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Overseas Education Loan

Avanse Education loans aims at providing financial support to deserving / meritorious students for pursuing higher education in India and abroad. To know more visit : http://www.avanse.com/avanse-education-loans/

RahulSingh
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Overseas Education Loan

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  1. Overseas Education loan

  2. Financing higher education in India - Education Loans can never be the only solution

  3. In my previous blogs, I have spoken in great length about the need for public expenditure in higher education. In this section, I would like to highlight one of the most preferred options for financing higher education in India, namely ‘Education Loans’. Off late, education loan has been one of the most popular sources of financing higher education in India. Education loans are provided by both public and private banks under the following structure:Loans for 4 lakhs INR or less do not require any kind of collateral by the bank. Loans for more than 4 lakhs INR are given by banks only upon provision of collateral by the lender. This makes education loans accessible to a significant group of people, if not all. However, the market for education loan is inherently imperfect as it suffers from information asymmetry and adverse selection.  This leads to various problems such as high interest rates, low repayment rates, lack of quality service provided by public and private banks, discrimination based on their financial background while short listing loan applicants, no priority given to student’s merit (education profile), among many others. `

  4. Financial institutions like banks often face the problem of information asymmetry while lending to its clients. This problem arises due to the fact that one party has more or better information than the other. However, this problem gets worse in the case of education loans. According to the 2011 report of State Level Banker’s Committee, the repayment rates on education loans have been dwindling over the last few years.  Non- Performing Assets have also been on the rise in education loan portfolio, increasing to 5.5% last year, according to the Chief Executive of Indian Bank Association. Considering the above factors, it would not be wrong to say that education loan is not the most reliable option for financing higher education. Government must not heavily entirely rely on banks, as in the end they, operate on ‘for-profit model’. To conclude, we have discussed different aspects of financing higher education in India. We then moved on to discussing the implications of lack of public expenditure in the sector and why a public-private partnership is the need of the hour in higher Overseas Education loan sector. Finally, I have laid down the limitations of education loan as a source of finance for higher education and the argument behind why Government must not heavily rely on public or private financial institutions.

  5. https://www.facebook.com/AvanseEducationLoan https://www.linkedin.com/company/avanse-financial-services https://twitter.com/avanseeduloan https://plus.google.com/+AvanseFinancialServicesLtdMumbai https://www.youtube.com/channel/UCcsuUx1EH1C08XmX2embpug

  6. Read more on Overseas Education loan: http://www.avanse.com/studying-abroad/ Thank You..!!!

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