Kerala, Karnataka, Tamil Nadu benefitted most from education loan scheme: Education ministry

NEW DELHI: Students of three southern states - Kerala, Karnataka, and Tamil Nadu - benefitted most from the Pradhan Mantri-Uchchatar Shiksha Protsahan Central Sector Interest Subsidy Scheme (PM-USP CSIS) scheme; interest subvention on education loan provided to students with up to Rs. 4.5 lakh annual family income for pursuing professional or technical courses in India, the education ministry said.

The Central government under the PM-USP Credit Guarantee Fund Scheme for Education Loan (CGFSEL), notified on September 16, 2015, gives a guarantee for the education loans availed by students without any collateral security and third-party guarantee for a maximum loan limit of Rs 7.5 lakh, the minister informed the Lok Sabha.

Students belonging to the economically weaker section (EWS) are eligible to avail the PM-USP CSIS subsidy for pursuing higher education in professional or technical courses only from NAAC, NBA accredited, or institutions of National Importance or Centrally Funded Technical Institutions (CFTIs). The Centre has appointed Canara Bank as Nodal Bank to implement the scheme.

Also read Education Loan: Over 50,000 NPAs in credit guarantee scheme, but repayment rate encouraging, says minister

Top 5 states with highest, lowest claims

As of March 1, 2025, the top 5 states with the highest claims settled in 2024-25 are Kerala with 59,680 claims, Karnataka with 59,632 claims, followed by Tamil Nadu with 53,816 claims. These three states are also among the states which have the highest number of colleges.

A total of 31,341 claims were settled under the interest subsidy scheme in Maharashtra. Although Uttar Pradesh is among the top states with high college density, the claims are significantly lower compared to the southern states.

Bihar and West Bengal were not that reliant on education loans compared to the three southern states. With Bihar at 6,754 claims and West Bengal at 7,076 claims, the data indicated lesser participation.

Also read Zero Samagra Shiksha funds to Kerala, West Bengal, Tamil Nadu: Government

Budget allocation for education loan

For the year 2023-24, the final allocated budget for PM-USP CSIS and CGFSEL was Rs 693 crore, the ministry said.

Congress MP Rajmohan Unnithan asked the ministry whether the allocated education budget “fell short” of the Incheon Declaration's target of 4-6% of the nation's GDP. The Incheon Declaration adopted at the 2015 World Education Forum, urged countries to commit at least 4-6% of their Gross Domestic Product (GDP) or 15-20% of their public expenditures to education.

In response, the ministry said: “As per latest published results of the Analysis of Budgeted Expenditure on Education, public expenditure on education including expenditure of Ministry of Education, other Central Government Ministries and State Government as percentage of GDP during all the years 2019-20, 2020-21 and 2021-22 has been more than 4% of GDP.”

To determine whether India’s budget met the target, we’ll have to compare the allocated education budget for 2024-25 with the GDP for 2024-25.

“The growth rate in Real GDP during 2024-25 is estimated at 6.5% as compared to 9.2% in 2023-24. Nominal GDP or GDP at Current Prices is estimated to attain a level of Rs 331.03 lakh crore in the year 2024-25, against Rs 301.23 lakh crore in 2023-24, showing a growth rate of 9.9%,” as per the official data. The total education budget for 2024-25 is Rs 1,28,650.05 crore.