Concise guide for educational loan in India

A Concise Guid
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A Concise Guide for a Education Loan for Students in India
December 1, 2014 | 0

Higher education in India is getting very expensive. If you want to do medical or engineering from a decent college then you need a huge amount of money.

For example a five years MBBS course could cost you over Rs 1 Crore, similarly engineering for one semester it is around Rs 70,000 or more.

It is quite possible that many parents in India cannot afford this luxury. They simply do not have money to pay for. Hence, they have no choice but go for an education loan.

In this article we shall look at how you can get education loan to complete your higher education.
What is an Education Loan and Why You Need Them?

Education loan is a special purpose loan that covers special charges related to funding your higher education by a bank.

Education Loan India

Following things an education loan can cover for your higher education.

A Payable Fees to College and Hostel
Examination Fees
Laboratory Fees
Caution and Refundable Deposits
Books, Uniforms, Instruments and other Equipments
Travel Expenses
Computers and other Gadgets
Study Tour, Project Work etc

So these were few expenses that an education loan can pay for. Although there are many others but we mentioned important one.

Eligibility Criteria for Getting a Loan in India

Here in this section we shall debate about basic eligibility criteria for getting an education loan.

Age Criteria: If you are over 16 years and less than 30 years old then you could be eligible for educational loan in India.

Loan Amount: Loan amount could differ because of various factors like kind of courses you choose and you are studying in India or abroad.

Kinds of Courses: If you are going for management courses like MBA, engineering, medical etc then you need higher amount because cost of the course is high and chance of employability is greater. Other hand courses like MA, BA, or B.Sc cost less.

India or Abroad: If you want to study in India then loan amount is less but if you want to study abroad the expenditure is higher.
Loan Amount

Loan Amount in India could be Rs 10 to 12 lakhs and the loan Amount for studying abroad can be Rs 20 to Rs 50 lakhs depending upon course.
What You Need to Get Education Loans?

In this section we will see what all you need to get an education loan. We look at things like courses, Institutes, documents, assets and other things.

Let us see them one by one.

Courses: You must go for certain courses if you want a loan.

Graduation Courses: BA, B.Com, B.SC, M.SC, MA etc
Post Graduation Courses: Masters and PhD
Professional Courses: Medical, Management, Engineering, Agriculture, Law, Dental, Computers etc.

Institutes: You must be studying in following institutes.

Courses offered in Institutes must be certified or approved by UGC university grants commission, AICTE, AIMBS and ICMR
Courses must be offered in Institutes like IIT, IIM, IISc, NIFT, Regional Institutes etc.

Documents Required for Getting an Education Loan: Now you know about the courses and institutes that you need to study in it is time to collect all the documents required for getting a quick loan. You need to submit these documents in the bank.

1. Mark Sheet of the last examination you qualified like 10+2. For proof of age you need matriculation certificate.

2. Admission letter from the University or Institute you want to study

3. Now you need a letter from your university mentioning the tuition fees, semester or year wise, cost of living like hostel and number of years you want to study.

4. You need two passport size photos

5. Bank Account statement for at least 6 months.

6. Income Tax Record for last 2 years

So these were some documents you need. For security you need other documents related to your assets. We discuss this in next paragraph.

For Security Tell Your Assets: Now for loan you need to submit liabilities and assets as security. For statement of liabilities and assets you need.

1. Land Agreement of the House, valuation report of the house

2. Legal Opinion to show that your property has no legal issues

3. Any other asset equal to loan amount, documents must be submitted to banks.

4. Up To 4 Lakhs – No Security, Above 4 Lakhs and Less than 7.5 Lakhs – Collateral in the form of third party, Above 7.5 Lakhs – Obligation of parents, third party guarantee.

So for collateral or security you need to have documents mentioned above.

Transferring Amount to the University: After submitting your security and other statements bank may approve the loan amount.

You can ask your bank to transfer the money to your university account or ask the bank to give a Demand Draft in favor of your college.

You need to ask for two demand drafts.

