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Interest-Free Loans For Underprivileged Students At IITs & NITs

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The Central Government is looking at ways to provide interest-free loans to the underprivileged students at IITs and NITs. This step is being explored in order to suffice for the steep hike of fees that is likely to be implemented at India's premier engineering institutions.

The NITs are likely to increase their annual fee from Rs 70,000 to Rs 1.25 lakh, which is almost double, while the IITs are deciding over to nearly triple the fee from Rs 90,000 per year to Rs 2.5 lakh. Government has set up a top decision making body to weigh this proposal of IITs and NITs over fee hike.

The argument behind the hike is that the government should only take care of planned expenditure on labs, equipment, library and the running cost of staff salary, housekeeping, water and electricity should be borne by students.

"Since the hike is going to be steep the government wants to ensure those who require education loans do not face any problems," said an official. "Setting up of helpdesks at all engineering colleges and doing away with the interest on loans could be a possibility."

The government believes that providing loans on easier terms, will blunt the steep hike and ensure fewer students default on repayments.

Studies show securing an education loan proves difficult for many students with several banks not keen to lend owing to a high delinquency rate. The nearly four dozen IITs and NITs heavily subsidise the education of their students, with the government bearing a major slice of the running expenses.

A committee headed by scientist Anil Kakodkar had suggested raising the IIT fee to Rs 2.25 lakh a year to close the gap between what the IITs charge and spend per student.

The government, officials said, will also have to rework the limit for collateral security a student will have to provide following the hike with the total fee for four-year courses at the NITs and IITs reaching Rs 4 lakh and Rs 10 lakh respectively.

Even after the proposed fee hike comes into effect, the IITs will remain cheaper than most top engineering colleges around the world.

An IIT spends Rs 3.5 lakh every year on a student who only pays the institute Rs 90,000. On the other hand, an IIT graduate on an average gets a pay package of Rs 8 lakh to Rs 10 lakh, which in exceptional cases goes into crores.

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