On July 23, Union Finance Minister Nirmala Sitharaman presented the Budget for 2024, allocating Rs 1.48 lakh crore for education, employment, and skilling initiatives. As part of the Education Budget, she announced that the government will provide financial assistance in the form of loans up to Rs 10 lakh for higher education in domestic institutions. This support will be facilitated through e-vouchers, which will be distributed to one lakh students annually, along with an interest subsidy of 3 percent on the loan amount.
The pressing question now is when this scheme will be implemented. According to media reports, the government is in the process of finalizing the scheme’s details, with plans to roll it out by October 2024.
What exactly is the scheme announced by the finance minister?
During her Budget 2024 speech, the finance minister declared that the government will offer financial assistance of up to Rs 10 lakh for higher education in domestic institutions. This initiative is particularly beneficial for students who aspire to pursue higher education in India. Moreover, it will be available to youths who are not covered by any existing government schemes or policies.
Regarding loan disbursal and interest rates:
The government plans to issue e-vouchers to one lakh students each year, paired with an interest subvention of 3 percent on the loan amount. This will effectively lower the interest rates on education loans, easing the financial burden on students and their families.
Currently, student loans up to Rs 7.5 lakh do not require any security or collateral. For loans between Rs 7.5 lakh and Rs 10 lakh, a third-party guarantee (such as from a family member or friend) is needed. Under the new scheme, collateral will only be necessary for the portion of the loan exceeding Rs 7.5 lakh. For instance, if you take out a Rs 9 lakh loan, collateral would be required only for the Rs 1.5 lakh that surpasses Rs 7.5 lakh.
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Media reports also suggest that the government has yet to finalize whether the interest subvention will apply for the entire duration of the loan, only for the initial years, or for a shorter period. These specifics are still under consideration.
For the fiscal year 2024-25, the budget for higher education has been set at Rs 47,619 crore, marking a 7.68 percent increase from the Rs 44,094 crore estimated in the 2023-24 budget. However, this amount is lower than the revised estimate of Rs 57,244 crore for the same period.