Education loan requests dip by 30%-50% in Tamil Nadu

CHENNAI: The still raging Covid-19 pandemic that has affected every sector has hit educational loans too. Banks say they have received 30%-50% fewer applications this year over last and expect a 25% dip by the end of the financial year.
Delay in college admissions, remote learning, reduction in expenditure incurred by parents and the deferred payment option given by colleges are being cited as possible reasons.Lack of physical movement among states and parents’ desire to keep their wards near them might have also played a role.
A senior State Bank of India (Tamil Nadu and Puducherry circle) official said about 2,300 applications worth Rs 240 crore were sanctioned in April-November in TN this year. “About 4,000 education loans applications were sanctioned in 2019.”
Lenders also say there will be a pent-up demand from students in the second or third year. “Certain nationally-reputed engineering colleges charge Rs 12 lakh-Rs 15 lakh for normal engineering courses, compared to other local colleges which charge Rs 4 lakh-Rs 5 lakh. Students who did not apply this year could apply during the second year,” he said.
Indian Bank, which sanctioned about 1,500 education loans worth Rs 114 crore between April and November in 2019, approved 640 applications worth Rs 57 crore in the same period this year.
M Aruna, deputy general manager of Indian Bank, said many colleges had still not re-opened. “There is always a rush from north India to pursue engineering courses in Tamil Nadu. That excitement has declined... However, students are in the middle of joining medical colleges after the counselling, and one needs to wait and watch till the end of January 2021,” she said.
S Kanimozhi, deputy general manager of Canara Bank, said medical counselling was still on and students were yet to come in person for verification of originals. “For students admitted to IITs, we have provided the option of availing from the branch on the campus, under Vidya Turant loan scheme.”
S Vaidhyasubramaniam, vice-chancellor of SASTRA deemed university, said many institutions began issuing bona fide certificates for education loans only from December. “Students can approach banks for loans only after getting fee estimates and bonafide certificates. So, we will get the full picture only in January,” he said.
Institutes such as SRM Institute of Science and Technology have allowed students to pay in installments. “Maybe, they will take education loan later,” said vice-chancellor Sandeep Sancheti.
P Selvaraj, secretary of Consortium of Self-Financing Professional, Arts and Science Colleges said students will get bona fide certificates only when they come to colleges. “During the pandemic, banks are not showing enthusiasm to disburse education loans.”
Education Loan Task Force convener K Srinivasan said they hardly received any complaints about education loans. “Usually, complaints overflow after the admission season. The hesitancy on part of banks in processing loan applications from students joined in non-accredited colleges also reduced the number of applications.”
(With inputs from A Ragu Raman)