KOZHIKODE: The exponential rise in the educational loan Non-performing Assets (NPAs) in the state raises serious concerns about the financial position of banks besides affecting the students. Financial experts and banking institutions call for an urgent intervention of the state government to initiate measures to streamline educational loan schemes and regulate fee structure of professional courses across South India.According to a recent study ‘Indebted Education- Social Implications of Students Loans in Higher Education: A case Study of Kerala’, sponsored by the Kerala State Higher Education Council and conducted by Soumya Vinayan of the Council for Social Development (CSD), Hyderabad, ‘the phenomenal increase in NPAs indirectly indicates the low levels of repayment (capacity) of students. The present loan scheme does not address the issue of capability of repayment of students. If the educational loan schemes are not streamlined and the levels of repayments are not ensured, it would affect the financial health of banks.’It adds, “given the rising NPA and burgeoning amounts of loans outstanding, it is very unlikely that private parties and even the public sector banks would encourage students loans in the long run. This is significant as student loans or outstanding for the past few years is equivalent to or more than the budget allocation for University and Higher Education (inclusive of Technical Education) by the Government of Kerala.”“While the total budget allocation for higher and technical education in 2008-09 was around Rs 986.91 crore, the amount of educational loans sanctioned during the fiscal stood around Rs 1624.48 crore.”Says Economist K N Harilal of the Centre for Development Studies (CDS), Thiruvananthapuram, “uncontrolled privatisation and rampant increase in professional courses are the root causes of this issue.”“Managements are looting the money deposited by the public in banks using the students. Shut down all those private engineering colleges and whip the managements. Promote proper educational institutions, limit the number of seats so that only eligible students can secure admission and provide educational loans to them,” Harilal said.According to the State Level Bankers’ Committee (SLBC) officials, widespread misuse of the norm that there is no need for collateral security for loans up to `4 lakh has also been reported.“Since its introduction, fee for professional courses, particularly nursing, multiplied several times. Many institutions increased the fee from Rs 60,000 to Rs 4 lakh and forced the students and parents to take educational loans. Parents also started demanding managements to include capitation fee and donation into the tuition fee so that everything goes under the educational loan amount,” a senior officer said.The general feeling that education loans would be waived in the long run just like farm loans also affected the repayment process.“However, banks cannot stop providing educational loans as it is the only resort of talented students hailing from economically weaker families,” the official said. Bank officials suggest the setting up of a separate institution or agency, protected by the state government, to deal with educational loans. The study by CSD, Hyderabad, also endorses the ‘constitution of an autonomous body which not only deals with repayable loans but re-introduces merit and need-based scholarships across courses of all study and disciplines.’ It also demands the constitution of a high-powered committee at the state-level, consisting of senior officials from Education Department, experts, policy makers and bankers to look into the re-structuring of the educational loan scheme.“A comprehensive survey of student loans provided by all banks in Kerala should be conducted incorporating details regarding course and location of study, amount of loan sanctioned and disbursed, outstanding, repaid; original and present level of EMI, collateral, parental income, and present status of employment and income of the individual,” the study said.“Based on these, recalculate the EMI by extending the period of repayment for deserving candidates based on their socio-economic background on a case-by-case basis,” it said.
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