Cabinet Committee on Economic Affairs (CCEA) has approved to continue Credit Guarantee Fund for Education Loans (CGFEL) and Central Sector Interest Subsidy (CSIS) Scheme. Central government will continue Education Loan Guarantee Scheme and education loan interest subsidy scheme from 2017-18 to 2019-20 with a total outlay of Rs. 6,600 crore. Accordingly, govt. will provide education loans to around 10 lakh students from 2017-20.
Central govt. has raised the upper limit for education loans to Rs. 7.5 lakh. This will ensure quality education to the students. Moreover, govt. will open a dedicated portal to easily provide education loans.
CGFEL and CSIS Schemes provide education loans to the students with full interest subsidy and without any third party guarantee.
Credit Guarantee and Interest Subsidy for Education Loans – Modifications
CCEA approves the following modifications in CGFEL and CSIS Schemes to provide education loans with interest subsidy:-
- The upper limit of the loan amount is now fixed at Rs. 7.5 lakhs so that more students can take benefits of these schemes. This decision comes after taking into consideration that the average education loan size is Rs. 4 lakh.
- Moratorium Period (Time period for which candidates are not required to make repayment during loan term) is now course period plus one year.
- Candidates can now take loans for pursuing professional or technical courses from NAAC / NBA accredited Institutions / National Institutions / Central Funded Technical Institutions (CFTIs). However, this condition is not applicable to the previously taken / current loans.
- Govt. will set up a dedicated dashboard to properly monitor this scheme.
Coverage – The restructuring of CGFEL and CSIS Schemes will increase the coverage area of loans upto 20%. With these proposed modifications, the number of education loans are expected to rise to 3.3 lakhs which are currently 2.78 lakhs. The primary objective is to make quality education affordable for all through education loan guarantee scheme and education loan interest subsidy scheme.
Central Sector Interest Subsidy (CSIS) Scheme
Education Loan Interest Subsidy Scheme was launched on 1 April 2009. Under this CSIS Scheme, govt. provides full interest subsidy for education loans from Scheduled banks under Model Education Loan Scheme of Indian Banks Association. These loans covers a period of course duration + 1 year.
All the students whose parents annual income from all sources is less than Rs. 4.5 lakh are eligible. In addition to this, these loans covers all the professional / technical courses in India.
Govt. disburses these education loans with interest subsidy without any collateral security and 3rd party guarantee. Till now, govt. has already disbursed Rs. 9,408.52 crore for interest subsidy to benefit around 25.10 lakh students.
Credit Guarantee Fund Fund for Education Loans (CGFEL) Scheme
This education loan guarantee scheme provides guarantee under Model Education Loan Scheme of Indian Banks Association. Now students can avail loans upto Rs. 7.5 lakh without any security and guarantee. Furthermore, govt. must rationalize the scheme to serve more students from economically weaker sections (EWS).
Other Decisions in Cabinet Meeting
— CCEA meeting chaired by PM Modi has approved the launch of Integrated Scheme for School Education. All the existing education schemes of central government like Sarva Shiksha Abhiyan (SSA), Rashtriya Madhyamik Shiksha Abhiyan (RMSA) and Teacher Education (TE) will get merged into single scheme. This scheme will continue from 1 April 2018 to 31 March 2020 with total estimated outlay of Rs. 75,000 crore (20% over current allocation).
— CCEA also approves to enhance the coverage of Pradhan Mantri Rozgar Protsahan Yojana