Students Face Difficulties In Repaying Their Loans

Students are given loans with a security note that they shall repay their loans once their education completes and they start earning. But, are students really capable of paying back their loans. No, a research says that around 80% of students do not earn enough to repay their loans.

Eight out of ten students are facing risk and are neglecting loan payments as a severe job outline that weaken their ability to repay. This year the neglect act has raised upto 70 to 80% .

Below are what a few experts feel about the ongoing situation.

A senior official from a public sector bank says that "There are more defaulters for education loans compared with earlier years. Also, repayments of education loans that were availed 2-3 years back are accumulating at banks". As per the details by Reserve Bank of India, the total outstanding education loans stood at Rs.54,300 crore as on November 30, 2012.

D.Sampath, additional manager and head, Retail, Federal Bank said "The ones who are seen neglecting more are those students who took loans for their Management and Nursing courses."

Satish Mehta, a credit expert and founder director at credexpert.com says "People's capacity to service bigger loans is less these days as they do not get expected income due to the slump in the job market. Students going to private universities paid higher fees compared with Government institutions, which bankers cite, is a major reason for neglecting. Also, there is huge mismatch in the borrowed amount and income earned by the students.

Ram Sangapure, General Manager-Retail, Central Bank of India said "It is recruiting candidates from among defaulters as business facilitators so as to enable them to repay the money over a period of time. We have just initiated this project and it would be a better and productive solution to bring down delinquencies".

Most of the bankers also say that, they are turning cautious on educational loans and are asking for credit guarantees, even as the government is pushing for relaxation of norms for such loans. However, the loan norms are yet to be finalized. But, the Government wants banks to lend for management quota students irrespective of their academic background.

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