Interest-free student loans make IITs fret

Mumbai: The interest-free loan scheme introduced by the ministry of human resources development (MHRD) for IIT students following a fee hike, will cost the institutes at least 25% of the income earned from the increased fees.
Interest on loan under the scheme, made available to all students whose family income is below Rs 9 lakh, has to be borne by the already fund-crunched premier institutes for five years—a matter of worry for their directors.While a modest estimate of even 100 such students will cost the IITs Rs 10 crore in five years, the institutes are busy collecting details from students who wish to avail of this scheme.
Meanwhile, students who have started joining the allotted institutes are waiting for authorities to roll out the scheme.
A director of one of the older institutes said the endowment fund comes from various sources and not just the government. “When institutes are struggling to meet expenses for infrastructural development, it is unfair to put the burden of such populist schemes on the institutes. Though we are all in favour of providing financial help to needy students, this is not the way it should have been implemented. If we take into account a modest estimate of even 100 such students, the interest amount for five years runs up to Rs 10 crore,” said the director, adding that though the ministry wants the IITs to submit a report on the scheme’s implementation to the IIT council, the scheme was not discussed before the council.
The tuition fee for undergraduate programmes at IITs was hiked from Rs 90,000 to Rs 2 lakh this year. Students with an annual income of less than Rs 5 lakh are considered for fee-waiver schemes. “We anyway get the entire fee amount from around 25% of the students, and after this scheme is implemented, the fee hike will not completely cover most students. For the set of students whose family income is less than Rs 9 lakh, the fee hike, in principal, has been rolled back to Rs 1.5 lakh, as the institute is giving back the remaining Rs 50,000 as interest,” said a director.
A senior MHRD official, though, said the scheme is not unfair. “It is just that the institutes are giving back part of the fees they charge to students. With the hike in fees, there will be a net accretion. We don’t expect institutes to spend from their research funding or the ones they receive from donations. The government is considering giving an additional budget to these institutes for implementation of this scheme at a later stage.”
While most IITs are clueless about the number of students who would benefit from the scheme, the JEE (Advanced) 2014 report states only 13.2% of the qualified candidates have family income above Rs 8 lakh. “One cannot go by the status declared by students in their admission forms. There will also be cases where income certificates are furnished to avoid an interest of 9-10%,” said an IIT professor.