Need Reforms in EDUCATION LOAN repayment
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"Education Loan is for the Future" rightly said by one of the Education Loan Activist. Students are facing hard times after their graduation due to unemployment and the additional burden they get is in terms of Repayment of Education Loans. With the help of commendable effort by the Government of India, Education is made viable for everyone and any student can pursue any course of his choice without worrying about the financial conditions of the family as they can easily get Education Loans for their Studies.
There is a huge lack of financial Literacy in the students who are getting the education loans which few banks are exploiting. In recent years the Unemployment rate is increasing year by year, especially in engineering graduates. A Recent study by NASSCOM and AICTE states less than 20 % of engineering graduates are employable and 60 % of engineering graduates passing out every year are unemployed. There is a huge gap in the supply and demand which makes them unemployed for years together. More than 60% of the students are availing education loan for their studies. The problem arises when they come out of college without job and education loan repayment starts.
Even if they get a job, they are paid less in the range of 8,000 to 15,000 initially which is not sufficient for any person to run the family.
Issues in Education Loan Repayment
1. IBA Guidelines for Education Loan clearly states that repayment period may be extended at the maximum of 15 Years which banks keep hidden from students
2. Banks never exercise Telescopic Repayment option for honest defaulters so that they can start small installments in repayment.
3. Penal Interest is charged for the nonpayment on par with commercial loans
4. Banks willfully classify the loan as NPA and sell it to Asset Reconstruction Companies to clear their balance sheets.
5. Banks are ready to give huge discounts in Loans while selling it to Asset Reconstruction Companies but not to the students
6. No relaxation is given for the students who are pursuing higher studies and honest defaulters.
There is a huge NPA recorded in education loan is due to the negligence of the banks in rightly educating the students to repay their education loan. The objective of every bank is to clear the balance sheets as early as possible. There are some willful defaulters in education loan but most of the students are willing to repay but they are not finding proper guidelines. We the citizens of the country understand that it's the huge responsibility of every borrower to repay the education loan.
When the student can't start repayment in EMIs how come he is being expected to repay in lump sum installments.
1. Separate regulations or Norms should be framed to classify Education Loan as NPA to avoid being exploited by few banks.
2. Ban ALL banks from selling Education Loans to ARCs and retrieve all the sold Education Loans from ARCs
3. Take stringent action against ARCs and Banks who are using illegal threatening ways for collection of Education Loans
4. Frame separate guidelines to collect education loan with proper discussion with the student allowing the repayment period as per IBA guidelines
5. Take strict actions against willful defaulters, even after implementation of these steps.
6. Frame a separate committee to look after the education loan repayment under the direct control of PRIME MINISTER OF INDIA, MINISTER OF FINANCE & RBI GOVERNOR to regulate the process.
Recently many students are facing threatening phone calls and messages from ARCs to repay the full amount of loan in one or two installments failing which legal actions will be taken against them. It has been reported a student committed suicide due to the harassment of Asset Reconstruction Companies. Please help in saving lives of Millions of Students.
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