Last updated 12 Nov 2026
Three things can lower what an education loan costs you: government interest support for eligible students, credit guarantee support that makes lenders more willing to lend without collateral, and scholarships that cut how much you need to borrow. None of them is automatic. Each has its own eligibility rules, portal and dates, which change. This guide explains what each does and how to check the current terms from the official source.
Nothing here is an offer of any scheme. Eligibility and benefits are decided by the government body or the lender. Read it with the main education loan guide.
The three kinds of help
Interest support, credit guarantee support and scholarships compared
| Kind of help | What it does | Who usually benefits | Who decides |
|---|---|---|---|
| Interest subsidy | The government pays the interest for a period, usually the moratorium, so your balance does not grow | Students from lower-income families who meet the scheme's rules | The scheme and the lender that handles it |
| Credit guarantee support | Gives the lender a government-backed cover, so it can lend with less or no collateral | Students admitted to institutions covered by the scheme | The scheme body and the lender |
| Scholarship or grant | Reduces fees; you do not repay it | Merit, means-based, category-based or sports-based applicants | The scholarship provider, a state, an institution or a trust |
| Education loan interest tax relief | Lowers tax, not the loan cost directly | Those who repay the loan and can use the deduction | The tax rules; see the tax guide |
A subsidy lowers the cost of the loan. A credit guarantee lowers the lender's risk. A scholarship removes the need to borrow part of the money. A student can use more than one.
PM-Vidyalaxmi in brief
PM-Vidyalaxmi is a central scheme for students who get admission to certain top-ranked institutions. The Union Cabinet approved it in November 2024. According to the scheme, eligible students can get loans without collateral and without a guarantor, with interest support for some students and a partial credit guarantee for the lenders. Whether you qualify depends on the institution list, the course, your family income and the loan size. Use the official portal for the current list and limits, and apply there or through a lender that takes part. The scheme's details have been revised before, so confirm them on the day you apply.
Interest subsidy during the moratorium
Over the years, central schemes have paid the interest during the moratorium for students from lower-income families who study professional or technical courses in India. The idea is that the family pays no interest while the student studies. Terms such as income limit, course type, and loan size have varied by year, and whether a scheme is open to new applicants can change. Ask the lender or check the official portal for the current position before you assume it applies to you.
- Ask the lender whether it handles the scheme and whether your course and institution are covered.
- Ask what proof of family income is needed and from which authority.
- Ask when the subsidy starts and stops, and what you pay after it stops.
- Keep every sanction letter and statement that shows the subsidy credited.
Scholarships that reduce what you must borrow
Common kinds of scholarship
| Kind | How you qualify | Where to look |
|---|---|---|
| Merit | Marks in a board or entrance exam, or a rank | Your institution, state government and trusts |
| Means-based | Family income below a limit set by the provider | State and central government portals, trusts, your institution |
| Category-based | Belonging to a notified category, as defined by the provider | State and central government portals |
| Minority or women-focused | Criteria set by the provider | Government portals, foundations |
| Sports and arts | A recognised achievement | Sports bodies, your institution |
| Company or foundation grants | Criteria set by the donor | The donor's own website |
Apply for scholarships before you apply for a loan if you can. The scholarship amount reduces the loan you need, and a smaller loan is easier to get approved. Tell the lender about any scholarship so it can size your loan correctly. Beware of any website that asks for a payment to secure a scholarship; a genuine scholarship provider does not charge to receive an application.
A worked example: how a scholarship changes the loan
Illustrative figures with no rate
| Item | Without scholarship | With a ₹2,00,000 scholarship |
|---|---|---|
| Total course cost | ₹10,00,000 | ₹10,00,000 |
| Family savings | ₹1,00,000 | ₹1,00,000 |
| Scholarship | ₹0 | ₹2,00,000 |
| Loan needed | ₹9,00,000 | ₹7,00,000 |
| Effect | Bigger loan, longer or larger EMI, more likely to need collateral | Smaller loan, lower EMI, better chance of fitting under a lender's collateral-free limit |
The same scholarship that cuts the loan by ₹2,00,000 also cuts the interest that would have built up on that amount through the moratorium. Use the EMI calculator to see the EMI for each loan size at the rate in your offer.
How to check a scheme is real
- Use only government (.gov.in) or scheme-run portals for applications. Type the address yourself.
- Do not pay any person who offers to arrange a subsidy or a credit guarantee. Genuine schemes do not sell access.
- Check dates and eligibility on the portal. Old blog posts and social media posts are often out of date.
- Ask the lender in writing whether your loan is under the scheme and how the benefit will show on your statement.
- Keep a copy of every application and acknowledgement.
If a scheme does not apply to you
Many students do not qualify for a government scheme and still get a good loan. Then the levers you control are the size of the loan, whether you pay interest during the moratorium, the lender you choose, and whether you offer collateral. Compare offers on the APR in the Key Fact Statement. Read Key Fact Statement and APR.
LOANZ 360 is a loan aggregator, not a lender. It does not decide eligibility for any government scheme. Your details are compared with partner lenders' published eligibility criteria before you apply, so you apply only where you are likely to qualify, which helps avoid unnecessary credit enquiries.
Frequently asked questions
Is every education loan eligible for an interest subsidy?
No. Interest subsidy depends on a scheme, your family income, the course and the lender. Many loans have no subsidy. Ask the lender and check the official portal for the scheme that is open at the time you apply.
What is PM-Vidyalaxmi?
It is a central scheme approved in November 2024 for students admitted to certain top institutions, with collateral-free and guarantor-free loans, interest support for some students and a partial credit guarantee. The list of institutions and limits is on its official portal.
Can I get a scholarship and a loan together?
Yes. A scholarship reduces the amount you need to borrow. Tell the lender about it, because it affects the loan size and sometimes whether collateral is needed.
Do I repay a scholarship?
Normally no. A scholarship or grant is not a loan. Some come with conditions, such as keeping a minimum result or working for a period, so read the terms.
How do I know a scholarship website is genuine?
Check that the address ends in .gov.in for a government scheme, or that the provider is a known institution or trust. Never pay to apply. If someone asks for an advance fee to secure a scholarship, do not go ahead.
Does the subsidy show on my loan statement?
It should be shown as a credit or as interest not charged to you. Ask the lender how it will appear, and check your statements each quarter.
Related reading: Education loan guide for Indian students, Education loan interest and tax, Co-applicant vs guarantor, Key Fact Statement and APR, Loan eligibility and FOIR, Study abroad education loan, Domestic education loan, Moratorium, Borrower rights, EMI calculator.
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