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.
Wednesday, April 30, 2008
Students pursuing IIM have to furnish collateral to get loan
The Indian Institutes of Management (IIMs) has hiked their fees therefore many general category students will have to approach banks of educational loans. To get the loan most of the students will have to furnish collateral to get that all-important loan to pay the increased fee.
For instance IIM-Ahmedabad, has almost trebled its fees to Rs 4 lakh to Rs 11.5 lakh. IIM-Kolkata has hiked it from Rs 5 lakh to Rs 7.5 lakh. Others like IIM Bangalore and IIM Lucknow have hiked it from Rs 5 lakh to Rs 8 lakh and Rs 4 lakh to Rs 5 lakh respectively.
If we see the expenses of students then add to that another Rs 3-4 lakh for laptops, books and others expenses, and the overall expense rises by another 30 per cent .Students, therefore, need to shell out anywhere between Rs 9-15 lakh for a two-year course.
Earlier students do not need to furnish collateral, but now students need to shell out anywhere between Rs 9-15 lakh for a two-year course and would start with a loan that they need to pay-off to free their collateral.
Although banks are ready to give loans to students studying in these institutes, the requirement for securities will increase. Till now, in India the maximum loan amount offered for studies was Rs 10 lakh.
The loan terms has been figured out like this no paperwork is required for the initial Rs 4 lakh. After that, there needs be a guarantor for a loan up to Rs 7.5 lakh. Above this, some collateral is required.
As per RBI guidelines, for loans up to Rs 4 lakh, the interest rate should not exceed the prime lending rate (PLR). Above Rs 4 lakh, the interest rate charged is PLR plus 1 per cent.
For instance, Indian Bank offers education loan schemes up to Rs 10 lakh for graduate, postgraduate and professional education in India. The current rate of interest is 12.50 per cent for loans up to Rs 4 lakh and 13 per cent for an amount above that.
Amit Roy (name changed), who recently passed out of IIM Lucknow, had taken an education loan of Rs 7.2 lakh. Today, he is paying Rs 14,000 a month as equated monthly installments (EMIs), which is around 20 per cent of his take-home salary. And he will continue to do so for the next 7 years. "Most of my colleagues are paying installments now," he admits.
Thus, even the crème-de-la-crème of students will start their careers with a loan in their balance sheets. Imagine getting the first salary cheque with an equated monthly installment (EMI) deduction. This not new for IIM students they have had to resort to educational loans for a while now.
Rajeev Mishra (name changed), who has completed a year in IIM-Kolkata, had taken a loan of Rs 7.5 lakh from the State Bank of India last year. Similarly, there are many others who have taken loans. All of them are hoping their salaries will be more than make up for the amount borrowed.
Over the years the banks have geared up loan schemes to meet the demands of aspiring IIM and IIT students because the repayment ability is there.
D Krishnamurthy, general manager, Bank of India, said: "With the hike in the IIM fees, we are looking at providing the students with bigger loans by raising the limit."
For instance IIM-Ahmedabad, has almost trebled its fees to Rs 4 lakh to Rs 11.5 lakh. IIM-Kolkata has hiked it from Rs 5 lakh to Rs 7.5 lakh. Others like IIM Bangalore and IIM Lucknow have hiked it from Rs 5 lakh to Rs 8 lakh and Rs 4 lakh to Rs 5 lakh respectively.
If we see the expenses of students then add to that another Rs 3-4 lakh for laptops, books and others expenses, and the overall expense rises by another 30 per cent .Students, therefore, need to shell out anywhere between Rs 9-15 lakh for a two-year course.
Earlier students do not need to furnish collateral, but now students need to shell out anywhere between Rs 9-15 lakh for a two-year course and would start with a loan that they need to pay-off to free their collateral.
Although banks are ready to give loans to students studying in these institutes, the requirement for securities will increase. Till now, in India the maximum loan amount offered for studies was Rs 10 lakh.
The loan terms has been figured out like this no paperwork is required for the initial Rs 4 lakh. After that, there needs be a guarantor for a loan up to Rs 7.5 lakh. Above this, some collateral is required.
As per RBI guidelines, for loans up to Rs 4 lakh, the interest rate should not exceed the prime lending rate (PLR). Above Rs 4 lakh, the interest rate charged is PLR plus 1 per cent.
For instance, Indian Bank offers education loan schemes up to Rs 10 lakh for graduate, postgraduate and professional education in India. The current rate of interest is 12.50 per cent for loans up to Rs 4 lakh and 13 per cent for an amount above that.
Amit Roy (name changed), who recently passed out of IIM Lucknow, had taken an education loan of Rs 7.2 lakh. Today, he is paying Rs 14,000 a month as equated monthly installments (EMIs), which is around 20 per cent of his take-home salary. And he will continue to do so for the next 7 years. "Most of my colleagues are paying installments now," he admits.
Thus, even the crème-de-la-crème of students will start their careers with a loan in their balance sheets. Imagine getting the first salary cheque with an equated monthly installment (EMI) deduction. This not new for IIM students they have had to resort to educational loans for a while now.
