The students, who avail this facility, need not pay the interest till they complete their studies. The interest will be borne by the Central Government.

The Human Resources Development Ministry has said that this scheme will be introduced from the academic year to begin in the month of July this year. In order to pay the interest to the Banks on the loan of the students, the Central Government has come forward to earmark a grant of Rs. 4000 crore.

The Union Finance Ministry has approved the proposal of paying interest on educational loans. The Central Government will pay the interest on the loan of the student till six months after completion of studies. The student will have to clear only the loan amount.

For the education loan the banks at present are collecting an interest of 15% to 18%. The Central Government has already had talks with the banks and Financial Organisations. It is also stated that the Centre will not give any guarantee for the loans but will only take the responsibility of paying the interest.