MHRD data also indicates variation in size of loans disbursed, with OBCs, SCs and STs receiving lower amounts on average

Around 70% of the education loans disbursed in the country appear to be going to upper caste students, data on a government-funded surety scheme for educational loans furnished by Ministry of Human Resource Development (MHRD) in the Lok Sabha has indicated.

The data provided was on the Credit Guarantee Fund Scheme for Education Loans (CGFSEL), through which banks can avail surety from the National Credit Guarantee Trustee Company Limited (NCGTC) for loans sanctioned up to ₹7.5 lakh without any collateral.

The data available from financial year 2016-17 till now shows that of the 4.1 lakh students benefited under the scheme, a whopping 67% belonged to General Category (GC). Only 23% were from Other Backward Classes (OBC), 7% from Scheduled Castes (SC) and 3% from Scheduled Tribes (ST).

Importantly, the size of the loan sanctioned to GC students tends to be higher than the amount sanctioned to students from other categories.

For instance, while 67% of the students were from the general category, they availed 70% of the total of ₹13,797 crore loan amount covered under CGFSEL.

Average loan amount

The average loan amount guaranteed under the scheme for a GC student was around ₹3.54 lakh. In contrast, for students from other categories, the size respectively for the students of OBC, the SC and the ST were ₹2.91 lakh, ₹3.24 lakh, and ₹3.17 lakh.

Su. Venkatesan, Member of Parliament, Madurai, who obtained the data through a question in the Lok Sabha, said that while data on all disbursals of education loans is hard to come by, data on the CGFSEL scheme can be taken as a fair indicator.

Highlighting that the scheme covered only smaller loans sanctioned without collaterals, he said, “These are the loans availed by those from socio-economically backward sections. If there is such a huge gap here, it clearly indicates a problem from a social justice perspective.” NCGTC’s annual report for 2017-18 said 29 banks have registered for the scheme.

Major private sector banks were missing from the list and all public sector banks were present. The report also said that 83% of the loans covered were smaller in size, i.e. within ₹4 lakh.

Caste privilege

M. Raj Kumar, a former banker from Namakkal, who runs Educational Loan Awareness Movement, said the data clearly showed that education loans were available predominantly to students from families who have better awareness and who could access banks through their social networks because of their caste and class privileges.

K. Srinivasan, convener, Educational Loan Task Force, said bias towards students from a particular category can be clearly established only if details on all disbursals of education loans were available, but there was no doubt that students from underprivileged sections were finding it difficult to avail loans.

“Loans should be given to all eligible students irrespective of their caste. Unfortunately, unlike the previous regime, education loans are not a priority of the present Central government,” he said.