The government is planning to propose a plan under which the students who are willing to undergo higher education could get financial help through educational loans at cheaper interest rates. This would get done through an interest funding scheme, under which a subsidy system would get introduced with which the government would pay the banks straight away so that they couldn’t charge much as interest from the students who have borrowed loans from various banks. The facilities would be given to aspiring students focusing majorly on the lower income group.
The announcement about the scheme was done by the Finance Minister Arun Jaitley which could get proposed in the upcoming budget. Presently banks on an average charge quite high for the education loans which becomes quite tough to manage for families of students who specially belong to a specific income group. The interest rate for education loan is 12.88% presently. Even the car loans are lower than this which is stood at 12.17% presently. According to a figure, Indian banks have given away 60,071 crore rupees till 31 March 2014 as part of education loans. These loans are high risk loans for banks and thus they have made provisions to limit the loan amount beyond a certain limit.
For the same, The Indian Banks Association (IBA) has recommended that a guarantee fund could get set up to overcome the situation. Arun Jaitley is about to discuss the same in a review meeting which would be held along with the public sector bank chiefs on 05 March 2015.
- Government planning to provide educational loans to help students for higher education
- This would get done through an interest funding scheme
- The facilities would be given to aspiring students focusing majorly on the lower income group