‘Govt to be guarantor for students’ loans’
NEW DELHI: The Aam Aadmi Party (AAP) has come up with a plan to make education accessible to all students.
The party has proposed a higher education guarantee scheme under which every student will be eligible for an education loan if she/he has completed class 12 from Delhi and has secured admission in any college — public or private— in the city.
“The problem with education loans is that people who need loans don’t get them as they have to show that they can pay them back and have a guarantor. Under this scheme, all students will be eligible for a loan from any bank and the government will act as a guarantor,” said AAP spokesperson Aitshi Marlena.
A number of people have raised questions about the feasibility of the government acting as a guarantor but AAP thinks it is not something to be worried about.
“The current rate of default on education loans is around 6% to 7%. Let’s say that around 60,000 students will require loan. The average annual fee for one student is around ` 50,000. This means that a loan of ` 300 crore will be taken against a guarantee from the Delhi government. Even if 10% people default on these loans, it costs the government a mere ` 30 crore. As per international reports, inaccessibility to higher education is costing India billions of dollars every year,” said Marlena. The party discussed this plan with the Indian Bankers Association. “They think it is a feasible proposition,” she said. A human resource minis- try report by Dr Pankaj Chandra (who is from Indian Institute of Management - Bangalore) on improving higher education had also advocated loans and scholarship to increase accessibility to education.
According to the party, the loans will be given for four years.
“The interest rates on these loans will be lower as the government will act as a guarantor and there will be moratorium of one year on repaying the loan,” Marlena added.