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South more savvy on education loans

New Delhi, Jan. 28: Students in south Indian states top the charts in securing higher-education loans from public-sector banks, Union finance ministry data suggest.

Information The Telegraph obtained through an RTI application indicates that students in the Northeast lag in availing education loans while the trend is catching up in the east, including Bengal. (See chart)

Experts cited two factors: the general awareness about the government’s education loan scheme is higher in the south, and the region has the heaviest concentration of higher-education and professional institutions.

However, the ministry figures refer not to students from a region but to those studying in a region --- so the south’s figures should be somewhat boosted by the large number of outside students who enrol in its many colleges with loans from local banks.

Tamil Nadu is tops, accounting for nine lakh among the 26 lakh students who have secured education loans.

The ministry data show that the total outstanding education loans given out by public-sector banks was around Rs 54,000 crore as of September 30 last year.

In Bengal, 72,597 students were studying with the help of loans on that date while the number was 75,665 in Odisha, 56,978 in Jharkhand, 110,818 in Bihar and 17,580 in Assam.

Mohan V. Tanksale, chief executive of the Indian Banks’ Association, which issues guidelines to banks on the loan scheme’s implementation, said southern students had a higher awareness about the scheme.

Planning Commission member Abhijit Sen said that banks in several parts of the country were “conservative” about extending education loans as they feared non-recovery.

“The IBA has to push the banks to not deny education loans to meritorious students,” Sen said, He added that neither the Centre nor the plan panel could direct banks to disburse more loans in the Northeast or the north.

Former University Grants Commission chairperson Sukhadeo Thorat said the south had more educational institutions: for example, Tamil Nadu is home to 900 engineering colleges compared with Bengal’s 150 and Odisha’s 199.

“Students from the north and the Northeast go to the south and apply for loans through their institutions, and the banks consider them students from the southern states,” Thorat said.

Many impoverished students are not comfortable taking loans, he added. Students who take loans of Rs 4 lakh or less don’t need to furnish any security.