Latest news with #ModelEducationLoanScheme
Time of India
08-07-2025
- Business
- Time of India
Student loans: Government orders faster approvals for education loans in 15 days; PSBs told to clear all backlogs till May
This is an AI-generated image, used for representational purposes only. The finance ministry has asked public sector banks to fast-track education loan applications, directing them to process requests within 15 days of submission. Banks have also been told to set up a centralised credit processing system with clear internal procedures to ensure timely approvals, according to people familiar with the matter. If a loan application is rejected or returned, the decision must now be approved by a higher authority and the student must be clearly informed of the reasons, the sources said, according to ET. "A series of meetings have been held with banks over the last two months to discuss delays in the processing of education loan applications," an anonymous government official said, as quoted by ET. The source further added that it would be ensured by the lenders that decisions are made within three to five working days. While most banks currently take up to a month to process education loans, the ministry wants this timeline shortened. Sanctions will continue to depend on proper documentation, the presence of a co-applicant or guarantor, and other eligibility factors. Disbursements will be made in instalments, directly to the educational institution. Banks have also been instructed to clear all pending applications up to May and submit a detailed status report. The push comes after the government received several complaints about delays. 'There were some cases where loans were sanctioned, but disbursals were on hold due to unsatisfactory documentation. Those cases have also been put on the fast track,' the official added. To streamline the process, banks have been told to stick only to documents listed under the Indian Banks' Association 's Model Education Loan Scheme. A senior bank executive said lenders are now working to align their internal systems with the Vidya Lakshmi portal to speed up operations. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
07-07-2025
- Business
- Time of India
Government tells PSBs to clear education loans within 15 days, streamline approvals
The finance ministry has directed public sector banks to process education loan applications within 15 days of submission and establish a centralised credit processing system with clear internal standard operating procedure for expeditious approvals, said people familiar with the matter. In case of rejection or return of a loan application, it must be approved by the next higher authority and clearly communicated to the student with reasons for the decision, they said. "A series of meetings have been held with banks over the last two months to discuss delays in processing of education loan applications," a government official said on condition of anonymity, adding that it has been decided that lenders will ensure decisions on loan applications are made within three to five working days. Sanction of education loans is based on proper documentation and depends on other factors including co-applicant or guarantor. The disbursement is done in stages as per demand directly to the educational institute. The average time for most banks in normal course is within a month. Live Events Banks have also been directed to clear all cases pending till May and submit a status report. The move follows several representations to the government on the issue. "There were some cases where loans were sanctioned, but disbursals were on hold due to unsatisfactory documentation. Those cases have also been put on the fast track," the official said. Banks have been told to seek only those documents that are stipulated by Indian Banks' Association Model Education Loan Scheme. A senior bank executive said that lenders had already begun aligning their loan operating system with the Vidya Laxmi portal.
NDTV
18-06-2025
- Business
- NDTV
NMC Directs Medical Colleges To Promote This Scheme For Easy Education Loans
The National Medical Commission (NMC) has issued a public notice advising 50 leading medical colleges and institutions across India to actively promote the PM Vidyalaxmi Scheme, a government initiative designed to facilitate collateral-free, guarantor-free education loans for meritorious students pursuing medical education. In its latest circular, the NMC noted that all Scheduled Commercial Banks have been advised by the Reserve Bank of India to adopt the Model Education Loan Scheme (MELS) formulated by the Indian Banks' Association (IBA). To further streamline access, the PM Vidyalaxmi scheme was officially launched on November 6, 2024, providing a simplified, transparent, and digital loan application process for students enrolled in Quality Higher Educational Institutions (QHEIs). The commission has shared a list of 50 premier medical institutions, including AIIMS branches, state-run colleges, and private universities, urging their deans and principals to include information about the PM Vidyalaxmi scheme in their admission brochures and prospectuses. This move aims to raise awareness among eligible students about available financial assistance and ensure wider adoption of the scheme. Students can apply for loans through the official PM Vidyalaxmi portal, Institutions on the list include AIIMS Delhi, AIIMS Patna, JIPMER Puducherry, PGIMER Chandigarh, Madras Medical College, CMC Vellore, King George's Medical University, and others across 24 states and union territories.
