This is an email I sent to every single contributor to Project Hope on September 8, 2013.
This is an email I sent to every single contributor to Project Hope on September 8, 2013.
Why do education loans attract the highest interest rates when the government stresses on the impetus of education?
I distinctly remember the union budget speeches of our Finance Minister and now the President of India Pranab Mukherjee and the current finance minister P Chidambaram. They both outlined the government’s focus of elementary education through theSarva Shiksha Abhiyan and theRight to Education Act. Speech after speech they stressed on the government’s commitment towards the education sector.
In P Chidambaram’s last budget speech, the word ‘education’ was used 15 times whereas ‘economy’ was uttered 13 times. However, in the 2010 budget speech of Pranab Mukherjee, he said the word ‘economy’ 19 times and ‘education’ 8 times. Inclusive growth? As part of Mukherjee’s inclusive development agenda, he proposed to increase the plan allocation for school education from Rs.26,800 crore in 2009-10 to Rs.31,036 crore in 2010-11.
“The Right to Education (RTE) Act is being implemented with effect from April 1, 2010 through the Sarva Shiksha Abhiyan (SSA). For 2012-13, I have provided Rs 25,555 crore for RTE-SSA. This is an increase of 21.7 per cent over 2011-12,” Mukherjee in 2012-13 budget speech said.
Chidambaram, in 2013-14, said, “Education is the other high priority. I propose to allocate Rs 65,867 crore to the Ministry of Human Resource Development, which is an increase of 17 percent over the RE of the previous year. The Sarva Shiksha Abhiyan (SSA) and the Right to Education Act are firmly in place. I propose to provide Rs 27,258 crore for SSA in 2013-14.”
One might argue that with the above mentioned allocations the government is dispensing its social duties. Education for all.
But is this education for all? Is this inclusive? What happens to higher education? What happens to students who dream to study more?
Of course I am not suggesting that the government should subsidise education at every level. But is it too much to expect realism in terms of affording higher education?
Now let’s look at the latest data available with the Reserve Bank of India. It says that during March 2012 to June 2013 period, the lending rates for education loans saw the sharpest decline of 63 basis points. Kudos! Now the bad part: the median lending rates of scheduled commercial banks for the education sector was 13.12 per cent in June 2013. In simpler terms, if you approached any private bank for an education loan, the interest rate it will charge you is 13.12 per cent. Even after the sharpest decline amongst all sectors, the lending rates for education were only second to credit card interest rates. Necessity versus luxury?
A home loan in June 2013 was available for 10.93 per cent, vehicle loan for 12.85 per cent and agriculture loan for 11.67 per cent versus an education loan, at 13.12 per cent. Credit card interest rates were at 26.67 per cent.
Turns out, socialist, democratic republic of India cares more about capitalism. What else could be the reason that a home loan and vehicle loan is cheaper than education loan?
The banks will tell you that the problem is with the students. They do not repay the loans and the bad debts that banks have to write off in the education loan segment are high. Therefore, as the risk is greater, the interest rates are higher. Instead of finding a solution as to why students are not able to repay their student loans, this is the solution the banks have found.
Now imagine such a situation with a big corporation? Banks would have bent over backwards to offer them a corporate debt restructuring (CDR) plan. No questions asked, interest rates lower, time period increased, more money pumped in, moratorium, etc. Kingfisher Airlines?
This story shows how CDR has increased from Rs 86,535 crore in March 2009 to a whopping Rs 2, 50,279 crore in June 2013.
Now let’s look at the RBI data on the deployment of gross bank credit by major sectors. In July 2012 and 2013,outstanding education loans grew to Rs 49,800 crore and Rs 54,500 crore, respectively The education loans, which are mentioned under the priority sector, as on July 2011 were at Rs 45,300 crore. Lowest after micro-credit at Rs 16,200 crore and export credit at Rs 33,100 crore out of the list of 10.
What does this show? The government’s impetus on education is not necessarily finding space with commercial banks?
