Deputy Chief Minister and Education Minister Manish Sisodia kick-started the scheme here by distributing cheques to the first 25 beneficiaries. Around 30 students were issued sanction letters to whom cheques would be issued subsequently.
Cheques worth Rs.75 lakh in total and sanction letters were distributed to eligible students at the inaugural function.
"The government is with the students whose parents don't have property as a guarantee to avail loan for their education," the minister said. "We will take their guarantee and give them a chance to study and not let finance become a hurdle in their education."
Describing the new education loan scheme as a "big step" in the field of education, Sisodia said many students fail to continue studies due to the non-availability of education loans.
Students, who have cleared Class 12, would be eligible for the loan meant for higher studies.
According to the scheme, a collateral or third party would not be required to avail the loan.
The student would get a one-year moratorium after completion of his or her degree or diploma course. He or she would be expected to repay the loan through EMIs over 15 years.
Sisodia said the success of the scheme depends on the commitment of students to repay the loan.
"We take the guarantee of those students who fail to get a job despite higher education. But this trust will break if students do not repay even after getting jobs," he added.
Education is the top most priority for the seven-month-old Aam Aadmi Party-led Delhi government, which earmarked a lion's share -- Rs.9,836 crore -- in its Rs.41,129 crore maiden budget.
The minister said that the guarantee would be available for loans for courses of government as well as private self-financed institutions located within Delhi.
Under the scheme the students of the institutions of technical/skill development courses like World Class Skill Centre will also be eligible. The institutions should have NAAC/NBA/SFRC grading.
Expenses covered under the education loan scheme are -- course fee, library/lab fee, purchase of books, equipment, instruments, uniforms, computer, reasonable boarding and lodging. Rate of interest to be charged in this scheme is base rate plus 2 percent, the Delhi government said in a statement.
One percent interest concession may be provided by the bank, if interest is serviced during the study period and subsequent moratorium period prior to commencement of repayment, it added.