Intending to take Educational Loan, then read this...

The Educational Loan is going to be cheaper, say thanks to the government. The Government is thinking to bear interest burden on educational loans taken by students during moratorium period or the times when students are pursuing academincs and have not yet begun earning. The Manmohan Singh government is finalising a scheme in consulation with Planning commission. The corpus of the scheme is estimated to be Rs.4,000 crore and the Interest burden on the government is estimated to be Rs.650 crore a year. The above amount arrived by planners is based on that five lakh students from families earning Rs.2.5 lakh a year or less availed of the loans. The interest subsidy would be availabe for students meeting the economic bar set for beneficiaries and studying professional and technical courses at the undergraduate and post-graduate levels. The government is intending to implement the scheme from the next academic year 2008, also wants to ensure that the benefit should be available only for one loan. Untill now the education loans come with a clause which allows students not to pay interest during academic life. The interest for this period is added to the principal and repayment begin once the student availing of the loan starts working. This step by the government will be a breather to Banks who lend to students as they can lend more freely. This step is more useful to students as the courses take normally 3 to 4 years. By the time they complete the course and start earning their loan would have been increased by 30 to 50% by addition of interest. If the government takes this burden they will be relieved a lot.