Govt examining income-contingent edu loan proposal

Students will not have to worry about repayment of education loans until they get jobs and start earning adequately, if the government accepts a proposal.

The Human Resource Development (HRD) ministry is examining a suggestion of the Indian Institute of Technology-Delhi (IIT-D) for rolling out an income-contingent education loan scheme for the higher education students on the lines of a scheme in Australia under which repayment would begin only after the students are employed and their earning goes above a fixed threshold.

“Yes, we are examining it,” ministry's higher education secretary R Subrahmanyam told DH, when asked.

Australia's Higher Education Loan Program (HELP) provides loans to students studying approved higher education courses. The scheme allows students to defer the costs of tuition until their taxable income reaches "a certain level" at which repayments commence.

If the government accepts the IIT-Delhi's suggestion, it will bring much relief to the students pursing technical and professional programmes taking education loan, as a large number of them do not get job offers for a long time after completion of programme.

Even if a student lands a job, the salary remains inadequate to meet his or her personal expenses and repay the loan amount.

As per the existing education loan provisions, a student will have to start repayment a year after he/she completes the programme, irrespective of the fact whether employed or not. If a student gets a job soon after completion of his/her programme, repayment will start after six months.

The IIT-Delhi has suggested the HRD ministry to consider setting up an agency similar to the Higher Education Financing Agency (HEFA) for “directly” funding students' education with full or partial tuition fee based on their needs, and put in a process to recover as additional tax/cess once he/she gets employed.

The HEFA, a non-banking agency, provides loans to the government educational institutions for infrastructure development.