Odisha HRD

Unsecured study loans to become easier: GOI to give guarantee to banks

August 8th, 2007

Following is excerpts from a Hindustan Times article on this.

Students cutting across different social groups will soon be able to avail of education loans at highly subsidised rates to study in top educational institutions of the country.

The Prime Minister’s Office (PMO) in consultation with the Human Resource Development Ministry and the National Bank Association has finalised a scheme for paying huge loan subsidy to students from economically weaker sections.

A mean test (annual earning) will be the eligibility criteria to apply for the loan. The government is likely to announce the scheme on Independence Day. The University Grants Commission figures state that only eight per cent students from economically backward families are enrolled in higher education.

… To implement the scheme, the government plans to float a Loan Guarantee Corporation that will pay for any default by the students from the weaker sections.

 “It will be a kind of a government guarantee to the banks to give loans to poor students,” an official said. The corporation will become functional with a corpus fund from the government. A small amount from the interest paid against student loans will get deposited with the corporation.

The government found that students from weaker sections have not availed of education loans because of their failure to obtain sufficient guarantee. With the government in the picture, banks are willing to pay them loan for studying even in private educational institutions.

The loan will be available for admission to government-approved institutions. It would be paid directly to the institution. Continuance of the loan will depend on the students’ performance.

Entry Filed under: Educational Loans