Representative image (Courtesy: PTI)

CHENNAI: The pool of eligible institutions for which students can take education loans to pursue professional or technical courses just got smaller.

According to the latest set of guidelines issued by the Union HRD ministry, eligibility for the model educational loan scheme of the Indian Banks’ Association is restricted to students enrolling for professional and technical courses in NAAC-accredited colleges and universities, institutions of national importance and centrally funded technical institutions. Programmes that have been accredited by the National Board of Accreditation (NBA) are also eligible.

Any professional or technical course beyond this would need to be approved by the respective regulatory bodies such as the Nursing Council of India for nursing courses and the Medical Council of India for medical courses, the guidelines state.

Under the revised accreditation framework of NAAC, India has 59 accredited universities and 997 colleges. Between 2017 and June 14, 2019, the total number of accredited institutions stood at 1,056.

Bankers say students from NAAC and NBA-accredited institutions and departments stand a better chance of being hired during campus placements, which translates into a higher possibility of their education loans being repaid.

The model scheme states that students whose parents earn up to Rs 4.5 lakh can avail interest subsidy. The loan is given without any collateral and third-party guarantee for a maximum amount of Rs 7.5 lakh.

All applications for education loans are now routed to the banks through the Vidya Lakshmi portal. In the past four years, banks have approved barely 42,700-odd out of 1.44 lakh-plus applications received through the portal.

“Banks are not giving importance to education loans. There is not enough awareness among bankers and students. Disbursement of education loans are not properly monitored,” said K Srinivasan of the Education Loan Task Force, a voluntary organisation that seeks to raise awareness about how to go about applying for an education loan.

While applying for a loan, students are allowed to pick three banks each in their respective areas. The banks are required to intimate the status of an application to a student within 15 to 30 days. “But banks often do not respond within the period mandated by the guidelines. There is no proper grievance redress mechanism for education loans either,” Srinivasan said.

Students can repay a loan in 15 years. In the event of being unemployed or under-employed, they are eligible for a moratorium on repayment.

Asked about the high percentage of rejections, a Canara Bank official in Chennai said: “We look at the employment prospects of a candidate as one of the main criteria while sanctioning an education loan.”



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