The Department of Human Resources Development is in the process of making changes to its program to pay interest on student loans for students in the economically weaker section.
Instead of transferring the money to a bank account, the amount could be credited directly to the student’s account to maintain greater transparency and reduce the number of outstanding loans, official sources told DNA.
The government pays the interest amount on student loans for students whose annual family income does not exceed Rs 4.5 lakh per year.
Senior ministry officials have attempted to revamp the interest subsidy program as the number of outstanding student loans has grown steadily in recent years.
According to a study conducted by Professor Jayadev M of the Indian Institute of Management-Bangalore, delinquent loans have increased at a rate of 12% since 2008. According to data compiled by the Indian Banks’ Association, total studies in Current loans at the end of fiscal year 2016-17 stood at Rs 67,678.5 crore.
The ministry increased its budget as part of the grant program. While it allocated Rs 1,100 crore in 2013-14, the amount increased to Rs 2,081 crore in 2014-15 and Rs 2,130 crore in the next fiscal year. There was a slight decrease in the allocation in the 2016-2017 budget, when the amount was 1,950 crore rupees. The amount could increase again in the next budget, sources said.
“Even if the money is handed over to the banks on time, the outstanding amount has increased. This is why we believe it would be better to transfer the amount directly to student accounts. It is possible that the banks use the cash reserve and lend it to earn additional interest, ”a source told the ministry.
A note regarding the proposed change in the regime has already been moved to the ministry.
The Planning Commission report (2011) suggests that to achieve the target gross enrollment rate in tertiary education of 30 percent by 2020, at least 20 percent of enrolled students should have access to student loans. studies.