1. First one is for the college fees in favor of your university.

2. Second is for your personal expenses like hostel fees etc

If they give one Demand Draft then it becomes very difficult for students because they do not get their part of money other than college fees. Hence always ask for two separate DDs or traveller check.

How do you Repay Your Loans to the Bank?

Now your loan amount is sanctioned by the bank and you have also deposited to your college. Now you need to complete the college and repay your entire amount with the interest rates.

Usually repayment of loans starts after 1 year or six months of your course completion once you are employed.
The time period for repaying your college amount can be 6 to 7 years and in some cases banks are generous to increase the tenure.
The repayment tenure also comes with a moratorium period.

You need to get a good job in case you want to pay your college debt or loan.

So this was a concise guide for educational loan in India.

Inclusive Education in North East India

Inclusive Education in North East India
With the adoption of the Salamanca Statement in 1994 (UNESCO) a large number of developing countries have reformulated their policies to promote the inclusion of Child with Special Needs (CWSN) into mainstream schools.
Though a large number of developed countries like USA, Canada. Australia, have policies/laws for promotion of “inclusive education,” despite developing countries like India continue to provide educa­tion to CWSN in “segregated schools” till recent times.
Inclusive Education India
Background of Inclusive Education in India:
The Kothari Commission, 1964, recommended for sending the CWSN in the mainstream school. Through the Integrated Education of Disabled Child (IEDC) Scheme, Government of India made an attempt for “integrated education” of CWSN in 1974.
Thus the rights of the children between the ages of 6-14 for the edu­cation were ensured. The IEDC Scheme was designed to promote the integration of students with mild to moderate disabilities into reg­ular schools.
Further it stressed for the retention of CWSN in the regular school system. The National Policy on Education 1986 continued the spir­it of IEDC Scheme and stated” mild disabilities should be included in the mainstream classroom”.
However the IEDC scheme was to be revised in 1992 due to some shortcomings in the scheme. Under the revised scheme. 100% assistance was made available to schools involved in the “integra­tion” of students with disabilities.
Further section 26 of the Person with Disabilities (Equal Opportunities, Protection of Rights & Full Participation) Act, 1995 suggested for providing free education to CWSN and thus made an another attempt to promote for their inclusive educa­tion.
The Scheme of Inclusive Education for Disabled at Secondary Stage (IEDSS) was launched in 2009-2010 by Government of India enabling all students with disabilities for completing sec­ondary schooling (classes IX to XII) in an inclusive environment. This scheme replaced the IEDC Scheme. However the IEDSS was subsumed under Rastriya Madhyamik Sikshya Abhiyan (RMSA) since 2013.
Present scenario of Inclusive Education in North East India:
There are 2, 68. 10.557 Persons with Disabilities (PWDs) in India as per census 2011, constituting 2.21% of total population. The enrolment of CWSN in the mainstream schools of North Eastern region is as follows:
SI. No. Name of the State PWD of Age Group 5-9 years PWD of Age Group 10-19 years No.  of schools for Inclusive Education Enrolment of PWD by 2013-2014
1 Assam 35.211 76.681 1.256 5.030
2 Arunachal Pradesh 2.082 5.026 92 598
3 Nagaland 1,937 4.631 58 322
4 Manipur 3,973 9,107 147 560
5 Mizoram 988 2219 216 809
6 Tripura 4,114 9.764 287 708
7 Meghalaya 4,459 9,624 65 148
8 Sikkim 716 2,014 34 68
Sources: Census Report 2011 & RMSA. Ministry of Human Resources. Govt. of India Reports.
The Government of India has approved to cover 2.11.616 CWSN under the IEDSS Scheme in the year 2014-2015 out of which 46.122
from North East. Since the PWD Act 1995 advocates for free education of CWSN up-to the age of 18 years hence the age groups from 5-9 and 10-19 have been considered in this write up.
The non-availability of sufficient qualified professionals for the evaluation of PWDs in North East has badly effected the enu­meration of PWDs in the region. Thus it has become very difficult to quantify how many PWDs in the age groups of 5-9 years and 10- 19 years are actually mild, moderate or profound.
Challenges to the inclusive education system:
Lack of trained personnel and of flexi curriculum: The majority of school employees are not trained to design and implement educational programs for CWSN in regular schools. Evidences reveal that all the states of North East do not have sufficient trained/qualified person­nel to teach CWSN. Further the non-flexi “curriculum and evaluation method” is also found to be a challenge to the system.
Removal of architectural barrier: Though provisions have been made under the PWD Act 1995 for creation of architectural barrier free environment for the PWDs. those are hardly executed in full in most part and it has adverse affect on the integration of CWSN in the regular education system.
Poverty: A large number of CWSN live in families with income below poverty. The combination of poverty and disability results in a condition of Immediate deprivation” which sets up challenges to the participation of CWSN in regular schooling.
Attitudes: The prejudice mind setup of the parents of the non-disabled Childs that disability is disease and it can be spread to their child if mix up with CWSN is a major hurdle in the process.
How to overcome these challenges
Training of teachers: Effective training on disabilities has to be provided to the teachers to make the inclusive education system success. The Rehabilitation Council of India (RCI) who is responsible for the cre­ation of human resources in the field of dis­abilities needs to adopt a policy for training of at least one teacher from each school. The provision for appointment of Special Educators in the ratio of 1: 5 under IEDSS should be implemented soon.
Collaboration between different min­istries: As different ministries are entrust­ed with the responsibilities of implement­ing different schemes/policies hence a better coordination among the different ministries will certainly help in achieving desired goals.
Channelizing NGO’s in implementing inclusive education programs: Government departments has limitations in execution of certain programs under certain conditions. The involvement of
NGOs will certainly be very instrumental in such situation.
Role of university: Universities may be used in designing curriculums which may help in changing the attitudes of people towards PWDs. As a large number of teachers will be required to make the pro­grams success, distance mode of education may be used. Further flexi “curriculum and evaluation” system may be designed con­sidering the needs of CWSN.
Conclusion
With the implementation of The Persons with Disabilities Act in 1995, Rights of Children to Free and Compulsory Education (RTE) Act 2009 and the adop­tion of National Policies for Person with disabilities, 2006 and the National Policy for Children 2013, the inclusive education has started gaining momentum. However the success of the inclusive education system will depend on how educators and educational systems work together.

