Currently, when a student avails an Educational Loan to pursue his/her studies; the interest amount charged during the period of study gets added to the principal amount or he/she can pay the interest amount during the studies. This makes the educational loan repayment a costly business. To ease this burden on students and to prevent brain drain from the country, the Government plans to take over interest on Educational Loans during the period students pursue their education and have not begun earning.
This is available to those students who come from families having an annual income less than 2.5 Lakh. Banks in general deny loans to students from the lower strata on the risk of repayment. With this move, banks will have more assurance on repayment and would give more loans to the needy, as the government is paying the interest amount during the education period which would otherwise get added to the principal, making it huge for repayment, leading to possible defaults. Donno whether it is applicable to online degree programs.
More details here.