Education Loan Moratorium and Relief 2026

Reviewed on 2026-06-20 by Dr. Shrawan Kumar Pathak.

Most education loan guides tell you what a moratorium is and what to do when a bank breaks its promise. This guide answers a sharper question: during the moratorium, who actually pays the interest, and how do you make the government pay it for you? That is real money. On a Rs 10 lakh loan, interest over the study years can run into lakhs, and a subsidy can wipe it out.

If you are an existing borrower fighting a bank over moratorium terms or a wrong EMI, read our companion page on education loan moratorium rights and repayment. That page covers the complaint ladder and the RBI Ombudsman. This page covers getting your interest paid in the first place.

A moratorium is the gap between when your loan is sanctioned and when you must start full repayment. Under the standard model scheme, it runs for your course period plus one year after the course, or six months after you get a job, whichever comes earlier. You do not separately apply for it. It is built into your sanction letter.

The catch is interest. Interest keeps building on your loan during the moratorium even though you pay nothing. When repayment starts, that built-up interest is added to your loan, so your EMI is larger. The two relief schemes below exist to stop that from happening to lower-income families.

The Central Sector Interest Subsidy Scheme pays your full interest during the moratorium if you belong to the Economically Weaker Section.

• Annual family income up to Rs 4.5 lakh.
• Loan taken under the Indian Banks Association model education loan scheme.
• A technical or professional course pursued in India.
• Loan up to Rs 10 lakh (the ceiling was raised to this amount). Loans up to Rs 7.5 lakh need no collateral or guarantor.

It pays the entire interest for the whole moratorium period, your course duration plus one year. After the moratorium, you start paying EMIs on the principal, so your repayment burden is much lighter. Canara Bank is the nodal bank that releases the subsidy to your lending bank.

1. Get an income or EWS certificate from your authorised state government officer. This is mandatory and is the document students most often miss.
2. Tell your lending bank you want CSIS noted on your loan account when the loan is sanctioned or at the start of the moratorium.
3. Submit the certificate and the scheme claim form your bank gives you.
4. Keep your acknowledgement. The bank forwards your claim to the nodal bank for the subsidy.

PM-Vidyalaxmi is the newer scheme, approved by the Cabinet on 6 November 2024 and run by the Department of Higher Education. It is built around the country's top institutions.

You must get admission to one of the roughly 860 Quality Higher Education Institutions selected using NIRF rankings. This list covers institutions ranked in the top 100 in the NIRF overall, category and domain rankings, certain state institutions ranked just below them, and central government institutions. The exact list updates with NIRF each year, so check the current list before you count on it.

• A collateral-free, guarantor-free loan covering full tuition and course costs.
• For loans up to Rs 7.5 lakh, a 75 per cent credit guarantee from the government, which helps the bank approve you.
• Family income up to Rs 4.5 lakh: the full interest subvention during the moratorium continues, delivered through the existing CSIS mechanism described above.
• Family income up to Rs 8 lakh, where you are not already getting another government scholarship or interest subvention: a new 3 per cent interest subvention on a loan up to Rs 10 lakh during the moratorium. This 3 per cent band, the credit guarantee and the digital loan product are what PM-Vidyalaxmi adds on top.

1. Confirm your institution is on the current PM-Vidyalaxmi list.
2. Register on the Vidya Lakshmi portal at vidyalakshmi.co.in.
3. Fill the common education loan application form once. You can apply to up to three banks with it.
4. Submit your admission letter, fee structure and income proof. The interest subvention is applied based on your income band.

Figure: step-by-step flow. If a step stalls, use the grievance or RTI route shown.

If you are an EWS student on a professional course in India, CSIS is the established route to full interest relief. If you have a seat in a top-ranked institution, PM-Vidyalaxmi is built for you and adds the collateral-free loan and credit guarantee. You cannot stack the same benefit twice, so the 3 per cent PM-Vidyalaxmi band is meant for those not already covered by another scheme. When unsure, ask your bank which scheme your loan account is tagged under and verify on the Vidya Lakshmi portal.

Sometimes the moratorium passes and the interest was never subsidised, or your claim is silently rejected. First raise a written complaint with your branch and keep the receipt. If there is no fix within 30 days, escalate to the RBI Ombudsman through the complaint portal at cms.rbi.org.in. To get proof of what the nodal department actually did with your claim, you can file an RTI asking for the status and any rejection reasons. Our guide on scholarship renewal shows the same paper-trail discipline for education benefits.

No. The moratorium is automatic and written into your sanction letter as the course period plus one year, or six months after employment, whichever is earlier. What you do apply for is the interest subsidy that pays the moratorium interest for you.

Family income up to Rs 4.5 lakh a year gets full interest paid during the moratorium under CSIS or PM-Vidyalaxmi. Income up to Rs 8 lakh can get a 3 per cent subvention under PM-Vidyalaxmi on a loan up to Rs 10 lakh, if you are not already covered by another scheme.

CSIS covers technical and professional courses pursued in India under the banks' model education loan scheme, for students from the Economically Weaker Section. Confirm your exact course and current limits with your bank, as ceilings can change.

The income or EWS certificate from the authorised state government officer. Without it your CSIS claim cannot move. Get it early, before the loan is sanctioned if you can, and give a copy to your bank.

On the Vidya Lakshmi portal at vidyalakshmi.co.in. You register once, fill the common application form, and can apply to up to three banks. Your institution must be on the scheme's current list of quality institutions.

You cannot claim the same interest benefit twice. The schemes are alternative routes, and the PM-Vidyalaxmi 3 per cent band is meant for students not already getting another government subvention. Ask your bank which one your account is tagged under.

Complain in writing to your branch first and keep the receipt. If unresolved in 30 days, escalate to the RBI Ombudsman at cms.rbi.org.in, and file an RTI with the nodal department to get the documented status and any rejection reason.

• https://www.pib.gov.in/PressReleasePage.aspx?PRID=2071131
• https://www.vidyalakshmi.co.in
• https://www.jansamarth.in
• https://cms.rbi.org.in

Read our companion education loan moratorium rights page for the repayment and Ombudsman ladder, the scholarship renewal guide, and how a bonafide certificate and gap certificate support your education paperwork.