Students should be able to bank on education loans

Students will benefit from this year’s Union Budget but there is a lot which remains to be done on the part of the government. Let’s go with the facts first. It’s been declared that students from weaker sections of society will not have to pay any interest during the study period for loans which are taken from scheduled banks. This means that no interest would be charged during the time of the education program for these students. There’s been an increase of Rs 2,000 crore in money allotted for higher education and that figure stands at Rs 8,000 crore. These funds will definitely be used for developing infrastructure but banks must improve policies for providing loans to students.

Scheduled banks include banks such as the State Bank of India and other public sector banks, private banks such as ICICI, HDFC Bank and also select foreign banks. Approximately five lakh students are expected to benefit from this scheme. It remains to be seen if such a large number of students from the weaker sections will indeed get loans sanctioned from these banks.

The government has implemented these measures in the budget but provision of education loans is another area in which the government can make some useful changes. These days most students are opting for an education loan to fund their MBA studies in India and these programs usually cost in excess of Rs five lakhs. B-schoolers are facing issues of loan repayment because of the slowdown. A student at a Symbiosis management institute said, “At the State Bank of India (SBI), it is completely up to the branch manager to decides whether the loan should be granted or not. SBI also requires that there should be a branch in the student’s hometown and the student or his parents should have an account in that branch.” These details often result in students at schools which do not have bank tie-ups encountering difficulties in securing loans.

I think that the government should definitely lay down rules which smoothen the process of obtaining loans. It is unfair to force students to approach multiple banks so that they can get funds for their studies. Banks should be given clear directions so that education loans are more easily available to students enrolling in India’s accredited MBA colleges. The government can also set up organisations to ensure that loans are available for students entering accredited institutes.

Top b-schools such as the Indian Institute of Management (IIMs) have bank tie-ups to provide loans for students at lower interest rates while students at other institutes have to make their own arrangements. Public sector and nationalized banks could be encouraged to have tie-ups with b-schools outside the top ten institutes so that students can get education loans in an easier manner. A lot of b-schools have increased their fee in the past two years. The government should definitely make efforts to ensure that the loan process does not stop deserving students from making use of management education.