Funding Education :
Though it is the principal source of funding for the higher education sector,the subcommittee on Student Financial Aid has recommended that the Union government should provide for the disbursal of scholarships for every student who wishes to pursue higher education. The panel's report recommends, the cost of such scholarships should be financed by the government by reallocating funds from other sectors or by raising taxes.
The Students, the Government and the Corporations/ employers are the three stakeholders of higher education which must participate together in the financing of education at varying levels. As its element, the government should give block grants to institutions to meet capital and operational costs. There should be tax exemption on the income of the institution and subsidy for “Inputs”.
The present scholarships for students belonging to the Scheduled Castes and the scheduled Tribes and the minorities, particularly Muslims, should continue. However, the allocation for these scholarships should be at least Rs.8,000 crore in the first year of the 12Plan. This should increase annually by 15%. This is to meet increase in tuition fee and living expenses. The top 10% on the rank list of all examination boards should be given scholarships equivalent to the tuition fee for any undergraduate programme in the country. Institutions should be encouraged to provide a tuition fee waiver for needy students.
Education Loans :
Based on the loans for education it recommends that these shall be made available to all students who qualify for higher education programmes. This decision is irrespective of their caste, creed, religion, means and merit. Hence the education loans shall be made available for every discipline available in the country and should not be restricted to professional courses. The committee has recommended that loans shall not be linked to the income of the applicant's parent's.
The loan component relating to boarding and lodging should be transferred directly to the student's bank account. The rest amount shall be paid directly to the concerned institutions. The rate of interest on loans should be slightly more compared to the yield on comparable 10 year government securities. In other words, the interest on education loans should be 9.5% in the present regime and will drop to 7.5% in a “Begin inflationary regime”.
The entire process of Scholarships and Education loans shall be administrated by a student financial aid delivery system, an IT-driven system which would minimize personal interaction between students and loan disbursing agencies and ensure transparency in processing loan requests. The subcommittee has recommended the adoption of the Andhra Pradesh model, with suitable modifications to improve the process.