Appeal for reducing interest on educational loans

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Honourable Prime Minister of India and Honourable Chief Ministers of States of India.

Sub: Appeal for reducing interest on educational loans

Dear Sir, Madame,


This is to appeal to your good-self to reduce the interest on educational loans so that even the poorest of the poor can take a leap in the career, thereby raising the intellectual  level of the Nation.

  Education is a “key factor”, for the growth of any country. Quality of education & the Quantity in terms of the number of people decide the fate of the country. Many people, in India, are not able to continue education because of financial constraints. This is where the Central Government and State Governments can collectively, make a lot of difference to the whole nation by drastically reducing the interest rate on educational loans. We have seen the big positive difference made by the Central Government in the housing sector when the interest rate for housing loan was brought down to 8%. We are sure that there will be a much bigger positive impact on the whole nation if the interest on educational loans is brought down drastically. Unfortunately, the interest rate for educational loans, at present, is very high -- 10% to 11.5%, which is too much of a burden & a big deterrent for higher education. On top of this, there are severe issues of collateral security.

  Many of the German Universities do not charge anything even for Postgraduate degrees. China has a policy for deputing students to American Universities for higher studies & we see the long-term impact of such a policy. Today, China has the fastest Supercomputer in the world, manufactures the high-tech bullet trains, & it manufactures goods for the whole world. Like this, there are multiple advantages of providing thrust to education.

  Some checks & balances have to be introduced to ensure that the support is not misused. Some suggestions in this regard are: Only those students who get admission through some National or State test must be given this facility. The fees of the students must not be given to the students, but the amount must be transferred directly to the institute where the student is studying. Obviously, the institute must be a recognised institute. The student has to start repaying the loan after one year of graduation or must be permitted to go in for still higher studies, again with loan facilities.

  Repayment of loan can now be easily monitored by using the Aadhar & PAN schemes. Technology has now developed to such an extent that nobody will be able to escape the net & NPAs (Non Performing Assets) in this sector will become a non-entity.  Once a student takes loan, his/her sense of responsibility goes up, the drive to push self goes up phenomenally, & naturally, the overall performance will be much better. Very little prodding will be required by parents & faculty, as the motivation level will rise to a much higher level. This will naturally take the National average to a level which is much higher than the present level.

  We sincerely appeal to the Central Government and the State Governments to reduce the interest rate for educational loans to 2% for education in India, & to 3% for education in any foreign country. This facility must be extended for vocational courses & on-line courses also. The educational loan must be given without any collateral security, so that the poorest of the poor also, can take up higher education, or vocational education. Enhancing the educational level of our people will automatically raise the level of the Nation, preparing the younger generation for global competition.


Thanking you,

Yours Sincerely

B L Desai

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