HRD ministry fears, education loan interest subsidy program may have failed

UPA government grand education loan interest subsidy program seems to have failed. According to the HRD ministry it has not received any reimbursement claim from the member scheduled banks so far. In fact ministry is flooded almost daily with complaints from students, parents and even MPs, occasionally, on behalf of constituents, that banks are not assisting students. The HRD ministry has requested Pranab Mukherjee’s finance ministry to intervene in the matter.

However interest subsidy scheme was a key component of the UPA’s Common Minimum Program in 2004 and the Congress manifesto in 2009, and the scheme was launched in the same year after the coalition returned to power.

The current scheme by the government says that it would pay the interest on education loans for professional courses during the course of study along with the moratorium period for families having income of less than 4.5 lakh a year. The moratorium period consists of the course duration and one year after, unless the student finds a job earlier.

Also, banks are to ask for reimbursements for interest subsidies through the HRD ministry at the end of each half-year or end of the academic year.

The HRD ministry has also written a letter to the finance ministry dated August 9, asking it to intervene in the issue and direct them to submit claims at the earliest. The letter says, “The scheme is effective from the academic year 2009-10 and this ministry has not received any claim from the member scheduled banks so far.”

A series of letters has also been sent to over 150 member banks of the Indian Banks Association implementing the scheme.

On the other hand, according to sources, “Banks are usually prompt to claim their due and we are concerned about the implementation of the scheme. The details of claims — if any — will at least tell us how far the scheme has been implemented and how many students it has benefited.”