Creating Affordability of Higher Technical Education: Central to Indian Economy
December 2015

Creating Affordability of Higher Technical Education: Central to Indian Economy

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Central to Indian EconomyAs India moves onto a knowledge age, the country’s higher technical education has thereby assumed an inflection point whereby there is a potent demand of duly trained and oriented techno-managerial manpower. However, a significant set of seats are lying vacant in the technical institutions, despite a large number of potential candidates. The reasons quoted for the same are lack of quality and affordability. Elets News Network (ENN) presents a viewpoint on this overdue issues and how to boost up the higher education system of India

While India has embarked upon an ambitious objective of economic growth through a slew of aspirational national campaigns, governance fixes and a whole lot of other policy level interventions, one of the key points missing from the otherwise duly integrated narrative is the role and importance of higher education in economic growth of the nation. The negative stereotypes have somewhere taken over and crippled not only the actions but the aspirations as well. This is somewhat alarming and concerning as higher education and higher technical education in particular sustains and catapults the economic destinies of any nation state.

While the Government is undergoing a mammoth consultation on a New Education Policy, which is being seen as a one size fit all redressal of Indian Education System, taking on one element at a time and impressing upon its due importance would not be a wasteful exercise at all. A large number of institutions would be getting established at the tertiary level with generous grants from the Central Government, the state of affairs of those established through private investments is quite dismal. Emanating out of a major educational reform in NDA-I, a significant lot of private edupreneurs entered into the fray of establishing technical institutions across which are administered by their respective State Technical Universities (STUs) and regulated by the All India Council for Technical Education (AICTE), which interestingly depends on State Perspectives to project for India’s demand.

As per trends and non-formal reports, a significant set of seats are lying vacant in these technical institutions despite a large number of potential candidates. One of the most repeated reason quoted for the same is “lack of quality”. But interestingly, nobody has ventured into the question of “affordability”, despite the manageable quality. India’s higher technical education has thereby assumed an inflection point whereby there is a potent demand of duly trained and oriented techno-managerial manpower, as the country moves onto a knowledge age; there is a decent higher technical education establishment to cater to the same; but due to sheer negative stereotypes as well as nonredressal of the “affordability” problem, the system is developing cracks.

These institutions have come in the fray from limited private investments and have built up over the years. In order for them to flourish, they need a constant influx of students to meet out the regular operational costs as well as meeting out the key quality interventions. In the advent of declining student enrollment, they get into a negative whirlpool ending up into closure. Quality of Education is thereby somewhere duly related to the affordability issue.

The limited meritorious chunk gets accommodated in the 125 odd centrally-funded technical institutions, and the 500 technical institutions owned in the Government domain or aided from Public Exchequer. Those who are at top of the economic spectrum of the country, some 4,50,000 of them go abroad spending Forex to the tune of `90,000 crores annually as per ASSOCHAM estimates to get quality foreign education. It’s this segment, which is benefited from the educational loan regime of the country. The remaining lot has to succumb to the wide spread of STUs affiliated institutions, who eventually provide armies of techno-managerial manpower to the India Inc. They are all owned, governed and operated by private players having limited capital to their access.

The average default rate of US Fed Student Loans is a mere seven per cent which is a bit higher on the Indian side ranging 16-17 per cent. Interestingly, the repayment plan of US Federal Loans in spread over 10-30 years while that in India it is limited to 2-7 years

US Fed StudentIt’s for the students of these institutions, education loan is a major problem. As per a Parthenon Group report, bank officials find these loans extremely risky. They are only able to cater to their higher-end customers. Apart from the aforesaid selection problem on the part of banks, there are significant issues with the current student financing system in India. Awareness, complexity of the application process and loan terms are the significant hurdles in India as per experts. Lack of standardisation makes the loan application process complex, long and difficult. A quick analysis done by this magazine revealed that even amidst the nationalised banks, the loan granting procedures are different and quite cumbersome despite the marketing claims. Excessive paperwork, loan processing time and lack of coordination between parties is the trouble trinity oft repeated by applicants, as per the aforesaid report.

The current terms make student loans inaccessible to low-income students and less valuable to any student. The rate of default on education loans concern the banking officials quite much. However, taking cue from the US experiment, the same can be lowered by making educational institutions partly responsible for the repayment behaviour of their students. The average default rate of US Fed Student Loans is a mere seven per cent which is a bit higher on the Indian side ranging 16-17 per cent. Interestingly, the repayment plan of US Federal Loans in spread over 10-30 years while that in India it is limited to 2-7 years.

Given the low tertiary gross enrollment ratio (GER) in India and low income levels, there is a great need for student financing. However, student loans account only for a small share of banks’ loan portfolios. It, thereby, become imperative on the part of the Government to look into this important aspect of creating affordability of higher technical education in the country, which is so very vital for national programmes. When one of the most ambitious financial inclusion programmes has been duly created and championed, the need of the hour is for a similar such eduCLUSION programmes whereby deserving students don’t stop aspiring for higher technical education for want of finances. At a time when we are collaborating with world’s oldest democracy on a whole lot of thematics, learning from their well-refined and duly defined Student Financing System would boost up a quality higher education system in the country.

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