Revised Model Skill Loan Scheme

Enhancing Access to Higher Education and Skill Development in India

Recently, The Finance Minister has announced significant revisions to the Model Skill Loan Scheme, aimed at enhancing access to higher education and skill development in India.

1. The revised scheme is expected to benefit thousands of students annually, promoting self-reliance and entrepreneurship among the youth.

Revised Skill Loan Scheme: Key Features

1. Loan Amount: Increased to ₹7.5 lakh to facilitate access to quality education and skill development
2. Guarantee: Backed by a government-promoted fund, ensuring risk-free loans and reducing financial burden on students
3. Beneficiaries: Expected to benefit 25,000 students annually, with a focus on promoting self-reliance and entrepreneurship among the youth

Higher Education Loans for Underprivileged Students: A New Initiative

1. Loan Amount: E-vouchers for loans up to ₹10 lakh for domestic higher education, ensuring inclusivity and access to quality education
2. Eligibility: Targeted at students who do not qualify for existing schemes, ensuring that marginalized communities are not left behind
3. Interest Subvention: Annual interest subvention of 3% of the loan amount, reducing financial burden and ensuring affordability
4. Beneficiaries: Directly benefits 100,000 students every year, promoting higher education and skill development

Budget Allocation for Education, Employment, and Skilling: A Significant Increase

1. Total Allocation: ₹1.48 trillion, a significant increase from the previous allocation of ₹1.2 trillion in the Interim Budget
2. Comparison: Demonstrates commitment to education and skilling, with a focus on promoting domestic education and talent retention

Objectives and Expected Impact

1. Skill Development: Enhances access to financial resources for technical and skill-based education, promoting self-reliance and entrepreneurship
2. Higher Education: Provides substantial financial support, making higher education more accessible and affordable
3. Economic Growth: Supports initiatives like the Make in Bharat campaign, promoting domestic education and talent retention, and driving economic growth

Detailed Breakdown of the Skill Loan Scheme

1. Eligibility Criteria: Admission to recognized institutions, including ITIs, polytechnics, schools recognized by State or Central Boards, colleges affiliated to recognized universities, or training partners affiliated with Sector Skill Councils, NSDC, State Skill Missions, or State Skill Corporations
2. Loan Features: Covers tuition fees, examination fees, library and laboratory fees, and other necessary expenses like the purchase of books and equipment
3. Interest Rates: Typically, the base rate or MCLR of the bank plus an add-on of up to 1.5%, ensuring affordability and reducing financial burden
4. Repayment Terms: Flexible repayment options, including moratorium period of up to 6-12 months post-completion of the course, depending on the duration of the course
5. Security and Collateral: No collateral or third-party guarantee required, covered by the Credit Guarantee Fund Scheme for Skill Development (CGFSSL)

Application Process

1. Eligible Banks: Participating banks and financial institutions, including major public sector and private banks as members of the Indian Banks' Association (IBA) and other financial institutions approved by the Reserve Bank of India (RBI)
2. Application Steps: Contact a participating bank or financial institution, submit required documentation including proof of admission and identity, and co-borrower (parent or guardian) is necessary if the student is a minor
3. Disbursement: Loan amount directly disbursed to the educational institution, ensuring timely and hassle-free access to funds

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