Education and Career Forum

I feel emi on education loan should be less so that students can get its benifit easily and education loan sceme sjhould be done easy for students who need it, Shouldn't?

Your view from the education point of view is absolutely right. But there are different aspects which limit the government from further decrease in the EMI of education loan. Decision regarding the terms, condition and interests is taken keeping in mind different thoughts like economy of country, economic conditions of the banks, education systems, pressure from the banks and many more. The final decision is taken by Reserve Bank of India regarding the EMI and the norms of education loans.

With the active involvement of the government in the education system of India, the terms and conditions as well as EMIs are already reduced. Nowadays education loans are very easy to get just after verification of documents and that too within few days it gets sanctioned. The interest rate although maintained around 12-14.5 percent yet it is simple interest which makes the EMIs much lower than other type of loans where the loans are on the basis of compound interest.

Banking field is not a developed field in our country. Hence various investments have to be made to employ better strategies and better infrastructure. As a result, huge capital is required which can come only through loans. Moreover during meetings held by RBI to decide the interest rates, representatives of various banks insist on increasing the interest value to maximize their profit margin and to reduce their risk of not recovering the loan amount from the loanee. As a result the EMIs fluctuate around 12.5-14.5 percents.
Although from educational point of view, EMIs should be lowered to ensure more and more candidates pursue higher studies and overall quality of education increases yet there are different other aspects which the authority has to see while deciding the interest rate. Hence EMIs cannot be lowered further unless the economy of the country reaches a good height.

Banking scenario in India comes under various pros and cons. It is indeed a good thought that EMIs should be lower. During RBI meetings, interest rates for loans are decided and hence EMIs fluctuate around 12.5-14.5 per cent. There is also a relaxation provided from the government’s side. Recently, it has launched a scheme to provide full interest subsidy during the period of course and one year or six months after getting job. One can return the loans within the time frame.