National student loan guarantee authority to fund poor students

The government may announce the setting up of a National Student Loan Guarantee Authority (NSLGA) in the Budget 2008-09.

The proposed authority will provide education loans to needy students, rather than funding universities directly.

This proposed body can help students from economically backward backgrounds to pursue higher education.

Banks provide educational loans, but these have certain operational problems. It has always been easier for students at premier institutes like IITs and IIMs to access bank loans, but for students in other institutions, loans are often linked to collaterals.

According to the Planning Commission, banks should lend freely to students who have achieved admission to certified institutes against a loan guarantee given by the NSLGA.

The formation of NSLGA is being worked out in the backdrop of the government’s plan for a hike in the university fees.