Here’s why getting a student loan has become tough over last 5 years

For the first time in five years, growth in education loans not only turned positive but also registered a 17 per cent surge in the last financial year ended March 2023. According to Reserve Bank of India’s (RBI) data, the outstanding portfolio under education loans grew 17 per cent to Rs 96,847 crore in the year 2022-23 as against Rs 82,723 crore in the previous year. 
This is significant because the growth in education loans was flat during 2021-22 and it was negative for the three years before it. The education loans were down by 3 per cent, 3.3 per cent, and 2.5 per cent during FY21, FY20, and FY19, respectively. 
The spurt in demand especially for the big-ticket loans for studies abroad and the willingness of banks to extend collateral loans are driving the growth in education advances from the last financial year, say bankers. Loans for higher education in domestic institutions are attracting greater caution from some leading banks due to ‘doubts’ about job opportunities and repaying ability after completion of the studies. 
A survey conducted for The Pew Charitable Trusts reflected borrower concerns about affording their payments—and how the stop-and-go path to the recent restart would unfold. Many seemed confused and unprepared for what would come next.

Survey contours

Eight in ten (82 per cent) of those who expected to have to make payments once repayment started again said that payments would be “somewhat” or “very” difficult to afford. Nearly 6 in 10 respondents (59 per cent) said that they found making their student loan payments more stressful than other monthly bills. Among that group, 40 per cent said the most important reason they felt this way was that the payments were larger than other bills, while a comparable share (41 per cent) said this was because they did not see their balances going down despite making on-time payments. Another 16 per cent said the most important reason they found student loan payments more stressful was because they would be paying them longer than other bills.

Department of Higher Education, Ministry of Education has been implementing the Central Sector Interest Subsidy (CSIS) Scheme since 2009. Under this Scheme Interest Subsidy is given during the moratorium period i.e., a Course period plus one year on an Education Loan taken from the Scheduled Banks under the Model Education Loan Scheme of Indian Banks Association to students belonging to economically weaker sections whose annual parental income is up to Rs 4.5 Lakh from all sources. The subsidy is allowed for pursuing higher education in professional/ technical courses only from NAAC-accredited Institutions or professional/ technical programs accredited by the NBA or Institutions of National Importance or Centrally Funded Technical Institutions (CFTIs). Canara Bank has been appointed as Nodal Bank for the implementation of the scheme.