Several government schemes cover your loan's interest during the study period — reducing what you actually owe when repayment finally begins.
Combining a central and a state-level scheme, where eligible, can substantially reduce the effective interest cost of a large education loan.
| Scheme | Who qualifies | Benefit |
|---|---|---|
| Dr. Ambedkar Central Sector Scheme (ACSIS) | OBC/EBC students; family income ≤ ₹4.5 lakh/yr | Full interest subsidy during moratorium (course + 1 year) on IBA Model Scheme loans |
| Padho Pardesh | SC/ST/OBC/Minority students studying abroad; income ≤ ₹6 lakh/yr | Interest subsidy during moratorium — check current status, as the scheme is paused/restarted periodically |
| SC/ST Interest Subsidy (state channelising agencies) | SC/ST students | Full interest waiver during study period + moratorium, often via state SC/ST welfare departments |
| Scheme | Eligibility | Benefit |
|---|---|---|
| TN Kalvi Thittam Education Loan | BC/MBC/BCM/DNC TN students, income criteria apply | Concessional soft loan, no collateral up to ₹5 lakh — apply at district BC/MBC office |
| Adi Dravidar & Tribal Welfare Dept Loan | SC/ST TN students, professional courses | Low-interest loan, often combined with a scholarship |
| TAHDCO | SC/ST TN students, professional/vocational courses | Education loan up to ₹4 lakh at low interest — apply at TAHDCO district office |
It means interest doesn't accrue on your loan while you're still studying — without the subsidy, that interest compounds and adds meaningfully to what you owe when repayment finally starts. For a large loan over a 5-year course, this can mean tens of thousands of rupees saved.
Approach the District Backward Classes and Most Backward Classes Welfare Office first. These state loan schemes have lower interest rates, less collateral requirement, and sometimes partial grant components — combine them with central interest subsidy schemes to minimise your actual out-of-pocket interest cost.
A counsellor can check your category and course against every scheme.