New Delhi: Financial constraints for those who are aspiring for higher education will no longer be a hurdle in future as the government is preparing to help such students getting loans easily. The government has already sensed the reluctance of banks in providing education loans to the students. Now the government is preparing to be in the role of a guarantor for education loan seekers. It will soon set up a Credit Guarantee Fund Trust for this purpose.  

The sources say that the Ministry of Human Resource and Development is taking initiatives to facilitate easier and cheaper education loans for the needy students in the country. The Ministry has already initiated a process to create a corpus of Rs 2,500 crore for Credit Guarantee Fund Trust. The trust will act as a guarantor for the students applying for loans. However, the students will have to approach banks for the education loans as usual. The trust will be in the role of a facilitator to help the students getting loans easily.

The banks will need to pay one percent of approved loan to the trust as fee and the latter will provide guarantee to former on their loans.

Banks are found to be hesitant in giving education loans to students owing to absence of any kind of security on the loans provided for this purpose.  Data suggests that only seven percent of applicants succeed in getting loans for higher education. Banks prefer to give auto and home loans instead of education loans.

The government seems to be serious on promoting higher education in the country. According to the current statistics, only 17-18 percent students pursue higher education in the country. The government aims to increase the enrolment for higher education up to 30 percent by 2020.

JPN/Bureau

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