New Delhi: The credit crunch in the economy isn’t squeezing just companies and consumers. Students aspiring for higher studies are now feeling the pinch as banks cut back on educational loans in the face of a slowing economy and tightening job market.
Banks are applying more stringent conditions to loans, especially for students seeking admission to institutions that score low on name recognition and placement salary, students say. Firms that assist students to study abroad also complain of loans being delayed, if not denied.
Costly lessons: Neetu Kumari (right) and Nirbhai Kumar Singh, both students of IIBM, at the institute’s campus in New Delhi. Kumari was refused a loan and Singh was asked to mortgage his house for a loan. Harikrishna Katragadda / Mint
Gagan Sharma, 25, the son of a retired engineer in Raipur missed the September session at Coventry University in England after Bank of Maharashtra took a month to process his application for a Rs7.5 lakh loan. “I have now applied for the February intake at the university,’’ said Sharma. “If I go abroad, I’ll get more exposure and better opportunities for work,” he reasoned.
“Banks, especially the nationalized ones, are taking as long as a month to process education loans. We are frequently seeing cases where students have been asked to do much more paper work than ever, and this is taking longer than usual,” said Deepti Dhamija, education counsellor at Studylink, a firm that helps place students in universities abroad.
To be sure, even before the onset of the global financial turmoil, educational loans couldn’t have been easy to get for all but the best students assured of admission into the most prestigious institutions such as Indian Institutes of Technology or Indian Institutes of Management.
But anecdotal evidence shows that banks have become more tightfisted with student loans as darkening economic prospects force companies to slow hiring and affect students’ prospects of landing jobs and repaying loans.
In January, Neetu Kumari was denied a loan to pay the Rs3.8 lakh tuition fee for the MBA programme at the Delhi-based International Institute of Business Management (IIBM) by branches of the Punjab National Bank (PNB) and State Bank of India (SBI) in Agra.
Her father, who runs a stationery shop in Agra, paid Rs95,000 each for the first two semesters cost, but can’t afford to fund the remaining part of her course. The 21-year-old says she may have to drop out if she doesn’t get a loan to fund her third semester.
Though IIBM has a tie-up with PNB for educational loans, Neetu Kumari says the bank did not even accept her application, citing her low marks in her school-leaving examination, overlooking the 61% she scored in her graduation.
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