In light of increasing concern about student loans, debt levels, and rising default rates, which coincide with worries about college costs, affordability, and transparency, NASFAA(National Association of Student Financial Aid Administrators) convened a task force to study this issue and make recommendations for improvement. NASFAA's Task Force on Student Indebtedness was charged with examining current trends and making recommendations aimed at improving the system for students and institutions throughout all stages of borrowing, including: pre-borrowing, in-school, and repayment.
K. Srinivasan, convener of the Education Loan Task Force says, "Based on the complaints received by ELTF, many students have not been getting interest subsidy from many banks. There are bank managers who even fob off the borrowers denying any such interest subsidy scheme." The ELTF guides students on rules and regulations governing the education loans offered by nationalized banks.
Citing union budget documents, Srinivasan says that during 2011-12, Rs.697 crore was allotted for the loan's interest subsidy, between 2012-13 and 2013-14, Rs.800 crore and Rs.1,100 crore have been allocated. Rs.1,100 crore allocation for this fiscal has already been exhausted. According to him, the total education loan portfolio for the banking sector as on March 31, 2013, is around Rs.53,000 crore in around 25 lakh accounts.
If one takes a look at the Indian Bank's Association (IBA) guideline, loan repayment could be done over a 10-15 year period. But banks are forcing students to pay the loan within three/five years and with the poor economic situation and lack of employment opportunities, the students are not able to pay huge monthly dues. When a student defaults on the payment the banks shame the student by pasting their pictures on the branch notice boards. The ELTF convener mentions that although the interest subsidy scheme is there to help students the way in which it is managed needs to be thoroughly audited by CAG or RBI.