Scheme of soft loans for students fails to take off
Planning Commission objects to HRD Ministry’s proposal; says banks are already doing the job
The government’s plan to set up a national educational finance corporation to provide soft loans to students and educational institutions has been put on the backburner with the Planning Commission objecting to the proposal.
The Human Resources Development Ministry had mooted the plan in 2010, seeking to provide soft loans to private, aided and government educational institutions for their infrastructure development and expansion. It also aimed at providing re-finance loans to students to support their higher education pursuit.
“Proposal for setting up of National Educational Finance Corporation (NEFC) was prepared and sent to Planning Commission for concurrence. Planning Commission raised certain objections to the proposal. Therefore, the proposal was not taken forward,” sources in HRD Ministry told Deccan Herald.
Questioning the feasibility of the plan, the Commission wondered why an independent finance corporation was required to be set up for giving loans to educational institutions and students when banks were already doing the same work, sources added.
By the establishment of a corporation, the Ministry was considering to provide loans at 4 per cent annual interest to students with annual parental income of less than Rs 4.5 lakh and at 7 per cent for those whose parental income was more than Rs 4.5 lakh, provided the loan amount was less than Rs 12 lakh.
However, the plan panel’s objection to the proposal has come as a big setback to the HRD Ministry’s plan to boost education sector in the country. By setting up an independent financial institution to provide soft loans to students and institutions, the Ministry was hoping to provide much-needed relief to the education sector which has been facing acute shortage of funds.
According to an estimate of the HRD ministry, the requirement of funds in the education sector could touch as high as Rs 1.55 lakh crore in 2016-17. Currently, the financial requirement stands at approximately Rs 60,000 crore. Through the corporation, the government wanted to ensure lendable funds of an estimated Rs 38,000 crore by 2012 and Rs 1 lakh crore by 2016-17.
HRD Minister Kapil Sibal, replying to a question in Rajya Sabha in March last, had said that once the proposed corporation was set up, loans would be made available to interested institutions, and students will not have to “sell family silver for education.”
