For want of education loan, an academic year is lost

Students who had counted on obtaining education loans to finance their higher studies are a stricken lot currently. The lockdown on account of the Covid-19 pandemic has resulted in an economic crisis and students' loan plans have gone awry. Banks are not processing education loans, for lack of staff, financial constraints and the absence of job securities of guarantors. This in turn, has forced students to defer or cancel their study plans for this year.

Till June 8, banks had temporarily stopped processing loans and were not accepting applicants. When this Free Press Journal reporter visited the State Bank of India (SBI), Goregaon east branch in May, the bank was not processing any education loans. Preeti Advankar, deputy manager of the SBI branch in question said, "We are not processing education loans because we do not have sufficient staff. Also, the loan procedures are stopped due to the lockdown."

Later, when The Free Press Journalvisited HDFC, ICICI and SBI banks again at the end of May, it was revealed that RACPC (Retail Assets Central Processing Centre) offices, which verify documents of loan applicants, were shut in the lockdown. A senior bank official said, "Even if we accept documents of loan applicants, we cannot verify these papers, as RACPC offices are shut. Officers cannot personally inspect securities such as property, house or land submitted by applicants as collateral. Education loans cannot be processed till these offices reopen."

Sharmishtha Gurav, a student who visited banks several times in May for an education loan, finally gave up her study plans in June. Gurav said, "I visited the bank almost every week in May and June. But every time I went, bank officials told me they could not begin my education loan application, as RACPC offices are shut."

Gurav added, she was forced to withdraw her admission because she could not pay her first instalment fee of Rs 3.5 lakh, having missed her deadline because of the delay in loan processing. Gurav said, "I had secured admission for a Master's programme in communication in an Australian university starting in September. I had to pay my first semester fee of Rs 3.5 lakh by May 30. I managed to get it deferred till June 15, hoping my loan would get processed by then. But my loan application process had not even begun and approval was a far cry. I missed the fee payment deadline and had to withdraw my admission."

Apart from this starting trouble, financial uncertainties related to securities submitted as collateral and employment proof of guarantors pose other hurdles. Daniel Musquita, a student, said, "I have applied for an education loan to support my post-graduation programme in physics. The bank has asked for proof of income of a guarantor along with collateral. My father is my loan guarantor but he has been facing pay cuts for the last two months, due to lockdown. When I submitted his last sixmonths' salary statements as proof of income, the bank noticed the pay cuts and asked me to select a new guarantor."

An agitated Musquita said, "From where am I supposed to find a new guarantor? My father is the sole earning member of my family and he has been working for the last 25 years. How can the bank deny my loan application only because my guarantor has been enduring a pay cut for the last two months? If my loan is not processed by Juneend, I will have to cancel my study plans this year."