India is to set up a Higher Education Loan Guarantee Authority (HELGA) that will make it easier for needy students to secure bank loans for education and also pay the interest till they complete their course.
Currently, the interest of the loan is added to the principal amount and thus the compound interest puts a lot of burden on students.
The mega plan, orchestrated by the Planning Commission and the human resource development ministry, will help students with annual family income of Rs.250,000 or less to avail of the loan.
'Every year, banks are providing study loans worth Rs.150 billion. We are setting up a Higher Education Loan Guarantee Authority to help needy students cross the hurdle,' said a Planning Commission member who is closely associated with the project.
The authority will have a mandate to pay the interest incurred due to the study loan till the candidate completes the course. The member said this would put a burden on government to the tune of Rs.6.5 billion annually.
The scheme will be available to both postgraduate and undergraduate students of institutes recognised by the University Grant Commission (UGC), the All India Council for Technical Education (AICTE) and the Medical Council of India.
'Depending on their requirement, they will get loans up to Rs 1.5 million from banks. We are also planning that students should not pay huge collaterals, as is the norm now, to avail loan from banks,' he said.
The official said the ministry officials and our members are negotiating to implement the scheme from the coming academic year.
Source: http://www.indiaenews.com/education/20071219/87097.htm
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