On July 23, Union Finance Minister Nirmala Sitharaman unveiled the Budget for 2024. In her presentation, she allocated Rs 1.48 lakh crore for education, employment, and skilling. As part of the Education Budget, she announced that the government will offer financial assistance in the form of loans up to Rs 10 lakh for higher education in domestic institutions. This support will be provided through e-vouchers, which will be directly given to one lakh students annually, along with an interest subsidy of 3 percent on the loan amount.
The question now is, when will the government implement this scheme? According to media reports, the government is finalizing the scheme’s details, and it is expected to roll out by October.
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What is the scheme that the finance minister announced?
During her Budget 2024 speech, the finance minister announced that the government will offer financial assistance of up to Rs 10 lakh for higher education in domestic institutions. This is good news for students who want to pursue higher education in India. Additionally, youths not covered by any existing government schemes and policies will be eligible for this financial assistance.
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Loan disbursal, interest rate and more
The government will issue e-vouchers to one lakh students every year, along with an interest subvention of 3 percent on the loan amount. This will lower the interest rates on education loans, ultimately reducing the financial burden on students and their parents.
Currently, if you take a student loan up to Rs 7.5 lakh, you don’t need to provide any security or collateral. For loans between Rs 7.5 lakh and Rs 10 lakh, a third-party guarantee (such as a family member or friend) is required. Under the new system, you’ll only need to provide collateral for the portion of the loan that exceeds Rs 7.5 lakh. For example, if you take a loan of Rs 9 lakh, collateral would be required only for the Rs 1.5 lakh that goes beyond Rs 7.5 lakh.
Media reports further suggest that under the new scheme, the government is yet to decide whether the interest subvention will apply for the entire tenure of the loan, only during the first few years, or for a shorter duration. These details are still being worked out.
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Allocation for higher education
For the fiscal year 2024-25, higher education has been allocated Rs 47,619 crore, reflecting a 7.68 percent increase from the Rs 44,094 crore budget estimate of 2023-24. However, this amount is lower compared to the revised estimate of Rs 57,244 crore for the same period.
