CA M. Lakshmanan
It is a welcome proposal that the government will pay the interest outstanding as on 31.12.2103 for the education loans taken up to 31.03.2009 and the borrower has to pay interest from 01.01.2014. But for those who have paid interest whether the same will be refunded or the interest portion will be deducted from the principal payable. While granting relief the prompt payers should also be encouraged. Otherwise in future such loans will not be repaid at all thinking that one day or other waiver will be announced and in a such a situation the prompt payers would be at a loss.
Related Press Release of Ministry of Finance Dated 17.02.2014 is as follows :-
Major Relief for Education Loan Borrowers, 9 Lakh Student Borrowers to Benefit
The Union Finance Minister Shri P. Chidambaram has announced a Moratorium period for all education loans taken-up to 31.3.2009 and outstanding on 31.12.2013. Government will take over the liability for outstanding interest as on 31.12.2013, but the borrower would have to pay interest for the period after 1.1.2014. Nearly 9 lakh students borrowers will benefit to the tune of approximately Rs2,600 crore.
Presenting the Interim Budget in the LokSabha today, the Union Finance Minister ShriChidambaram said that a sum of Rs 2,600 crore will be provided in the current financial year itself and this amount will be transferred to the Canara Bank. Mr. P. Chidambaram said that the Central scheme for interest subsidy was introduced in 2009-10 in respect of education loans disbursed after 1.4.2009. However, students who had borrowed before 31.3.2009 struggled to pay interest during the period of study and they deserved some relief.
Shri P. Chidambaram informed that ten years ago, only a few thousand students- mostly the well-connected- got education loans. At the end of December 2013, Public Sector Banks had 25,70,254 student loan accounts and the amount outstanding was Rs. 57,700 crore.