The interest would be put off till the completion of the course, which may extend to four years. An additional six months would also be provided. All this while, he said, the state would pay the interest.
Chidambaram said that this was Centre's effort to encourage students to pursue higher studies and provide scholarships to deserving students.
He added that soon there would be central universities, technical and management institutions in all regions.
However, Chidambaram's sudden involvement in education loan may raise questions.