Helping hand: Madhya Pradesh to offer easy higher education loans to students
Madhya Pradesh is set to become India's first state to finance students for higher education. The Shivraj Singh Chouhan regime is devising a plan to provide loans to "promising students" studying in IITs, IIMs and other such prominent institutes.
Significantly, the students won't be asked to furnish any documents to avail the loan, or even a bank guarantee. Only their parents will have to provide a self-attested certificate stating they don't pay any tax and live permanently in the state. The borrower will have to repay the money within five years after completing her education.
Chouhan has reportedly directed his bureaucrats to give "final shape" to the scheme soon. It is likely to be implemented from the next academic session, and the government plans to raise a revolving fund of Rs 1,000 crore for the purpose. Part of the fund will be provided by the state government while the rest is likely to come from private companies under the corporate social responsibility scheme.
The fund will be managed by an agency to be created by the government for this purpose; it will be responsible for disbursal of loans and their recovery.
The chief minister has said this scheme "is meant for students of all castes and communities". "It's our endeavour to not let money come in the way of talent. Many students are forced to compromise their career for want of money as bank loans involve a lot of formalities. Our aim is to help such students. We will try to implement the plan from the next academic year," Chouhan said recently.
Any student who is a permanent resident of Madhya Pradesh and who has gained admission into a prestigious institute such as IIT, IIM, NIT, National Law College will be eligible for the loan. Students enrolled in the state-run medical and engineering colleges will also benefit.
The government is already preparing a list of institutes to be included in the scheme. Only those that admit students on the basis of merit are likely to be considered.
Any student who wants to avail the loan will have to upload basic personal information - address, educational qualification, details of the institute - on the portal to be created for the purpose, along with a self-attested declaration from the parents that they don't pay taxes. Both filling of application forms and their verification will be done online. The loan will go directly into the account of the institute the student is enrolled in.
It's unclear whether the state will charge any interest on this loan. While the chief minister is believed to be against the idea, the bureaucrats are pressing for levying a nominal rate of interest. The officials are arguing that "this will ensure sincerity for repayment among the borrowers". The state expects that the revolving fund will need to be financed only for the first five years, when it will become self-sustaining as the students start repaying their loans.