Higher education is a dream for many students in India, but financial constraints often make it difficult to pursue. To solve this problem, the Government of India introduced the Education Loan Subsidy Scheme for students, which reduces the burden of loan repayment through interest subsidy.
This scheme ensures that economically weaker and middle-class families can send their children to top colleges in India and abroad without worrying about the high interest cost.
In this blog, we will cover:
- What is the Education Loan Subsidy Scheme?
- Types of subsidy schemes (CSIS & PM-Vidyalaxmi)
- Eligibility criteria
- Benefits of subsidy
- Step-by-step application process
- Examples with real calculations
- Key FAQs for students and parents
Let’s dive deeper.
What is the Education Loan Subsidy Scheme?
The Education Loan Subsidy Scheme allows eligible students to get an interest waiver or partial subsidy on education loans during their moratorium period (course duration + 1 year).
This means, while you are studying and for one year after completing your course, you do not have to pay the loan interest (or get a reduced interest). The government pays it on your behalf.
There are two major schemes under this:
- Central Sector Interest Subsidy Scheme (CSIS) – for economically weaker students.
- PM Vidyalaxmi Scheme (PM-Vidyalaxmi with Credit Guarantee & Subvention) – introduced in November 2024 to cover middle-class families too.
Education Loan Subsidy Scheme For Student
Central Sector Interest Subsidy Scheme (CSIS)
Key Features
- Applicable for loans up to ₹10 lakh.
- Full interest subsidy during moratorium.
- Family income should not exceed ₹4.5 lakh per year.
- Only available for professional/technical courses in India.
Example Calculation
Suppose:
- Student A takes an education loan of ₹8,00,000 for 4 years at an interest rate of 9%.
- Without subsidy, interest during study + 1 year =
- With CSIS, this ₹3.6 lakh is paid by the government.
- Student A only starts repaying the principal + future interest after the moratorium.
This shows how much relief CSIS provides to low-income families.
PM Vidyalaxmi Scheme (PM-Vidyalaxmi)
Launched in November 2024, the PM Vidyalaxmi Scheme extends benefits to students with annual family income up to ₹8 lakh.
Key Features
- Collateral-Free Loans – No security or guarantor required.
- Digital Application – Apply through the PM Vidyalaxmi portal.
- Repayment Tenure – Up to 15 years after moratorium.
- Credit Guarantee – Loans up to ₹7.5 lakh are backed by 75% guarantee.
- Interest Subsidy/Subvention:
- Income ≤ ₹4.5 lakh → 100% subsidy for professional/technical courses.
- Income ≤ ₹4.5 lakh → 3% subvention for other courses.
- Income between ₹4.5 – ₹8 lakh → 3% subvention for all courses.
- Income ≤ ₹4.5 lakh → 100% subsidy for professional/technical courses.
Example Calculation for PM Vidyalaxmi
Case 1 – Family income ₹3.5 lakh, Engineering course
- Loan = ₹6,00,000, Interest = 9%, Duration = 4 years + 1 year moratorium.
- Interest during study period =
- With PM Vidyalaxmi (Income ≤ 4.5 lakh, technical course) → 100% subsidy.
- Student pays ₹0 during study period.
Case 2 – Family income ₹6.5 lakh, B.Com course
- Loan = ₹4,00,000, Interest = 9%, Duration = 3 years + 1 year moratorium.
- Interest without subsidy =
- With PM Vidyalaxmi → 3% subvention = Government pays 3% out of 9%.
- Subsidy amount =
- Student only pays interest of ₹96,000 after the moratorium.
This partial relief reduces the loan burden significantly.
Eligibility Criteria
To apply for these subsidy schemes, students must fulfill:
- Must be an Indian citizen.
- Admitted to recognized higher education institutions (technical, professional, or top-rated colleges).
- Family income certificate required (issued by competent authority).
- Only loans taken after Nov 6, 2024 are eligible under PM Vidyalaxmi.
- Students already availing other scholarships/subsidies cannot apply again.
- Management quota admissions are not covered.
Benefits of the Scheme
- Reduces loan repayment pressure.
- Makes higher education affordable for low and middle-income groups.
- Encourages students to join reputed colleges without fear of cost.
- Digital and transparent process through Vidyalaxmi portal.
- Promotes financial inclusion by giving access to collateral-free loans.
How to Apply for Education Loan Subsidy
- Visit PM Vidyalaxmi Portal → pmvidyalaxmi.co.in
- Register & Fill Application (2-page online form).
- Upload necessary documents:
- Aadhaar card
- Income certificate
- Admission proof
- Bank loan details
- Aadhaar card
- Submit application and track status online.
- Subsidy is credited directly to your Digital Rupee wallet, which is then used for loan repayment.
Important Points to Remember
- Only 1 lakh students per year get selected for 3% subvention under PM Vidyalaxmi.
- Preference is given to government colleges, technical courses, rural/girl students.
- Loans above ₹7.5 lakh are not covered by credit guarantee but may still get subsidy.
- If subsidy is not used for loan repayment in time, the amount is returned to the government.
Comparison: CSIS vs PM Vidyalaxmi
| Feature | CSIS | PM Vidyalaxmi |
| Income Limit | ≤ ₹4.5 lakh | ≤ ₹8 lakh |
| Subsidy | 100% subsidy (technical/professional) | 100% subsidy (≤ 4.5L, technical), 3% subvention (others) |
| Credit Guarantee | Not applicable | 75% guarantee up to ₹7.5 lakh |
| Application Mode | Bank nodal agency | Digital portal (PM Vidyalaxmi) |
| Coverage | Indian courses | Top Indian institutions (QHEIs) |
Conclusion
The Education Loan Subsidy Scheme for Students is a game changer for families who want to support their children’s higher education without being crushed by interest payments.
- If your family income is below ₹4.5 lakh, you can get 100% interest subsidy under CSIS or PM Vidyalaxmi (for professional courses).
- If your income is between ₹4.5 – 8 lakh, you can still benefit from 3% interest subvention under PM Vidyalaxmi.
By reducing financial stress, these schemes give students the freedom to study well, build their careers, and repay loans comfortably in the future.
👉 If you are planning for higher education, make sure to check your eligibility and apply for these subsidy schemes today!