Top 5 Challenges in Primary Education in India

Top 5 Challenges in Primary Education in India

In India major challenges in education sector lies in the rural areas. Still Indian rural areas don’t get the high quality primary education and they lack many further opportunities.

After 60 years of independence still the quality of Indian education is not changed. 70% of Indians stay in rural areas and are still unaware about the importance of the education. India has lower literacy rate than the other countries.

According to Annual Status of Education Report (ASER) 2012 only half of the children of class fifth can read the text of class second.

According to census 2011 India’s literacy level has reached 74.04% in past 10 years.

Here are some of the Top 5 Challenges in Primary Education in India
Inadequate inputs:

The biggest challenge Indian Schools is facing of inadequate inputs. In most of the states, there is a shortage of quality teachers. Even the teacher are lacking for the professional training programs. If the teachers are properly trained then they can help students also.

The less qualified teachers affect the level of teaching. Teaching profession in India is less attracted, either people with less education, living below poverty line or some having it as a hobby take the teaching profession.

The demand for teachers is more and the supply less. Still many schools face the problem of lack of infrastructure. Even today Indian schools are not maintaining the standard of education.

Teacher comes to class, teaches student the curriculum, the bright students are able to understand the subject. But what about the students who just comes to school and pick up the teachers level of teaching.

They remain back and continue twice or thrice or leave the school forever. The rate of dropout students is also high they leave the school before completing their primary education. School should take some initiatives for the students who require extra help.
Higher Education cost

Some parent can’t afford the school education fees even if they are living in the remote area or in city. 70% Indians live in rural areas and find it difficult to afford the education fees. Many Indians are living below the poverty line.
Quality of Education

All over India the quality of primary education is not maintained. There is lack of discipline, punctuality and motivation in primary education.

