Loans for Learning

Study now pay later scheme could replace college reservations

The government’s Rs 4,000 crore megascheme — to which the Planning Commission is now putting the final touches — to subsidise education loans for students from families earning Rs 2.5 lakh a year or less, is a welcome sign of fresh thinking in official quarters on human resources issues. It’s a much better way of improving access to college education than the current approach of caste-based reservation quotas. According to the scheme the government will take over interest repayment on education loans for the ‘moratorium’ period, or the time in between when the student borrows the money, and when he starts work and therefore is in a position to repay the loan. The scheme is open for professional and technical courses at undergraduate or postgraduate levels.
One of its great advantages is that it replaces caste with income as the criterion for receiving support from the government. The arbitrariness of using community-based standards for measuring individual disempowerment has been exposed in Rajasthan’s caste riots, where the Gujjars are threatening turmoil because they have not been deemed worthy of receiving scheduled tribe (ST) benefits. The rival Meenas, who enjoy ST status, are on the other hand happy with the verdict of the Chopra committee that threw out Gujjar claims, as it does not expose them to competition from Gujjars. In this game, a win for one community amounts to a loss for another. That’s a recipe for clash between communities and political instability. Incomebased criteria, on the other hand, are better targeted and no cause for political gripes to anybody.
The other advantage of government subsidies for student loans is that it doesn’t devalue merit in the same way that caste-based reservations do. It still devolves on the student to find admission to the college courses of his choice on merit; admission standards will not be specially relaxed for him. This is particularly important when the Indian economy is facing a skills crunch and the employability of graduates who possess formal degrees is turning into a major issue. The scheme should serve to tap talent that cannot be developed currently because of the modest family background of students. If administered well, it should increase opportunities for youth and help plug the skills gap that prevents the Indian economy from firing on all cylinders.
It is being hoped that the scheme will check the brain drain from the country, whereby Indian students spend more than three billion dollars abroad every year in search of quality education. That will, however, require further measures in deregulating education and allowing excellence to thrive.