The priority sectors or the areas important for the economic and social growth of India are identified to be agriculture, micro and small enterprises, education and housing. Interest rates for all of which are in double digits with education being the highest. Education loan, although described as the harbinger of India’s future and economic stability and growth, classified as a priority sector by the government and the RBI, is still mentioned under the ‘personal loan’ sections.
If education is supposed to uplift the people and with them their families and the economy on the whole, is it still a personal loan?
If the government’s allocation for education goes up year on year, if a student wishes to study more it becomes his personal ambition rather than an ambition for the nation?
A student who wishes to pursue his higher education abroad cannot do so because he doesn’t belong to a rich family and the interest rates that the bank charges on such loans is back breaking. Most banks offer education loan for higher studies abroad of upto Rs 20 lakh with a few public sector banks even offering Rs 25 lakh. But these loans are not without a collateral and understandably so.
But what happens to a student whose family doesn’t have a house to mortgage to the bank to secure the loan? Isn’t it the duty of the government to underwrite the loan for the underprivileged? Is the flight of one’s dream based on the money his parents or their forefathers earned?
If education is such a top priority for the government then the interest rates, the method of lending and government’s role should reflect that.
(Shubhashish is a journalist who is now pursuing Masters in International Studies and Diplomacy in London. Email: email@example.com)
This column originally appeared in DNA on October 16, 2013.
I should update this blog a lot more often.
Let’s begin with Project Hope numbers. I have collected Rs 1,84,000 as on February 8! Isn’t that fabulous? I genuinely did not believe this was possible. Definitely I was under the influence of the most potent alcohol of all when I thought of starting this initiative – hope.
And since I was in Delhi last week I met people who happily wrote a few cheques to me! Talk of offline collection drive!
But as I said earlier, contribution is not only in terms of money. A friend was seemingly upset knowing that people don’t even have just Rs 800 to give. Well, neither do I blame her, nor do I blame you. Any sum that has the potential to change someone’s life isn’t small.
And its not about the cash totally. People are also helping me spread the word and that help crosses the ocean faster than a Concorde.
Now the repercussion.
Project Hope has slightly changed my behaviour on Twitter. Earlier I could get into arguments and mild trolling. Now I can’t. Because the people I used to argue and troll with have come out and helped me so generously that its embarrassing for me to argue with them.
Not that they have shown their discomfort but I am myself not able to separate the two.
People talk of Chinese Walls all the time. Although I have conquered one literally it is the figurative Wall that has put me in the dilemma.
But I am not complaining. Its a small price to pay. Moreover, maybe I don’t disagree with them now at all.
Possible? Yes. Hope.
I faced a couple of issues relating to my genuineness and keeping some of the identities anonymous. I am glad some of you asked questions and were satisfied with my answers. One thing I wanted to make very clear since some of you had this query. The total course fee is around Rs 22 lakh. I have half of it sorted through a bank loan and my personal savings. Its the rest that I am trying to raise through Project Hope.
Some of you said you don’t want your names to put up on a public forum. Fair enough. I deleted all names from the public file.
Some of you said you don’t want the money back. In normal circumstances I would have used it to build a fresh corpus to see the world but that can wait.
The amount of love and support I have received is simply unparalleled. This has emboldened the thought that if you set out to achieve something people will come forward to help.
A few emails were from people who are in the same boat as me and yet contributed. I just can’t thank them enough.
The last time I said so many “thank yous” was on my engagement day! That did not survive. This will.
Its time for a commitment.
In approximately four years from now I will match the money I am able to raise through this Project Hope in the coming three months. That corpus will be used to fund education of people like me.
Say Yes! to Project Hope.
Its not about money anymore. On Day 1 itself I am saying this. Yes, its not about money anymore. The absolute love people have showered upon me during the last 12 hours is in itself life altering.
How many people will just part with their money because a stranger wants to go to London to study. No questions asked. Nothing. I met these people. And whatever I deserve in life is now secondary.
Its no more my dream or goal. It is our collective goal. When I go to London its not me alone who will be going there. Its us. All of us. Including those who just encouraged me with their words. Because as I said, now its no more about the money. Its a journey. Not mine. Ours.
Hope. And paying it forward.
Hope makes us do wonderful, strange things. This is my hope.
