Press Information Bureau

Government of India

Ministry of Finance

25-November-2016 17:24 IST

Government has no Plan to write off education loans given to the poor and middle class family students who could not get employment. However, for the students belonging to economically weaker sections, an interest subsidy scheme on educational loans is in place. Under the scheme during the period of moratorium full interest subsidy is available for educational loans disbursed on or after 1st April, 2009.

The Indian Banks’ Association (IBA) has formulated a Model Educational Loan Scheme for adoption by banks. As per the scheme, Banks may also provide additional moratorium upto 6 months at a time taking into account spells of under-employment/unemployment during the tenure of the loan.

Government of India has launched a Credit Guarantee Fund Scheme for Education Loans (CGFSEL) wherein collateral free loan is given upto ₹ 7.5 lakh. The fund provides guarantee against default in repayment of education loans to the extent of 75% of the amount in default.

This was stated by Shri Santosh Kumar Gangwar, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today.

*****

DSM/KA

Education loan write off policy: no general waiver; interest subsidy and guarantee schemes support eligible borrowers. Government policy does not provide for write off of education loans for unemployed students; however, an interest subsidy scheme covers interest during the moratorium for loans disbursed on or after 1 April 2009. A Model Educational Loan Scheme allows banks to grant additional moratoriums for under employment, and the Credit Guarantee Fund Scheme for Education Loans supports collateral free lending and guarantees a portion of defaults to expand access to education credit.