Wanted from Mr Modi: An educational finance corporation

Abstract

In case students don't find a job after availing of the loan, the government can recruit them as outsourced temporary hands and deduct the EMI from their monthly pay/stipend. Yet another academic year is around the corner and the education industry is looking for larger sales and profits. The cost of education has gone up in the last decade and even pre-primary education has become expensive with capitation fees or donations at entry level. A family with two children needs to spend at least Rs 2,000 per month on education even in a modest school. At the higher level, that is, in professional courses, the annual expenditure goes up to a couple of lakh rupees depending on the institution and the entry mode. Commercial banks are gearing to enhance the facilities for educational loans but, unfortunately, they are not adequately equipped to finance income-based lending compared to asset based lending. For instance, such activities as trading and hoteliering are treated similarly by commercial banks as the model is security - or asset-based lending and not based on anticipated future cash flows since estimating risk premiums in the later is more complex. Recently, most large commercial banks increased their educational loan portfolio. Read more at: https://www.dailyo.in/business/wanted-from-mr-modi-an-educational-finance-corporation/story/1/1340.html