Amid increasing default rate in education loan, banks want to give loan to those students who stand a better chance of being hired
New Delhi: Getting an education loan for pursuing professional or technical courses to become difficult from now as the pool of eligible institutions for which students can take education loans just got smaller.
The Union HRD ministry has issued a guideline restricting the eligibility for the model educational loan scheme of the Indian Banks’ Association to students enrolling for professional and technical courses in NAAC-accredited colleges and universities, institutions of national importance and centrally funded technical institutions. Programmes that have been accredited by the National Board of Accreditation (NBA) are also eligible, the Times of India said in a report.
The guideline says any professional or technical course beyond this would need to be approved by the respective regulatory bodies such as the Nursing Council of India for nursing courses and the Medical Council of India for medical courses.
Amid increasing default rate in education loan, banks want to give loan to those students who stand a better chance of being hired. Bankers believe students from NAAC and NBA-accredited institutions and departments have a better chance of being hired during campus placements.
The guidelines issued by the HRD ministry also mentions that students whose parents earn up to Rs 4.5 lakh can avail interest subsidy. The loan is given without any collateral and third-party guarantee for a maximum amount of Rs 7.5 lakh.
All applications for education loans are now routed to the banks through the Vidya Lakshmi portal. In the past four years, banks have approved barely 42,700-odd out of 1.44 lakh-plus applications received through the portal.
“Banks are not giving importance to education loans. There is not enough awareness among bankers and students. Disbursement of education loans are not properly monitored,” the ToI report quoted as saying K Srinivasan of the Education Loan Task Force, a voluntary organisation that seeks to raise awareness about how to go about applying for an education loan.
Worth mentioning here is in the event of being unemployed or under-employed, students are eligible for a moratorium on repayment. Repayment tenure in such cases can be extended to 15 years.