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Business Standard
20-05-2025
- Business
- Business Standard
Visa revokes, illness abroad: How Indian students may face loan burden
Ritu, a 24-year-old Indian student, had taken a loan of Rs 45 lakh to pursue her studies in the UK. Last month, she fell ill and flew back to India so her parents could care for her. For now, she has had to pause her education abroad. She's not alone. Across countries like the US and UK, many Indian students are grappling with similar disruptions. Some have faced deportation after visa revocations. Others dropped out due to mental health breakdowns. In most cases, these are non-fatal but life-altering setbacks that throw their financial commitments into disarray. < Lenders usually don't cancel loans, even in serious setbacks < Relief (like EMI reduction or moratorium) is given on a case-by-case basis < Supporting documents are mandatory: medical, academic, or immigration-related < Full loan waivers are rare Ankit Mehra, CEO and co-founder of GyanDhan, said Indian lenders rarely cancel education loans, even in cases of distress. "In case of a serious setback, such as illness, deportation, or academic suspension, relief is assessed on a case-by-case basis with supporting documentation from universities, hospitals, or immigration authorities. Based on individual cases, lenders offer moratorium extensions, reduce EMIs temporarily, or allow partial repayment options. However, such relief measures are exceptions, not guarantees," Mehra said. Adhil Shetty, CEO of explained that moratoriums are usually limited to specific hardship events. "Education loan repayment can be paused or renegotiated in situations like serious illness or academic suspension. Many lenders provide a deferment period during which repayments are temporarily paused. However, complete loan waivers are rarely granted. In cases like deportation, repayment is still expected, though restructuring can be requested," Shetty said. Financial and emotional impact on families The toll is not just monetary. Sonam Chandwani, managing partner at KS Legal & Associates, said both students and their families bear the brunt. "A ₹20-40 lakh unsecured education loan at 11-13% interest can balloon to ₹50 lakh or more over a decade if repayments falter. Co-borrowers, usually parents, are legally liable. With many nearing retirement, their savings can be obliterated," she said. Chandwani said secured loans put assets like property or fixed deposits at risk. "Defaulting craters credit scores, blocking future loans for emergencies. The social stigma of default in India adds to the distress, and when paired with mental health struggles or deportation, the emotional toll is immense," she added. What education loan insurance covers < Usually covers death or permanent disability of the borrower < Does not cover temporary illness, visa denial, mental health issues, or academic failure < Families often misread the extent of insurance coverage < Students advised to read exclusions carefully System is rigid, relief not assured Under the Indian Banks' Association (IBA) Model Education Loan Scheme, loans come with a moratorium period covering the course duration plus 6 to 12 months. During this time, interest accrues, pushing up the total payable amount. According to Shetty, public sector banks guided by RBI's 2019 circular may offer some leeway. Private lenders and NBFCs, however, are far less flexible. "Restructuring options like extending the loan tenure or reducing EMIs are available, but banks demand hard proof of distress and approvals are inconsistent. Early loan termination isn't permitted," Shetty said. Mehra added that while GyanDhan has not encountered cases of outright loan termination due to setbacks, they've seen lenders offer support selectively. "We strongly advise students to maintain timely communication and keep documentation ready. Relief options like restructuring or forbearance require exceptional approvals from senior management," he said. Gaps in the loan system < Moratorium covers course duration + 6–12 months; interest accrues < No early termination of loan even if student drops out or is deported < Public banks may allow restructuring; private lenders often rigid < Documentation needed for relief: deportation proof, medical reports < Relief approvals often inconsistent and slow Outdated risk models and lack of insurance coverage Lenders typically assess default risk using the course type, university reputation, and co-borrower's income or collateral, based on RBI's 2016 guidelines. These models don't account for visa revocations or mental health issues. Chandwani said visa revocation is particularly crushing. "It cuts off access to high-wage foreign jobs, and India's ₹5-10 lakh annual salaries can't cover hefty EMIs. The loan system assumes a straight path to graduation and high-paying employment. It's blind to disruptions like immigration rules or illness," she said. She cited an example of a student deported after taking a ₹25 lakh loan. Back in India, he finds a ₹6 lakh job, with a monthly EMI of ₹30,000. "After 90 days of missed payments, the loan is marked as non-performing under RBI's 2018 norms, triggering recovery efforts, including legal notices or asset seizure. Families get trapped in a cycle of debt and despair," she said. Is student insurance the answer? Insurance, too, has its limits. Meet Kapadia, head of travel insurance at said foreign university insurance plans often carry exclusions. "A well-structured student insurance plan usually covers medical treatment, hospitalisation, emergency evacuation, accidental death, and travel-related issues. But many plans exclude coverage for academic failures, mental health, or deportation," Kapadia said. Many students buy supplementary insurance in India, which is more comprehensive. "Indian policies often cover pre-existing conditions, medical emergencies, personal liability, trip cancellations, and loss of documents," he added. But this doesn't solve everything. Shetty said families should be wary of overestimating what education loan insurance covers. "These policies typically cover death or permanent disability, but not temporary illness, visa issues, or academic problems unless specifically mentioned. Families must go through policy documents in detail," he said. Mehra said most lenders require students to take out loan insurance for the full loan amount. "These usually cover death or permanent disability, but in other cases, repayment responsibility falls back on the family," he said. No standard relief policy, slow grievance redressal While RBI's 2021 Banking Ombudsman Scheme allows borrowers to file complaints, relief is not always forthcoming. Chandwani said banks rarely have consistent internal policies. "Some public banks offer ad-hoc concessions, but private lenders often stonewall. Grievance redressal processes are slow, bureaucratic, and rarely offer meaningful relief," she said. She called for structural reform. "The system needs mandated loan insurance, automatic repayment pauses during crises, and coordination with mental health services. Without it, families continue to bear the burden for events beyond their control." The gap is wide. And for students like Ritu, the consequences are immediate, personal, and deeply tied to a financial system that expects the best-case scenario—even when the world has other plans. Automatic repayment pause during verified crises