If you are willing to risk just a little on what Kipling called “a turn of pitch-and-toss”, if you can spend some money for a cause good enough to rack up bonus brownie points for your Karma account, read ahead. Even if you aren’t an altruistic Rockefeller, read on – you might just have a change of heart by the end.
All I have is the hope that springs eternal.
How far would you go to make somebody else’s dream come true? If that someone else is your wife? Or husband? Or a friend..? Or even just a stranger like me?
Before we go any further, how much of your money are we talking? Is this charity? A donation? Or something else altogether?
Rs 800. That’s all it takes. And it’s crowdfunding. An investment – in me. In my ability to make a difference in the years ahead. In my resolve to make that difference.
I got positive feedback when I discussed this idea with a couple of my friends, but I have no doubt this is harder than climbing Everest without oxygen.
Yet, hope makes us do wild, wonderful, strange things.
Am I embarrassed to be discussing my finances with you? Not at all. I know there are many others out there without a college fund. I want you to be mine. Some of you know me personally, but don’t know this story. So here goes.
This blogpost is about education. And my right to have one. And my struggle to bring Earth and Sky closer to get one. This is just one step in that direction.
In 2007, right after my graduation I applied for my MA degree in the UK. I got admission but couldn’t go – my wonderful grandparents and extended family who had funded my education couldn’t help anymore, and I had no money of my own. So I went to work instead – I’ve been a journalist for the last five years.
After five years of working, I’ve decided to clinch that duvet of hope yet again. And here I am again, at the same crossroads, looking yearningly at the path ahead, with no wherewithal to take that first step. Yet, take that step I must. This is not merely about my future – it is about my resolve to make a larger impact to society. I have it in me.
I know there are many other ways of making a difference, but this is the path I have chosen for myself. I’m proud of having taught some wonderful students in two Mumbai colleges – I hope with positive impact. Now I want to add to my arsenal of skills to use for good. By getting that MA, in the UK.
With crowdfunding. From you. I am counting on you.
Yes, you – I am counting on you.
You must be wondering why I don’t apply for a bank loan. After all, our dear finance minister stressed the fact that banks cannot refuse an education loan to any eligible student. That’s true – almost. the devil is in the details. For foreign education, a maximum loan of Rs 25 lakhs is available. That is good news but like in a Hindi film, there is a catch. You must produce collateral for any loan over Rs 7.5 lakh. And this effectively means that, like so many students in our country, I cannot fund my college through a bank loan.
Scholarships? Yes. That’s a hope. I have applied to every single one of those I could under the sun. Am I counting on them? Yes.
Am I counting more on you? Yes.
Here is my proposal:
I need to put together Rs 20 lakh ($36,000) in the next six months so that I am able to go to London for my MA beginning September 2013.
Each of you send me Rs. 800 ($15). That’s all it takes.
Why Rs. 800? The crowdfunding idea came from my Twitter and Facebook lists. I have slightly over 2500 followers and 600 friends, and if half of them funded me to the tune of Rs. 800 or $15, my means are assured to help reach the goal. Of making a difference!
I won’t get into the conscience stirring stuff about an evening out or an impulse buy, but this much I will say – a small amount to each of you, put together, is a dream realized for me. Helping proves there is enlightened altruism in this world and that people will come together for someone like me. And in return get back their principal, with 8% interest and the bigger promise of me making use of that education for good. To make a difference.
Yes, I have every intention of returning this money to you. Every one of you – in seven years time. With interest. I don’t want you to be an unknown donor. I will tabulate every single contribution in cash or kind, update and make that document public on this blog to ensure transparency.
Please email me your investment in me with your bank account details and complete address and phone numbers. How else will I keep a track of you and return the money when I can?
My email id is firstname.lastname@example.org if you have any questions, or if you want to help in any way that you can. I will be more than happy to engage.
And I will pay this altruism forward, all my life, helping others as I have been helped.
I sincerely hope that you will send me the money and become part of a history in the making. A history that will change the course of my future. And with me, the world.
My LinkedIn profile: http://lnkd.in/cKPixb
My Facebook page: https://www.facebook.com/shubh1608