Impose only simple interest on education loans.
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Students take education loan because of just one reason, i.e, if they don't have strong financial support. People especially from lower middle class and lower class are the ones who opt for education loan.
Now coming to the point.
The Government of India had launched a scheme to provide full interest subsidy during the period of moratorium i.e., Course Period plus one year or six months after getting job, whichever is earlier, on loans taken by students belonging to Economically Weaker Sections from scheduled banks under the Educational Loan scheme of the Indian Banks’ Association, for pursuing any of the approved courses of studies in technical and professional streams, from recognized institutions in India. During this moratorium period the interest payable by the student is borne by the Government of India. After the period of moratorium is over, the interest on the outstanding loan amount shall be paid by the student, in accordance with the provisions of the existing educational loan Scheme of Banks. But once the repayment of the actual principal starts, the interest is calculated on a compounded basis.
This interest that we students have to pay after the end of course is the matter that I want to highlight.
For e.g., if loan is 4.5 lacs and we pay 7 thousand every month then even after paying for next 2 years we barely reduce a solid amount from the principal amount. If we miss even 1 month of repayment then we are charged interest upon the whole amount plus the previous month’s interest. I have been paying my loan for last 2 years and after 1.5 years of my paying EMI regularly I had reduced just 20k from the amount I had taken, it seems the whole time I had just been paying the interest only, and for some financial issues at home I couldn’t pay my loan for last three months and now you won’t believe that my loan sums up to more than what I had actually taken from the bank. This actually gives people more stress than the office work and personal issues. This scheme is what I want to change.
Please ask the banks to charge only Simple interest on the education loans. If a person is financially weak and can’t pay the loan for a few months, at the end of those months he/she will be much more under debt. If we are charged only SI on the loan that we take then the amount won’t seem too huge to the student at the end of the day and also the repayment won’t take so many years to complete after completing the education.
Please help me with this petition as this is going to bring a big change for all the students who took education loan.
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