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Educational Loans - need for reorientation

Educational Loans - need for reorientation

College admissions have started and it is time for parents to start arranging for funds to secure a seat for their wards in the course and college of their choice. The government, duly recognising the role of education in the development of the country, has evolved educational loan schemes through Indian Banks' Association to help out the needy in meeting costs.

The aim of the scheme is that no meritorious student should be deprived of education for want of finance. But since the term 'meritorious' is not defined and there is no security stipulation for loans up to Rs. 4 lakh and no minimum mark requirement, any student getting admission into a course of higher study becomes eligible to avail the loan. While students with high scores get admitted into premier colleges through counselling, majority of the students have to seek admission in private colleges under management quota. This phenomenon is increasing year after year.

There is a gap between the demand and supply for engineering courses because of the increasing number of students and limited capacity to absorb students through counselling. This has resulted in private engineering colleges offering seats under management quota at high fees even though government/ AICTE have fixed a cap on it.

But this does not deter the students or parents because of the availability of educational loans. They do not stop to think about whether the student will be able to get a job in that stream and repay the loan. Loan-seekers for courses like medicine and foreign studies are limited because they are mostly merit-based. If the government specifies minimum qualifying marks, the scheme will serve its real purpose. Also, uniformity should be established in the tuition fees of private engineering colleges.

Also, there has to be consensus among branches at the State level to follow uniform policy to confine applications to the bank branch where the parents/student already has accounts.

Tracking of loans which have already been issued becomes difficult when details like progress made by the student in the course, details of employment, income, etc., are not communicated to the bank. The government should evolve a suitable system in this regard for proper recovery of educational loans.

Educational loan scheme is evolved with a noble social purpose and in order to make useful to the society, norms need to be specified more clearly to avoid misinterpretation. For this, bankers, government and parents should work together.

Educational Loans - need for reorientation

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