Interest Free Loan Scheme for IIT Students
In a major relief to IIT students who’re going to face a steep fee hike from this academic session, the government has announced a scheme that’ll provide interest-free bank loans to students whose family income is less than Rs. 9 lakh INR per annum. The scheme has been dubbed “Vidyalaxmi Scheme” and it’ll cover students enrolled in both undergraduate as well as five-years integrated degree program.
Justifying the recent fee hike HRD Ministry officials said that the reasoning behind it was to offset the maintenance and salary bill of IITs, which now shoots up to Rs. 2,000 crore. However, they also said that at the same time ministry doesn’t want to put all the burden on the shoulders of students and their guardians as well, which is the reason why it’s launching this loan scheme.
The loans under the scheme will be provided for a period of five years, which include 4 years of course plus 1 year of moratorium. It’ll be an interest subvention scheme, which means that interest shall be paid from internal accruals of IITs. The Ministry has ordered IITs to sign Memorandums of Understanding (MoUs) with local banks to provide this facility to their students. The term of loan will be 10 years, and no collateral will be required except for personal guarantee of students and their parents.
|Scheme Name||Vidyalaxmi Interest Free Loan Scheme|
|Applicable to||Students enrolled in IITs for current academic session|
|Benefits provided||Interest free loans to pay for the tution fee|
|Loan period||Five years (4 years of course + 1 year moratorium)|
|Documentation Requirements||Personal guarantee of student and guardians|
So far, so good. However, some limitations are also associated with these loans.
- The payment of interest from accruals of IITs will depend upon performance of student in studies. It’s an issue that government is leaving in the hands of IITs.
- The loan amount can be used to pay the academic fee only – other expenses (i.e. purchase of laptops, books and travel expenses etc.) are not covered under the scheme. If a student has already paid some part of the fee, it can be reimbursed from the loan amount. But the amount can’t be used for any other expenses.
- The interest subvention thing will work only for the period of five years (including moratorium of 1 year). Post this period the candidates will have to pay the interest themselves. The rate of interest shall be in accordance with other educational loan schemes being offered by the bank.
- The facility is available only to students who’ve already secured admissions for academic session of 2016 – 2017.
The scheme will not replace any other educational loan scheme currently being offered by the government. For example, students who belong to Economically Weaker Sections (EWS) of society can take advantage of Central Sector Scheme that provides total subsidy on interest for the same period of five years.