“Educational Finance Corporation” is a good idea

February 1st, 2010

Following is an excerpt from a PTI report.

… The proposed Corporation will give loans on easy terms which will be repaid by the borrowers only after getting jobs, he told a news conference here.

Sibal, …, said talks are on with the Planning Commission and "we hope the Corporation will be set-up during the 12th Five-Year Plan".

He said approximately 22 crore children go to schools in the country, of whom only an estimated 2.5 per cent pursue higher education in universities.

In developed countries, the percentage of students pursuing higher education stands at 40 per cent, he said.

I think this is a very good idea. This will enable more students to pursue higher education and pay for it; It will enable government colleges to be able to charge for reasonable tuition that can be used towards improving the college infrastructure (note: The infrastructure in most government colleges is in shambles, yet they don’t dare to increase the normal tuition; the only thing they do to raise some resources is to start some self-financed courses); it will enable the establishment of more private colleges, and in general it will improve the quality and quantity of higher education opportunities.

While in the past there has been concern about repayment of such loans, with the creation and usage of unique ID for everyone in India, the loans taken can be made part of everyone’s record and its repayment can be easily tracked.

The government can also use these loans and their repayment as a tool to achieve its goal. For example, it can have a policy of (partially) waiving the loans for people who teach for 5 years and thus encourage more people to go into teaching.

For the kind of scheme that is needed for India, it will help to look at the scheme used in Australia. That kind of a scheme adapted to the Indian context will work well for India.

Entry Filed under: Educational Loans,India

1 Writeup

  • 1. chidambaram udhaya singh b  |  September 26th, 2010 at 12:55 pm

    what is the rate of interest for education loan to study higher studies and whether the interest is eligble for subsidy.
    Thank you,


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