Govt. of India to subsidy on education loan rate to make higher education accessible

Rising inflation has disturbed budgets of majority households of middle and lower income groups. Everybody is planning their budgets from where to cut and where to add. There comes a hope of some relief in the near future for the lower and middle income group at the education front with the Government of India (GoI) planning to provide subsidy on education loan interest rate.

In an interview Prof Sukhadeo Thorat, chairman, University Grants Commission (UGC), told reporters that under the 11th five year plan, GoI have plans to create a Higher Education Loan Guarantee Authority (HELGA), which will come up with various provisions to help students, particularly of the middle and lower income groups, in securing education loans and scholarships for higher and professional education.

The main idea behind it is in the next five years to increase the overall enrolment rate in higher education to 15 per cent from the existing 10 per cent by establishing new universities and colleges and expanding the capacity of existing institutions. In the 11th plan there is also a proposal for fee levels, that fee levels should be increased gradually, subject to the upper limit of 20 per cent of the operating costs of the general university education.

Simultaneously, Prof Thorat said, to make higher education more accessible, there are plans to disburse scholarships to at least two per cent of the total students. He further added, GOI will itself become guarantor for the student applying for higher education loans and provide subsidy in the rate of interest during the moratorium period. Currently banks, are giving loans without collateral securities up to Rs 7 lakh but for a loan above Rs 7 lakh students have to arrange for guarantors, which in many cases are not available because applicants come from middle or low income groups.

"The modalities for HELGA and the amount of subsidy to be given on education loan interest are being worked out by the government and a definite plan will be rolled out within 2-3 months," said Prof Thorat, who was in the city on Tuesday to deliver convocation address at Babasaheb Bhimrao Ambedkar University.
UGC has also decided to provide financial assistance to poorly performing institutions under its "Bridging The Quality Gap" schemes.

According to NAAC analysis there are 20,676 colleges in the country, of which 16,000 come under UGC's purview. Till date The National Assessment and Accreditation Council (NAAC) has accredited 3,492 colleges, of which nine per cent were rated as A, 68 per cent were graded B and 23 per cent were categorized under the C grade.

Likewise, of 417 universities in the country, so far 140 have been assessed by NAAC, 31 per cent of which were graded as A, 61 per cent B and seven per cent C. Clearly, quality in majority institutions is ‘average' or ‘poor'. As per the data of NAAC analysis data there is a deficiency in human resources and infrastructure is the main reason for the gap between A and C. "Now UGC plans to provide one time grant to ‘C' grade institutions, with a condition of matching contribution.