Study Loan Subsidy

Yesterday GoI came up with a foolhardy 4000 CR (1 billion USD) scheme of subsidizing the interest on the study loans for all Indian students.

GoI has been recently collecting educational cess on all the taxes and financial transactions. This was a welcome move, because in a country where half a billion souls have never attended schools/colleges now the Human Resources Ministry has almost infinite funds to educate the masses. Or this is what I had thought.

All the tolls collected via cess went directly to the center. While Primary education was funded by state government and panchayat/local administration (Madhya Pradesh) So in reality, although a huge war-chest was build, the spending on education hardly increased over the past 3 years.

Another problem faced by the HRD ministry was that budget was to be presented in a few months. Traditionally, any department that does not spend the funds it had been sanctioned in the previous budget is penalized in three ways:
1)It has to answer why it had not been able to plan and execute efficiently
2)The funds are taken away from it
3)In the next year, the department will get lesser funds.

I have a feeling that this scheme is nothing more than a plot to squander away our taxes.

If government wants to do something for an “All Inclusive Growth”, then open a thousand primary schools, open vocational and technical schools. The higher education is already very subsidized (a engineering graduate’s first year salary would be more than adequate to cover for his entire educational expenses).

Also if you look at the fine print, it covers only the undergraduate/post graduate study loan taken from Nationalized Banks. Now if Government wants to help the poor but deserving students, then isn’t providing a scholarship/full tuition waiver a better way to help them. After all its general knowledge that students work harder and perform better when they get study grants, for these students need to display good academic achievements for continuance of the grants.

In short there is nothing new or significant in the scheme.

 

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5 thoughts on “Study Loan Subsidy

  1. I too am getting suspicious of all these government schemes and the education cess. I have an alarming feeling that it’s not being used properly. I was thinking of writing a post on this but couldn’t get enough info.

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  2. why doesn’t someone files an RTI to find out how are they spending this education cess money!! and yeah decreasing the RoI on loans is not that great a scheme as compared to opening up more schools and colleges.

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  3. @nita…
    please refer to EPW… you will get all the data you ever wanted.
    what i have seen is that the education spending has not increased by any significantly amount… while the amount collected via education cess is staggering.

    @amit…
    government will wriggle out… or worse they will come up with a popular scheme like this one which will absorb all the excess funds…. so I doubt if RTI will work
    also what i am trying to point is that this scheme is far inferior to the generous scholarship schemes, let alone opening new schools or vocational training centers.

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  4. Just been contacted by phone for the senocd time by a company calling themselves Reclaim Cashback. They say they can get my money back from the liquidators but I have to pay a3 290 up front. I told them to send me information in the post they refused. I told them the Liquidators would contact me if I was owed money! I will not part with any money up front. Has anyone else been contacted by this company? Why is there not a legal team in this country dealing with it? Or is there? Marion

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    • Elias… what I can say is that if there has a fraud or injustice against you then it might be good to go to lawyers… but paying three thousand dollars to another company might be wasting more money for a lost cause. in reality very few companies have a success rate >10%

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