Novel Learning Mantra : Borrow and Study

The young generation in India has been maturing everyday, call it Western influence or age of technology or increasing awareness or anything else. The Generation Y definitely knows how to handle itself and overgrow the boundaries they have been fenced in for so long. Thwarted till today by societal pressure, they are now coming up as the future leaders who are poised and competent enough to take on the world.

These global leaders of the future are taking rein of their lives in their hands from as early as their schooling times. No longer hidden behind their mothers’ shelter or guided by their parents, the youth of today is ready to unharness the horse and take it full on. This begins even before they complete their schooling as they plan their career path and the course of action well in advance. Immediately after clearing Class X exams, they would join coaching centers for preparation of engineering, medical, law and other entrances for various government and private institutes of higher education. And then after preparing for two years and clearing the entrance, they get into the graduation colleges. Then begins the preparation for clearing through post graduate colleges offering courses like MBA, MCA, MA, etc. These institutes generally charge hefty sums of money as tuition fees which salaried people may not be able to afford owing to the increasing cost of living and fluctuating markets.

Here comes the role of education loans as they have made it much easier for students to pursue higher education. Taking loans or borrowing from banks was earlier seen in negative light as it invites liabilities and burdens but has become important today to live a quality life. So, the education fee of students is financed by banks who then repay the loan after completing the course and getting a good job.

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Education Loans May Get Cheaper

Higher education system in India is third largest in the world after China and United States. The government is now taking initiatives to promote higher education in India by bringing down the interest rates on education loan.

1. In an attempt to take the education of the poor to a higher level, government is planning to provide them education loans at 4% interest rate. This initiative is brought in to uplift the higher education of students from weaker sections of the society. The discussions between HRD Ministry and Planning Commission are still on as the proposal is in its preliminary stage.

Banks will provide this loan while a proposed funding corporation for higher education will re-finance the banks to help them compensate the loss. The mandate and functioning of the proposed NHEFC (National Higher Education Finance Corporation) is now being worked out.

2. In another effort to bring down the interest rates on education loans, government is working on a tax saving deposit scheme to fund cheaper loans. It has been trying to reduce interest rates to encourage higher quality education among students.

Investments in deposits under the proposed First Education Savings Scheme (FESS) will be eligible for tax exemption just like in public provident fund or life insurance premium. Savings under the scheme will be collected by commercial banks and transferred to the proposed NEFC for refinancing educational loans at cheaper rates. Banks will then transfer deposits under the scheme every month and get a commission for their services. NEFC will be set up with an initial equity capital and it will then raise funds through public deposits, domestic borrowings, grants, donations and bonds and debenture.

It is going to get easier to study at a higher level as soon as these proposals are passed and implemented by the Ministry.

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