The Covid-19 pandemic has hit the disbursal of education loans and students are being forced to pay fees from their own pockets.
“After submitting all other documents for education loan for PG course, I have been asked to provide the final-year degree certificate, which has not come yet,” said G Divya, who has just joined a Pune-based institute for a PG course in communication.
Though final year exams are yet to be conducted by many educational institutes and universities in the wake the Supreme Court judgment, which made final-year examinations mandatory, many private higher educational institutes have already started the admission process.
“I wish to go in for an education loan for my daughter’s PG course, but had to pay ₹75,000 as first instalment from my own pocket as the processing of my loan application has been put on hold,” said S Suresh, who applied for study loans from Punjab National Bank (PNB).
When contacted, an official with Punjab National Bank said that as per the guidelines, loans cannot be sanctioned without the proof of completing the present course.
But if one pays from the pocket, the loan can still be applied within six months from the date of payment, which can be reimbursed, he said.
According to a senior official with SBI, the scenario this year was “unprecedented”, and the delay in completion of final-year exams and announcement of results could impact students who wish to avail study loans.
‘SBI proactive’
SBI, however, has been proactive in processing educations loans, he said. According to an official with Union Bank of India, processing of loans can be done, but the actual disbursal can happen after the submission of final-year exam results.
Many universities across the States have already announced final-year exams in September and October, and may take about one- to one-and-a-half months to announcethe results.
Banks are expecting education loans to gain some traction by November for the academic year 2020-21. However, the general demand is expected to be on the lower side this year, especially for overseas education, due to travel restrictions and delay in commencement of key courses.
“Many students have put off overseas education plans to next academic year in view of the uncertainty. We see a 40 per cent dip in the enquiries as well as applications for education abroad,” said an executive with a consultancy chain, which has branches across cities.
Stay in India
The Ministry of Human Resource Development has also noted the trend and recently constituted a panel to focus on making students to ‘Stay in India’. There has been a general dip in the education loan portfolio already.
Generally, about 6.5 lakh to 7 lakh students go overseas for education from India every year, according to government data.
According to RBI data, the gross lending under education loans by banks had declined 3.9 per cent till August, compared to the same period last year.
In the present financial year so far (April to July), educations loans decreased by 1.1 per cent.
As on March 2020, total outstanding portfolio of education loans is about ₹65,000 crore.