 2024, the Indian government launched the PM-Vidyalaxmi Scheme, aimed at providing financial support to meritorious students and ensuring that financial constraints do not hinder access to quality higher education. Under this initiative, students admitted to Quality Higher Education Institutions (QHEIs) are eligible for collateral-free, guarantor-free loans covering full tuition fees and related educational expenses.

The scheme is administered digitally to maintain transparency and applies to institutions ranked under the National Institutional Ranking Framework (NIRF). For loans up to ₹7.5 lakh, the government provides a 75% credit guarantee of the outstanding default amount, encouraging banks to extend financial assistance under this scheme.

These initiatives collectively enhance access to international educational opportunities for Indian students by reducing financial barriers, thereby enabling them to pursue higher studies abroad without excessive financial stress. Now let’s see what kind of financial institutions in India offer these schemes for abroad education loans.

Financial Institutions that offer Interest Subsidy Scheme for Education Loan Abroad in India

The Interest Subsidy Scheme for Education Loan Abroad in India is offered by the following financial institutions:

1. Public Banks: Public Banks are Banks owned completely or partially by the government or a government agency. These banks offer education loans for students at a lower interest rate compared to other financial institutions. Some public banks in India include:

• State Bank of India
• Bank of Baroda
• Union Bank of India
• Punjab National Bank
• Bank of Maharashtra

2. Private Banks: Private Banks in India are banks owned by private individuals and groups. The abroad education loan amount offered by these banks is higher compared to public banks, they also offer additional perks and quicker loan approval. Some examples of private banks in India include:

• ICICI Bank
• Yes Bank
• IDFC First Bank
• Axis Bank
• Union Bank of India

This concludes our journey of understanding the Interest Subsidy Scheme for Education Loan Abroad in India. We saw the 2 schemes offered to students along with the kind of financial institutions that offer them.

For more information on how students can be eligible for these schemes or apply for them, students can reach out to abroad education loan experts near them. They can help students to understand their financial needs and offer personalized guidance for them to select the right one for them. They can also help students to get education loans without collateral if they’re struggling with collateral. So if you are a student planning to study abroad, reach out to an expert today!