Clarifications on Education loan Interest Subsidy Schemes

There are two types of Interest Subsidy scheme for students pursuing education in India.
1. First Scheme: For Loans granted / disbursed on or after 1st April 2009;
2. Second Scheme: For Loans granted / disbursed prior to 1st April 2009;
Eligibility
For both the Schemes, the eligibility is as follows:
a) The Education Loan should have been sanctioned under IBA Scheme;
b) The Loan should have been granted to pursue professional or technical courses in approved Institutions after 12th std. (Diploma students joining Engineering Courses through lateral entry are also eligible);
c) The education should be within India;
d) The gross parental income should be less than 4.50 lakhs.
For Loans granted prior to 1.4.2009
In Feb 2014, Shri P Chidambaram (then Finance Minister) announced in the Parliament that Government would reimburse 100% of the interest outstanding as on 31.12.2013. Canara Bank was appointed as Nodal Bank to pool the data. Interest component on all eligible loans outstanding as on 31.12.2013 were paid by the Government to the Banks and credited to the loan accounts.
In this scheme, the students who availed loan prior to 1.4.2009 and who paid the interest regularly, were in a disadvantageous position. Since interest component was either nil or negligible, they did not
get any benefit of the interest subsidy. Similarly the students who closed the education loan account before 31.12.2013 were also not eligible to get interest subsidy.
Now this scheme is closed. Now the students cannot claim any interest subsidy under this scheme. We are writing this only for information.
For Loans granted / disbursed on or after 1.4.2009
Government of India (Ministry of HRD) provides 100% interest subsidy for the eligible students (as given earlier) for all the loans disbursed on or after 1.4.2009 during the moratorium period.
If a Education loan Interest has been sanctioned in 2007 for Rs.4 lakhs, to be disbursed @ Rs. 1 lakh every year, the student is eligible for interest subsidy for the disbursements made in 2009 (if it is after 1.4.2009) and 2010.
Moratorium period is the study period + one year of six months after getting employment whichever is earlier.
Interest subsidy is available for either Under Graduation or Post Graduation. From the same family, brothers and sisters can avail the subsidy individually.
Students can avail the subsidy under only one scheme. Students who availed subsidy under the second scheme (loans prior to 1.4.2009) are not eligible for subsidy under the first scheme.
Problems faced by students
The students were required to submit the Income Certificate to the Bank to claim interest subsidy. Since the Banks did not intimate many of the students in the early years, many eligible students did not get interest subsidy.
It is the duty of the Banks to identify the eligible students and advise them to get the income certificate. Also, it is the duty of the Bank to submit the claim through the Nodal Bank portal to the Government of India within the time stipulated by the Government. Due to the fault of many of the Branches, claims were not submitted in the past claiming interest subsidy by the Banks.
Even the students who got subsidy, received only a small portion of the interest debited by the Bank. In many cases, Banks failed to submit the claim for few years. For example, banks might not have claimed for 2009-10, but claimed for other years. Also, they might have claimed for 2009-10, 2010-11, but might not have claimed for other eligible years during the moratorium period.
Source: https://www.evernote.com/shard/s647/sh/9e147f3d-342f-43cb-a7e8-1380b57940e0/adeb6a9d5cdf11abfdecc2187a277b02