Rajeev Mishra (name changed), who has completed a year in IIM-Kolkata, had taken a loan of Rs 7.5 lakh from the State Bank of India last year. Similarly, there are many others who have taken loans. All of them are hoping their salaries will be more than make up for the amount borrowed.
Over the years the banks have geared up loan schemes to meet the demands of aspiring IIM and IIT students because the repayment ability is there.
D Krishnamurthy, general manager, Bank of India, said: "With the hike in the IIM fees, we are looking at providing the students with bigger loans by raising the limit."
Monday, April 28, 2008
CorpBank and IIM, Ahmedabad sign MoU to provide educational loan
Corporation Bank and Indian Institute of Management, Ahmedabad signed a MoU to help students get educational loans to pursue for higher studies.
The bank and the institute have mutually agreed to have tie-up arrangement for the students to pursue higher studies by availing educational loans from the Bank.
According to a bank release under the MoU, both Corporation Bank and IIMA will work in close coordination through their branches/office. The institute will recommend the bank as a preferred financier for granting education loans to its bonafide students pursuing regular full time academic program and the bank will accept its nomination as a preferred financier for education loans.
The bank release stated, "Apart from education loan, the bank also extends assistance for purchasing accessories such as laptops and personal computers to aid students in their studies".
At the time of discussion IIMA showed keen interest in the "Branchless Banking" model developed by the Bank, which aims to take technology to the remotest villages of the country for providing banking facility.
The bank and the institute have mutually agreed to have tie-up arrangement for the students to pursue higher studies by availing educational loans from the Bank.
According to a bank release under the MoU, both Corporation Bank and IIMA will work in close coordination through their branches/office. The institute will recommend the bank as a preferred financier for granting education loans to its bonafide students pursuing regular full time academic program and the bank will accept its nomination as a preferred financier for education loans.
The bank release stated, "Apart from education loan, the bank also extends assistance for purchasing accessories such as laptops and personal computers to aid students in their studies".
At the time of discussion IIMA showed keen interest in the "Branchless Banking" model developed by the Bank, which aims to take technology to the remotest villages of the country for providing banking facility.
Govt plans to subsidize interest of educational loan
On Tuesday Minister of State for Human Resource Development D Purandeswari informed Lok Sabha that the government is working out a plan to subsidize the interest component during the moratorium period on education loans taken by students having lower than a specific parental income for pursuing professional education in India.
In a reply to a question the minister said, "A proposal to introduce a scheme for providing interest subsidy during the moratorium period on the education loans taken by students having lower than a specific parental income, for pursuing professional education in India under the revised Model Educational Loan Scheme formulated by the Indian Banks' Association, is under consideration of the government."
She said in the 11th plan a provision of Rs 4,000 crore has been allocated for this proposed scheme.
In a reply to another question Purandeswari said the Indira Gandhi National Open University (IGNOU) has launched many certificate courses and diploma programs. She informed a six month certificate course on HIV/AIDS and Family Education (CAFE) was started in 2002.
The Minister said from the academic session 2003 a diploma program on HIV/AIDS and Family Education (DAFE) was started and the course on social work with compulsory courses on HIV/AIDS and Family Education and Substance Abuse was introduced in academic year 2004.
In a reply to a question the minister said, "A proposal to introduce a scheme for providing interest subsidy during the moratorium period on the education loans taken by students having lower than a specific parental income, for pursuing professional education in India under the revised Model Educational Loan Scheme formulated by the Indian Banks' Association, is under consideration of the government."
She said in the 11th plan a provision of Rs 4,000 crore has been allocated for this proposed scheme.
In a reply to another question Purandeswari said the Indira Gandhi National Open University (IGNOU) has launched many certificate courses and diploma programs. She informed a six month certificate course on HIV/AIDS and Family Education (CAFE) was started in 2002.
The Minister said from the academic session 2003 a diploma program on HIV/AIDS and Family Education (DAFE) was started and the course on social work with compulsory courses on HIV/AIDS and Family Education and Substance Abuse was introduced in academic year 2004.
Saturday, April 5, 2008
NBCFDC disbursed loan amongst 10 lakh backward class families
The National Backward Classes Finance and Development Corporation (NBCFDC) distributed loan amongst the families belonging to the Backward Classes living below the poverty line. About 10 lakh families got the benefit of this loan.
According to the official release the NBCFDC has assisted more than 1.21 lakh beneficiaries by disbursing a loan amount of Rs 141.31 crore during 2007-08. Through accruing process it has assisted more than 9.51 lakh families of Backward Classes living below the poverty line with a loan amount of Rs 1,364.77 crore.
The commission through Self Help Groups (SHG) has started Micro Finance Schemes and Educational Loan Scheme 'New Akanksha' for technical and professional courses at graduate and higher levels.
As per the reports of the corporation against paid up capital of Rs 491.35 crore, the Corporation has disbursed Rs 1,364.77 crore at the end of Financial Year 2007-08.
