The Delhi government is planning a scheme in which it would stand guarantee for education loans procured by students pursuing higher education in institutions in the city, Deputy Chief Minister and Education Minister Manish Sisodia said on Thursday.
According to the proposed Higher Education Credit Guarantee Scheme, the government will stand guarantee for education loans up to Rs 10 lakh for students who have completed their Class XII from Delhi. The student will get a one -year moratorium after completion of his or her degree or diploma course and can repay the loan through EMIs over 15 years.
“This government is fully committed to education. The construction of a bridge can be delayed by six months, but if a student is denied an opportunity, an entire generation suffers,” Sisodia told students from various colleges.
He said often banks do not grant loans to students from underprivilaged backgrounds as no one stands guarantee. “Jiske paas koi na ho, uske paas sarkar hai,” Sisodia told the gathering at the Delhi secretariat auditorium. The scheme will be open to students from various financial backgrounds.
“We are taking these steps for the benefit of the future citizens of Delhi. We have an in-built trust that they will repay their loans,” said Sisodia.
He said that the government will have to make some provisions for this in the budget to keep seed money for loans. “The budget provision will be discussed. The banks too have to feel guaranteed,” Sisodia told The Indian Express.
A senior government official said the government plans to keep Rs 30 crore aside for student loans and the interest accrued may be used for repayment of loans, if necessary. “This is the first government to propose such a scheme for students. The national default on student loans is about 7 per cent. There will not be too many defaulters. The amount that is being considered is Rs 30 crore, but it may be changed later,” the official said.
Education secretary Punya Srivastava explained the draft provisions of the scheme that entails loans on interest rates of base rate plus 2 per cent that will cover books, equipments, tuition and other fees and hostel and boarding charges as well. She added the scheme will apply to all government and private institutions with the National Assessment and Accreditation Council or the National Board of Accreditation rating of A or B, and self-financing institutions affiliated with Guru Gobind Singh Indraprastha University with rating of A+, A or B.
Srivastava also said that there will be a grievance redressal committee and mandatory insurance under the scheme.
Students and heads of educational institutions also gave their feedback about the scheme to the minister. Among suggestions received were helplines, easy procedure and lower interest rates for girl students.
“I had applied for a student loan but I could not secure one as the bank reviewed my parental income and did not find it satisfactory. But with government standing guarantee, I am sure, many students will stand to benefit,” Sher Mohammed, an IIT Delhi student, said.
“The scheme will benefit for all students but there needs to be more clarity about the interest rates that will be charged on student loans ,” said Dolly Sharma, a BA second-year student.