Burden of debt breaks students’ backs

HYDERABAD: Getting through higher education without availing of a loan, has become almost impossible say students from the city. With a sharp rise in tuition fees, along with other services such as hostel, food, project costs etc, they say that they are often pushed into opting for multiple loans to fund their educational needs.
And this is true of those travelling overseas for a course as well as those staying back for a specialised degree from India.
“There has been a systemic shift from scholarships and fellowships to education loans. Now education has become more of an obligation than a right as it was with the case of bagging scholarships. With rising corporatisation of education and simultaneously lowering of funding for the public institutions in India, this trend of being obligated to take education loans is only going to rise,” said Professor K Laxminarayana, School of Economics, University of Hyderabad who has worked on themes of capitalisation of education.


As a result, young students, even before entering the job market have loan obligations for the next 10 years.
For instance, at 22, Saanvi* who is currently pursuing mass communication from Hyderabad, for instance, is already staring at a debt burden of Rs 20 lakh. And she is yet to complete her Masters. “My parents took an initial loan of Rs 8 lakh to fund my bachelors from a college in Karnataka. For my Masters, we took another loan as the annual fee was Rs 12 lakh. Collectively, it will be a huge sum to repay,” she said.
MBA student, Neha*, shared a similar predicament. The 28-year-old from the city travelled to Chicago last month to pursue a Master’s in Business Administration that cost her over US $1,15,062 or (roughly Rs 92 lakh). She opted for a loan from a bank in the US itself to fund the course and shield herself from impact of the dollar-rupee rate fluctuation, which made the process much easier.
However, the ongoing inflation has left her worried about her future after two years. “It is huge risk at the mo- ment because the US is witnessing a freeze/slowdown on hirings, especially in big tech companies where I am hoping to get a job. At the same time there is inflation. So, the cost of everything has gone up. Even if I try to cut corners, opt for shared accom- modation and minimise by living expenses, I will have very little financial runway in my loan itself. Next year the tuition fees of my course will also increase. At the moment I am seeing it as a 5-year plan to repay the debtpost my education,” she shared.
Visible rise in loan amount: Report
According to the latest State Level Bankers Committee’s report, as on March 2022, nearly 25,030 priority and nonpriority education loans were issued to the tune of over 1,400 crore during the financial year. While the overall number of loans issued has seen a marginal decline as on March 2021 it was 25,316 – the total amount has increased from last year’s Rs 1,200 crore (approx. ) indicating the rising costs of education. Cumulatively in the last four years 1,03,215 students were given education loans to the tune of over Rs 4,455 crore.
“While our observation shows that the tuition fee for STEAM courses, at least in the US, hasn’t increase, the rise in dollar to INR conversion rate – from Rs 75 per dollar to Rs 80 per dollar -has led to students taking larger loans. The jump is about 15% to 20%,” said Arvind Manduva, founder of i20 Fever, a consultancy firm. He added: “Thanks to the boom in financing companies and banks being more flexible, students are able to get loans even without collateral or without their parent’s profile because they have good scores and are getting into good colleges. ”
Multiple borrowing options
Banks are not the only option students are now relying on, owing to their need for having collateral or signatories. NonBanking Financial Companies (NBFCs) are also stepping in to cater to the huge demand.
“The education loan market is growing, with Hyderabad being one of the biggest markets as the number of students going abroad, especially to the US, is one of the highest from here. What we have observed is that the Gross Enrollment Rates are rising which indicates more students wanting quality education. Since public sector banks have their requirement for collateral, we step in d provide collateral free loans,” said Nilanjan Chattoraj, director In Cred Financial Services and NBFC.
‘Impossible to escape from loans’
Responding to TOI’s question on student loans asked last week, readers said that the sharp rise in cost of education must be arrested to not only relieve parents/students from the burden of borrowing, but also make learning a level playing field
Uniform fee structure
I had availed of a loan scholarship for my college education and taken educational loans for my children. Hence, having gone through the experience both as a student as well as a parent, I can say that education has become a moneyspinning industry. Most private educational institutions, right from elementary education to college education, are run by people who are chasing money. When the government can offer an engineering course for Rs 35,000 to Rs 40,000, what makes a private college charge Rs 4 lakh or more for the same course? This, predictably, pushes students and parents to go in for bank loans to meet the cost of education.
Is it not the duty of authorities to make education affordable even for the poorest of the poor? I think it is high time that the state/central government takes over all the privately-run educational institutions and creates a uniform low-cost fee structure.
—S Ravishankar
Could impact kids’ future
Education was once a necessity. But today it has become a status symbol as the address of your child’s school/college matters and shows your background. I personally have seen kids studying in private schools drop out to join government schools, after being unable to cope with financial pressures. The government should take note of the loot by private players and ensure appropriate action.
Schools right from kindergarten and lower classes are charging six-digit fees in the name of modern education. We won’t be left with honest citizens in the future if this trend continues as they would know how much money has been invested in their education and how much they would need to reap in the future.
—Deepesh Surana
Reason for stress
A lot of parents are keen on making sure their child gets degrees from reputed institutes, especially overseas, despite financial constraints. Some sell their properties, some sell valuables. And many are forced to opt for loans with high interest rates to fulfil the dream of their child studying abroad and hoping to get placed in a reputed organisation. The rapid fall in the Indian currency exchange rate against the dollar has made things more difficult. Moreover, if a parent has more than one child things become even more difficult.
Many students belonging to the middle class hope to pay college fees by doing odd jobs while pursuing education abroad even though the rules do not permit it (in some countries). It is estimated that more than half of the international students face a financial crisis in the US. Beside this many students feel pressured to excel in academics to secure scholarships. Compromise and sacrifice become an essential part of student life and often it drains them physically and mentally. Also, because of the high cost of living and high cost of tuition fee many do not feel encouraged to explore the full range of possible careers.
Md Ahmeduddin Farooqi

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