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Student loans:
It is a saying that if you have the will, you have the way. The same implies here in this country too. India is an economically developing country with almost 30% of its population just above the poverty line. For a country to develop, it needs to strengthen its future it needs to have its youth capable to accept responsibilities, and this can be achieved only by education.
Students hailing from the poorer sections of the society or the middle class, who wish to pursue higher education often find financing their studies as a burden. Hence, they either drop out their plans for going for higher education & settle for a 9 to 5 white collar job, which is no less than a compromise, or get into juvenile crimes.
Hence, financial institutions have taken an initiative step to help those students who wish to pursue higher education, but are not capable of funding themselves. Private & public sector financial organizations now offer student loans in various schemes. The student willing to take up higher education now just needs to complete the procedures prescribed by the financial institute, & can avail funds for his or her education.
The procedures of institutions may vary from one another. However, the overall concept remains the same. It is rather like the HNPL (Holiday now, pay later) scheme offered by many international tourism agencies! The student needs to prove and convince the financial institute that he or she has the academic capability to taken up higher education, and needs to provide a security for the sum borrowed. The financial institute then provides the student with the funds needed for completing the course, & later the student has to pay back the sum borrowed to the institute later when he starts to earn by working.
In the due course, the instate charges the student a given rate of interest for the sum of money borrowed till such a time the student is capable of repaying the loan.
Various private sector organizations provide loans to the student at a very reasonable rate of interest. The HDFC bank offers student education loans at a rate of 11.8% per annum, The State Bank of India offers higher education loans at 12.2% per annum & other private sectors provide loans at around 10.8 to 12.5 % per annum.
Dr. APJ. Abdul Kalam, the President of India, has insisted that in order to make India as a super power nation by 2020, we need to educate all our citizens and thus take initiatives to make education available to every one. He has insisted that the financial institutions should demand no security from the students who opt for a loan amount of around Rs 0.2 million to Rs. 0.5 million, and that the institutions shouldnt charge high rates of interest for loan amounts more than 1 million to 1.5 million.
The students availing this facility in the country generally opt for studies in expensive foreign universities in fields like medical and engineering. In some cases, the students going to foreign countries also opt for the work permit with their visa and hence begin to earn as they learn. So, they are capable of repaying their loan even before their graduation. But, it has become a matter of concern to our leaders of nation that, the students going to foreign countries try to settle there, causing brain drain from India. Hence, there has been an initiative to offer lower rates of interest to those who promise to come back to their home land and serve the people here.
Many government institutions too provide financial support to the students who wish to continue their studies. But, it is a fact that much preference is given to the backward classes in the Indian society, and the students hailing from the poor middle class is not benefited by any of these initiatives of Indian government. Further, practices of corruption have further diluted the prospects of students, who wish to make use of such facilities.
No system is fool proof in India, and the same is true for this too! It is a painful truth that, there has been a considerable rise in the rate of crime associated with financial institutions offering education loans. In the year 2003, 118 cases of fraud were registered in Mumbai, & 223 cases were registered in Delhi by students that they were cheated by agents of banks who claimed that they will help in organizing funds to the students at much lower rates of interest.
Though many steps have been taken in this regard, it is a sad thing to state that the rural parts of India remain unaware about such offers by financial institutes and banks. The government has initiated mass education programs to create awareness among the rural people, but it is not known as to what extent it has been successful.
The year 2005 saw a considerable growth in the rate of students opting for educational loans. In June 2005 alone, the private sector banks saw a growth of 13.2% in the education loans sector, as compared to 8.3% in the last year during the same period. This indicates that the Indian market in this segment is seeing an all time high. As the number of students going out of India for educational purposes has considerably increased, there has been a steep rise in the number of foreign universities who come to India to select their students and assist them with educational loans, if the student wishes to opt for it.
In turn, the student needs to promise the University that he will continue with the administration of the University on completing his course, for a minimum period of 3 years. However, this scheme is available with only a handful of universities and is provided to only those students who exhibit extra ordinary academic brilliance. Though, students willing to go out of the country & willing to have an educational loan from their destination- country may contact the respective embassies with regard to the same.
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