Education Loan Interest Subsidy Guide
CSIS (full moratorium interest, income up to ₹4.5 lakh) and PM-Vidyalaxmi (3%, income up to ₹8 lakh) explained with examples.
Updated 30 September 2026 · 8 lenders trackedWhat you need to know
Two central schemes reduce the interest you owe during the moratorium. The Central Sector Interest Subsidy (CSIS) pays the entire moratorium interest for families earning up to ₹4.5 lakh, and PM-Vidyalaxmi pays 3% subvention for families earning up to ₹8 lakh. Both are for courses in India on loans up to ₹10 lakh.
Schemes compared
| Scheme | Who qualifies | Benefit |
|---|---|---|
| PM-Vidyalaxmi (approved Nov 2024) | Students admitted to Quality Higher Education Institutions: top-100 NIRF (overall, category or domain), state government institutes ranked 101–200, and all central government institutions | Collateral-free, guarantor-free loans; 75% credit guarantee on loans up to ₹7.5 lakh; 3% interest subvention during the moratorium on loans up to ₹10 lakh for family income up to ₹8 lakh (up to 1 lakh students a year, preference to government institutions and technical/professional courses) |
| CSIS — Central Sector Interest Subsidy (since 2009, part of PM-USP) | Annual gross parental income up to ₹4.5 lakh; professional or technical courses in India at NAAC/NBA-accredited institutions, Institutes of National Importance or CFTIs | Government pays the full interest during the moratorium (course + 1 year) on loans up to ₹10 lakh under the IBA model scheme; available once |
| CGFSEL — Credit Guarantee Fund Scheme for Education Loans (NCGTC) | Loans up to ₹7.5 lakh under the IBA model scheme | Guarantee to the bank so that no collateral or third-party guarantee is needed from you |
Students from families with income up to ₹4.5 lakh already get full moratorium interest paid under CSIS, so PM-Vidyalaxmi’s 3% subvention targets the next band (up to ₹8 lakh). The combined FY2026-27 allocation for PM-Vidyalaxmi, CSIS and CGFSEL is reported at ₹1,050 crore. Apply through the PM-Vidyalaxmi portal (pmvidyalaxmi.co.in).
Illustration
| Case | Moratorium interest |
|---|---|
| Loan disbursed ₹1,000,000 at 9.5%, 3-year moratorium | ₹2,85,000 interest accrues |
| CSIS (income up to ₹4.5 lakh) | Government pays all ₹2,85,000; EMIs start on ₹1,000,000 |
| PM-Vidyalaxmi 3% subvention (income up to ₹8 lakh) | Government pays about ₹90,000; you bear about ₹1,95,000 |
| No subsidy | ₹2,85,000 added to the loan if unpaid |
Conditions
- Courses in India only; CSIS needs a professional/technical course at a NAAC/NBA-accredited institution, INI or CFTI
- Loan under the IBA model scheme from a scheduled bank
- Income certificate from the competent state authority
- Available once — not for a second course
- Subsidy covers only the moratorium period; interest after EMIs start is yours
- Discontinuing the course or disciplinary expulsion can make the subsidy lapse
Frequently asked questions
How is the subsidy paid?
It is credited to your loan account through the bank; you do not receive cash.
Do I apply every year?
You apply through the bank or the PM-Vidyalaxmi portal as per the scheme process; the bank claims it for the eligible period.
For information and comparison only. Loan terms, rates and rules change — confirm with the lender and read the Key Facts Statement before borrowing.