The Government is on its way to avail subsidies on education loans taken by students from economically challenged sections for pursuing their higher studies.

Under the scheme, the students from economically weaker sections can avail education loans from the government at subsidised rates of interest. Students with family income less than Rs 4.5 lakh per annum will be eligible for the loans. The scheme also provides a moratorium period, earlier of any two - one year from the completion of the course or of six months from date of joining a job.

It is estimated that under the scheme, a sum of Rs 4,000 crore will be given extended to such students during the 11th five year plan.

The scheme, which has been already approved by Expenditure Finance Committee, now awaits the approval of union cabinet.

Kapil Sibal, HRD Minister, said, "The government is launching a new scheme on interest subsidy on educational loans taken for professional courses by economically weaker students."

"We will give interest subsidy on education loans taken by students because we are interested in the education of poor students," he added.

The Congress-led United Progressive Alliance Government will present the union budget in first week of July. Education is expected to be one of the focus areas of the union budget for this fiscal.