An education loan is a very important part of a college student’s life, especially if one wants to go to a foreign country and pursue education. In India, there are a lot of banks, agencies which provide loans. One of these is Vidya Lakshmi, a project under the UGC.
NPA or Non-Performing Asset is an economic term referring to a loan which is not repaid or which is defaulted. As per recent studies, the number of loans are on the decline and NPAs are on the rise.
One of the major reasons for defaulting loans is that job growth is on the decline. Those who are exiting the education system are not given a welcome in the job sector. Students graduating don’t have enough job opportunities or don’t seek them out. Even if they are able to find a temporary one, they can be removed from it any time. This will mean that they won’t have an income, and eventually, loan repayment will be delayed.
Other factors include the concentration of loan applicants in a given geographical area. In India, it happens to be the Southern region where high literacy and education is prevalent, which force the students to continue their education in reputed institutions. The procedure for the same should be made fairly easier too.
The banks must look into the course selected by the student as well the university where they have applied for admission. With that, a rough idea about the employability and scope of the course can be obtained. Thereafter ,the banks can set the time for which the loans must be paid back. The period must be made realistic, say like 10 to 15 years. The loans must also take into account financial dependency and academic merit.
The government can help in giving subsidised and interest-free loans to financially weak students. The collateral for the loans must be carefully selected. The amount of repayment should be light enough so that it should not be a burden to the borrower or the lender. In case of any default, the student must be able to approach other agencies or government for help. Just in case if the student is unemployed, it may be considered that the loan burden be transferred to parents or others.
The RBI has recently taken a big step: that banks are not to consider restructured educational loan as NPA. This may encourage banks to continue endowing educational loans and not put the life and career of our youth on risk. However, it is important to understand a loan is taken to improve one’s life under the guidance of their parents. It is the student’s duty to pay back the loan and not their parents’.
Simply put, don’t take a loan if you are not sure you can repay it. Not repaying it makes you a defaulter and this will affect your credit score badly; it may even force you to be ineligible for future loans. Try your best to do your best.
The government must ensure that the loans go only to those who are determined to build their career. It should not be given out like ration. There are many other ways in which you can complete your education, even without loans. Explore these options well in advance.
As a society, it is our duty to ensure that the future of our students is in safe hands. We can’t fail them but at the same time, we must not compromise on our ability to help them either.