Lower Interest on Education Loans up to ₹10L for Courses within India
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The Budget for 2024-25 proposes to reduce the rate of interest on education loans up to ₹10 lakh taken by students for studying in India. This aims at extending much needed financial support to students and facilitating ease of access to higher education. Interest subvention would be in the form of e-vouchers to be provided directly to one lakh students every year, which shall make available an annual interest subvention of 3% of the loan amount. This will lighten the burden of financial constraints and will enhance job opportunities for aspirant students.
Education Budget Allocation The outlay for education, employment and skilling in 2024-25 is ₹1.48 lakh crore; out of this ₹1.2 lakh crore is for education alone. This is 2.6% of the total budgetary expenditure. For comparison, health gets 1.9% while transport gets 11.3% of the total budget allocation. While the allocation for education reduced by about 7% from the revised estimate for 2023-24, it was the same as announced in the interim budget in February. The budget allocation for schools increased marginally by 0.73%, while that for higher education decreased by 16.8%.
Other Budgetary Allocations It has also made provisions for a number of education-related initiatives. The fund to the University Grants Commission was slashed by 60.9% to ₹2,500 crore for 2024-25. This reduction may be seemingly drastic because some central universities are getting direct funding this year. Grants for central universities have gone up to ₹15,472 crore from the revised estimate of ₹12,000 crore in the previous fiscal. It slashed the outlay for IITs to ₹10,324 crore from ₹10,384.21 crore for NITs and IIEST. The budgetary allocations continued to shrink for the second consecutive year to ₹212.21 crore for the Indian Institutes of Management, or IIMs, in 2024-25.
Effects on Education Loans The provision of lower interest rates on education loans up to ₹10 lakh is definitely a good move for making higher education accessible to all students. This will be very instrumental in empowering the young aspiring students with an interest in pursuing academic goals without financial burdens and increasing job opportunities. The steps in this regard, especially introduction of e-vouchers for higher education loans, have been cited to represent a sea change in terms of ensuring universal access to quality education.
Conclusion: In the 2024-25 budget, there is a provision for a reduced rate of interest on education loans up to ₹10 lakh taken for pursuing higher education in India. This is an idea for facilitating the financing of higher education. 2.6 percent of expenditure at the aggregate level relates to the outlay for education in the total budgetary expenditure. It also has some specific funds for various educational initiatives, but all in all, there are various institutions that have been slashed and others enhanced. The provision of lower interest rates on education loans was welcomed by educators who saw it as a way to empower students and increase opportunities for higher education.
