Journal of Management and Public Policy

This paper examines whether the means-tested interest subsidy on education loans in India reaches poor students across different groups. We seek to understand the determinants of interest subsidy in a stratified society India, using a unique data availed from the bank which operates the scheme. It covers students who received subsidy during 2009–10 to 2012–13. The blanket equal subsidy, ‘one size fits for all ’approach promotes inequity in reality. Mean interest subsidies and education loans are progressive. Also better off male students benefit higher amount of subsidies across social, religious, location and course groups. The underrepresentation of less affluent socioeconomic, religious, rural children and female in higher professional education has important implications for social policy, economic efficiency and social justice.