As part of its pre-poll Delhi Dialogue campaign, the Aam Aadmi Party has promised that every Delhi student who has cleared Class XII will be eligible for a student loan. These loans will be given at low interest rates with the government as the guarantor, party leaders said on Tuesday.
“All students who have completed Class XII from Delhi, from a public or private school, will be guaranteed a loan. This loan can come from a private or a public bank but the government will be the guarantor in all cases,” said Atishi Marlena, AAP spokesperson.
With around 1.5 lakh students passing out of Class XII every year in the capital, the party feels that a large section among them do not get access to higher education, even if subsidised, because of financial restraints.
Stating that the problem of access to higher education has not been resolved by banks offering student loan, Marlena said, “It is a Catch 22 situation. Those who can afford to pay the fees are the ones who eventually get loans since loans are given against some guarantee such as property.”
Aimed to benefit students from economically weaker sections who are unable to provide such a guarantee, the AAP has proposed that the government will become the guarantor. In addition, the party also said it will keep around Rs 30-50 crores aside in the Delhi budget for paying back loans in case of default.
“With the government becoming a guarantor, the interest rates will also be reduced. One of the reasons for high interest rates is that those who pay back the loans can make up for the defaulters. A year-long moratorium will also be provided for paying back these loans,” Marlena added.
According to the party’s estimate, if 60,000 out of 1.5 lakh students want student loans, the proportion of defaulters will not exceed 10 per cent. “As per our research, the default rate currently is between 6-7 per cent. If we assume that a student has to pay around Rs 50,000 as fees annually, and studies for around four years, the government will be required to pay around Rs 30 crores annually,” Marlena said.
This is a very small part of the annual Delhi budget of nearly Rs 40,000 crores, she said. The loan amount will primarily cover tuition fees and some maintenance cost.
In order to put a check on defaulters, the party has planned to link these loans to Aadhar cards or Income Tax returns. “We have run this past bank associations and we have been assured that the plan is feasible,” she said.