The Covid-19 pandemic has hit educational loan disbursements, and students are having to pay out of pocket fees.
“After submitting all of the documents for an education loan, I was asked to produce the certificate of completion, which I had not received yet,” said G Divya, who has just joined a Pune-based institute for a PG course in communications.
Although many educational institutions and universities are not yet required to take final exams following the Supreme Court ruling that made final exams compulsory, many private higher education institutions have already begun the admissions process.
“I want to take out an apprenticeship loan for my daughter’s PG course but had to pay the first £ 75,000 installment out of my pocket as my loan application processing has been put on hold,” said S Suresh, who applied for a loan from the Punjab National Bank (PNB).
A PNB official said that under the guidelines, loans for a new course cannot be sanctioned without proof of completion of the current course.
However, he added that a person who pays out of pocket can apply for a loan and receive the money within six months of the payment date.
According to a senior State Bank of India official, this year was “unprecedented,” and the delay in completing last year’s exams and announcing results could affect students seeking credit. However, SBI has been proactive in processing student loans, he said.
A Union Bank of India official says loans are editable but actual payout will not be made until the final year audit results are presented.
According to the RBI, the banks’ gross educational loans were down 3.9 percent by August compared to the same period in the previous year. In the current financial year (April to July), education loans fell by 1.1 percent. As of March 2020, total educational loans outstanding amount to £ 65,000.
With many universities in the US announcing final exams in September and October, and results expected in just a month or so, banks expect education loans to grow in importance by November for the 2020-21 academic year. However, general demand is expected to be low this year, especially for overseas education, as travel restrictions exist and the start of key courses is delayed.
“Stay in India”
“Many students have postponed their overseas curriculum to the next academic year in the face of uncertainty. We are seeing a 40 percent decrease in inquiries and applications for education abroad, ”said an executive with an advisory chain that has offices in various cities. The Ministry of Human Resources Development has also taken note of the trend and recently set up a body to focus on getting students to stay in India. According to government data, generally 6.5-7 lakh students go abroad to study each year.