Loan amount of Rs 873.42 crore over and above the budgetary support was disbursed by recycling of repayments and recoveries and efficient management of internal resources.
According to the official release the NBCFDC has assisted more than 1.21 lakh beneficiaries by disbursing a loan amount of Rs 141.31 crore during 2007-08. Through accruing process it has assisted more than 9.51 lakh families of Backward Classes living below the poverty line with a loan amount of Rs 1,364.77 crore.
The commission through Self Help Groups (SHG) has started Micro Finance Schemes and Educational Loan Scheme 'New Akanksha' for technical and professional courses at graduate and higher levels.
As per the reports of the corporation against paid up capital of Rs 491.35 crore, the Corporation has disbursed Rs 1,364.77 crore at the end of Financial Year 2007-08.
Loan amount of Rs 873.42 crore over and above the budgetary support was disbursed by recycling of repayments and recoveries and efficient management of internal resources.
Wednesday, March 12, 2008
Corporation Bank the first one toCorporation Bank the first one to provide online education loan provide online education loan
Speaking on the inauguration of the new building -Expert Residency- of the Expert Educational and Charitable Foundation (EECF), near Kalakunj Road in Mangalore on Sunday, Sambamurthy said that their bank has become a role model for the entire nation for introducing online education loan.
Bank Chairman B Sambamurthy said the Corporation Bank is the first bank in the country to offer online education loan to students for pursuing higher studies
He maintained that “Even the central government has advised all other national banks to follow our bank while introducing online education loan scheme.”
The bank has sanctioned around Rs 400 crore loans to students for higher education, adding to this he said that the bank has shown 45 per cent growth in education loan sector.
The bank has a motto that “none of the deserved students should not be deprived of pursuing higher education just because of lack of money”, he added.
Discussing about the scenario of Human Resources in India, Sambamurthy said that earlier, there was a time when people used to chase companies to get a job.
But now, he pointed out that the scenario has changed most of the national and multinational companies are trying to fill up the vacancies. Recruiting manpower had become a big challenge for companies, he added.
While praising the success of EECF, Sambamurthy said that the wonderful partnership between the Corporation Bank and the institute have produced better result.
“If we are ready to meet the challenges in time, the growth rate, individual as well as national, will double the target,” he asserted.
Deputy Commissioner M Maheshwar Rao stated that standard of excellence was the criteria which depends on the possibility of success.
Bank Chairman B Sambamurthy said the Corporation Bank is the first bank in the country to offer online education loan to students for pursuing higher studies
He maintained that “Even the central government has advised all other national banks to follow our bank while introducing online education loan scheme.”
The bank has sanctioned around Rs 400 crore loans to students for higher education, adding to this he said that the bank has shown 45 per cent growth in education loan sector.
The bank has a motto that “none of the deserved students should not be deprived of pursuing higher education just because of lack of money”, he added.
Discussing about the scenario of Human Resources in India, Sambamurthy said that earlier, there was a time when people used to chase companies to get a job.
But now, he pointed out that the scenario has changed most of the national and multinational companies are trying to fill up the vacancies. Recruiting manpower had become a big challenge for companies, he added.
While praising the success of EECF, Sambamurthy said that the wonderful partnership between the Corporation Bank and the institute have produced better result.
“If we are ready to meet the challenges in time, the growth rate, individual as well as national, will double the target,” he asserted.
Deputy Commissioner M Maheshwar Rao stated that standard of excellence was the criteria which depends on the possibility of success.
Tuesday, February 26, 2008
FM asks PSU banks to clear education loan in a set period of time
On Tuesday again the Finance Minister reiterated that the public sector banks must clear education loans within a period of 15 days to one month and banks should also set up an online system for speedy clearing of loans.
In his reply given to Rajya Sabha Chidambaram, said, "As per the norms prescribed under the Model Education Loan Scheme, the banks are required to dispose of loan applications within a period of 15 days to one month." However he said as per the reports from the PSU banks time period condition is being taken care of where the applications were found complete in all respects.
The Finance Minister stated, the government has directed the banks to set up an online system of loan applications. This will make possible for the students to download the loan application form, apply online and learn the status of their loan application, Chidambaram said, online facility is now being provided by all major public sector banks.
As per the report received from the RBI he said educational loans worth Rs 18,992 crore were excellent as on November 23, sanctioned by the public sector banks.
In his reply given to Rajya Sabha Chidambaram, said, "As per the norms prescribed under the Model Education Loan Scheme, the banks are required to dispose of loan applications within a period of 15 days to one month." However he said as per the reports from the PSU banks time period condition is being taken care of where the applications were found complete in all respects.
The Finance Minister stated, the government has directed the banks to set up an online system of loan applications. This will make possible for the students to download the loan application form, apply online and learn the status of their loan application, Chidambaram said, online facility is now being provided by all major public sector banks.
As per the report received from the RBI he said educational loans worth Rs 18,992 crore were excellent as on November 23, sanctioned by the public sector banks.
Subscribe to:
Posts (Atom)