In my recent conversation with some of the young trained graduates I was told that they were finding it difficult in repaying the education loan, which they have taken to complete their professional degrees. The loan debt has created an “unprecedented financial challenge” for them. The similar conclusion was made in a study, which said that the loans were causing to educated youths headaches and loss of sleep. The study also revealed that the loan debt is a source of “significant” or “very significant” stress on more than 80 percent working professionals. The pressure of making big monthly loan payments are taking its toll in terms of stress, housing affordability and quality of life.
Recognizing the increasing share of banks and other market forces in higher education in India, few questions naturally comes into my consideration – whether this is making education more affordable or making it more exclusive? Is the access to student loans progressive or regressive? Does it affect the demand for higher education of weaker sections? Does it benefit the rural and urban; boys and girls; and caste groups equally? What is the relationship between course structure and loan size? What are the issues of recovery and default rates? What is the link between repayment and employment opportunities?
There is no denying that education has become very important priority in the human life and young people are becoming aware to utilize each opportunity related to this for moving forward. There is also a considerable growth in the global economy and the new aspirants are exposed to more choices. When we do the retrospection and look into our own times, then the choices were limited and so were the challenges. And it is this opportunity which government in collaboration with other financial institutions are trying to en-cash upon. Probably, government finds the growing global educational opportunities as their business prospect. Or else look confused and puzzled to face this new challenge.
Then, is this very desirable to keep these trained educated young people in such a precarious situation when country requires them the most? Is it not good for a country like ours to engage these trained youth in nation building exercise than to keep them busy calculating the interest payment and keep them worrying about the repayment of loans? Is this not desirable for a nation where more than 70 percent youth belong to agricultural families and where employment opportunities are such a dismal, to support in providing relevant free skill and training so that they are able to contribute more and more? Aren’t we making education a liability?
Entry of market forces have made education so expensive that even young people of middle class and upper middle-class families are finding it difficult to meet the costs. The condition of the aspirants from lower income families are even worse. The talented students from these economically backward sections find it difficult to pursue a dream of a higher education. The price of engineering degree varies from 8 lakhs rupees in IIT to 25 lakhs rupees in private college. The cost of medical graduate varies from 16 lakhs in government colleges to 100 lakhs in private college. There is altogether no relief even in case of MBA hopefuls to law aspirants. The exorbitant interest rate of banks causing these young people about 60 to 80 thousand a month as a typical loan repayment. Recently I was talking to one auto driver and he said that despite clearing the joint entrance engineering examinations his son could not able to enroll himself in the college because of non-affordable cost and no bank provided him the required loan either. Considering the lucrative business opportunity, this is no surprise that the Banks pitched in to this field to make money out of the owes of these young students. Interestingly, even the central and state governments have come out with their student credit cards and has fixed target for the Banks. How can government fix a target to make life misery of students? Probably even government is looking at economics of education not the sociology and psychology of education.
Some time back the matter was raised in Parliament about the insensitivity of State Bank of India’s action where, it was reported that the Bank had sold its active education loan as NPA (non-performing asset) to Reliance Assets Reconstruction Company (RARC) even while the student borrower was still pursuing his education. When the student approached the bank for the next disbursement of fees, the bank then realised that they had sold the loan account to RARC. A student from Madurai district in Tamil Nadu has reportedly committed suicide due to harassment by a private recovery agency.
In yet another instance, it was noted that the Central Bank of India shamed a poor education loan woman borrower for a meagre default by displaying her name on a banner at a public place. The woman then lodged a complaint against the bank resulting in the National Human Rights Commission (NHRC) levying a penalty of one lakh rupees on the Bank. These are just a representation that have been reported, while there are many cases where education loan borrowers have been harassed by banks and have ended their lives.
I think, keeping the affordability, social justice, fairness, equity and equality of opportunity into consideration higher education and technical education cannot be let into the hands of market forces alone. The public financing of education must remain in the picture for larger interest of nation building. Whatever be the changing narrative of the state may be the role of welfare state cannot be totally denied in India.