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Strange as the idea of a feast amid famine sounds, so also the thought of nine per cent economic growth without a high tertiary education enrollment ratio.
Out of 6.5 million students who complete class 12, only 3.5 million enroll in colleges.
If India has to meet the projected economic growth of nine per cent, enrollment in tertiary education has to be increased by 8.9 million seats by 2016, says a study ‘Financing Indian Higher Education' by global educational consultant, Parthenon.
Presently, the biggest obstacle that students face is lack of Government-backed loans and the conservative outlook of banks when approached for loans, Mr Karan Khemka, Partner, The Parthenon Group, told Business Line .
Meagre percentage
Less than five per cent of Indian students pursuing higher education opt for education loans, compared with 60 per cent students in the US taking recourse to these. The reasons are: lack of awareness about availability, complicated process and unfavourable loan terms. Most students, therefore, end up paying out of their pockets, family funds, employment-backed savings or in many unfortunate cases, never go to college, says the study.
Most often, banks perceive providing unsecured loans to students as a risky business and target only selective premium clients whose repayment course can be easily tracked. As a result, students from low-income backgrounds without collateral not only find it difficult but impossible to get a bank loan. “In reality, loan availability is skewed toward students from wealthier families,” states the study.
Selective availability
Additionally, loans are available only for professional courses. The rates of interest are so high (six per cent to anywhere in the double digits if it's a private bank) and the term period for repayment so less (five to seven years), that students who do opt for the loans, end up holding the roughest part of the carrot stick. In the US, the rates are so low that it is easier to take a loan than pay it yourself. Also, there is no discrimination regarding eligibility.
On this issue, the Indian government when compared to its US counterpart comes off as dismally retroactive, says the study.
“The Federal government plays a proactive role in aiding education through reforms, easy loans and financial aid programmes. Today, tertiary education is less affordable in India than in the US for every income bracket,” Mr Khemka said.
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