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

NEW DELHI: Over 50,000 students issued credit guarantees by the government for their education loans were unable to repay their loans, reveals the data provided by the centre in Lok Sabha on Monday.

Responding to a query from BJP MP Mukesh Dalal, education minister Dharmendra Pradhan informed the parliament that the National Credit Guarantee Trustee Company Ltd (NCGTC), a trustee firm set up by the ministry of finance, has issued over 11.26 lakh credit guarantees under the Pradhan Mantri Uchchatar Shiksha Protsahan Yojana Credit Guarantee Fund Scheme for Education Loan (PM-USP CGFSEL) since the inception of the scheme in 2015. Of these 50,800 have turned Non-Performing Assets (NPAs).

However, the ministry views the proportion of bad loans as a positive sign. “This shows that the majority of the students are repaying the loans for which the government of India has provided credit guarantee,” reads the government’s response.

The NCGTC aims to facilitate access to credit for various sectors by offering credit guarantee programmes to students, women entrepreneurs, MSMEs, among others.

Student Loans: PM USP CGFSEL

Education minister Dharmendra Pradhan also underscored that both NPAs and the number of credit guarantees issued constitute performance indicators of the programme. “NCGTC prepares a quarterly report on the status of operations under the scheme for monitoring purposes… These reports are analyzed on a regular basis to assess adequacy of funds available for credit guarantee,” he said in his statement.

As part of CGFSEL, notified in September 2015, the centre guarantees the education loans students avail without any collateral security or third-party guarantee for a maximum loan limit of Rs 7.5 lakh. The fund provides a guarantee to cover up to 75% of the amount in default through NCGTC, the higher education department’s trustee for this purpose.

The government said it has approved a total corpus of Rs 3,500 crore for the credit guarantee fund, while Rs 3,019 crore aggregate fund was available as of December 31, 2024.

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

Education Loan: Steady increase in credit guarantees

The data also shows that between 2020 and 2024, as many as 6.78 lakh students benefited from the programme – 3.78 lakh of them male and 3 lakh female.

There has been a steady increase in the number of beneficiaries with 1.91 lakh learners availing the guaranteed loans in 2024. Karnataka records the highest number of beneficiaries (1.04 lakh), followed by Tamil Nadu (94,797) and Kerala (88,744).

Number of guarantees issued for education loans

State-wise guarantees issued since 2020

PM USP: Interest subsidy scheme

The government also provided Rs 531.41 to 3.07 lakh students under the Central Sector Interest Subsidy (CSIS), another component of PM USP, in the financial year 2023-24, reveals the education ministry’s response to another query by Rajmohan Unnithan, Congress MP from Kasaragod. The claims for this aid were made in the previous fiscal 2022-23.

Started in 2009, the scheme provides an interest subsidy for the moratorium period – course period plus one year – on education loans taken from the scheduled banks under the Model Education Loan Scheme of Indian Banks Association. The programme is meant for students belonging to economically weaker sections whose annual parental income is up to Rs. 4.5 Lakh from all sources.

The subsidy is valid for pursuing higher education in professional or technical courses from National Assessment and Accreditation Council (NAAC) accredited institutions, programmes accredited by the National Bureau of Accreditation (NBA), Institutions of National Importance or Centrally Funded Technical Institutions (CFTIs).

Kerala accounted for the highest number of interest subsidy claims and amount – 64,779 and Rs 105.24 crore, respectively – followed by Karnataka (Rs 87.21 crore for 56,087 students) and Tamil Nadu (Rs 75.47 for 52,758 beneficiaries).