Students don’t get proper & complete education from schools so parents opt for the private tuition and this puts more pressure on the students.

Students in fourth grade are hardly able to read the paragraph and they are not up to their school level.
Literacy Rate

In India every state has different languages, different customs and different culture. In some societies education for the women is not considered as an important.

This keeps the children also away from the benefits of education. If the mother is educated definitely the children also gets the proper education. Children get less motivation from the illiterate parents and they remain back.

People living below the poverty line take their children to their work place so that they can earn daily wages for their parents. Indian schools should start some initiatives to teach the illiterate adults also.
Language issue

There are 1500 languages in India and it’s a difficult task for a teacher to teach every student in their own language. In urban areas parents prefer English medium for their children’s education, also now a days in remote areas English medium is preferred.

This is big challenge for the teachers to teach and to students to grasp the knowledge. Due to this the parents and children’s fail to understand.

Many Educational Instructors think that if an education is given in mother tongue to every student it benefits the students.

To achieve complete literacy in India government should take some more initiative. Government should generate more awareness among people about the importance of education. Then only India will have a different face.

Future of Online Education in India

The advanced technology is playing an important role in every field. This advanced technology has also changed the way of education. Online Education is better than the traditional classroom teaching. The future of online education is very bright in India.

People in India are moving towards the online education due to the convenience, affordable cost and the quality education and also now government is promoting the online education. In coming years still there will be a growth in the online education market.

future of online education

Indians are accepting this new medium of learning. Online education is also known as e-learning. Online education has a great scope and all those having time limitations are turning towards it. Many top universities, organizations and the colleges are accepting the online education system.

Refer – Advantages and Disadvantages of Distance Education

Online Education is affordable for students and also flexible as they can learn from their comfort place. Online education has no age bar and anyone can do the course from anywhere.

According to the recent survey after United States, India is the second highest country for the online enrolment courses all over the world. Online education in Indian schools can enhance the quality of the education.

United States have started providing the online education to the Secondary School and they are finding it as effective. Many foreign universities are offering the online degrees so no need to go to the abroad for further education.

Many top Indian universities like Sikkim Manipal, Symbiosis, IIM, IGNOU and Annamalai University are offering online distance education. They offer courses like MCA, MBA, MSc, BA (Hons),

Retail & Digital Marketing, BBA etc. The fees of these online courses are affordable for students. Online education saves money on the lectures & conferences. Also they conduct online exams time to time.

Classroom education is not suitable for everyone as in classroom there are some students whose grasping power is high and there are some who are always back. Also some students require more detailed information in classroom education, but not possible.

But in online education students can get more detailed information and also can concentrate. In classroom education teacher can’t give personal attention to each and every student. In classroom education not all students are active, some are energetic but some just sit back.

Classroom education has a limitation on the number of students, but for online education thousands can enroll for a course. For online education there is no need to stand in a queue to get an admission.

All those working professionals or a business professional who wants to do a professional course or wants to study further to improve their skills can enroll for the online education.

Online education is getting more popular in the working professional as they don’t have the time to attend the regular classes. It’s best option for them. They can enroll for online course for any time of the day.

Advantages of Online Education

Advanced teaching techniques are used to teach
Convenient
Affordable fees
Can choose the class timing as per your timing
More Revision
Saves Time & Saves Money [ No Travelling] More concentration and less disturbances
Video presentations helps students to understand quickly
From last 2 to 3 years the online education has changed the quality of education and is far better than earlier. There are some online education service providers in market who are providing the education at free of cost.

Seeing the increasing demand for the online education, many business competitors are entering this market. But all those providing the quality education will only survive in future.

Also there may be still more various courses in online education and with lots of options. The demand of the online education will create more employment for the lecturers in the future.

Still Indian parents are not finding the online education as more important than the classroom education. Government should create more awareness to change the trend.

How Much is the Cost of Education in India

How Much is the Cost of Education in India

Do you want your child’s admission in kinder garden? Or You have a child waiting to go Primary or Secondary school? Or He/she is young enough to join a bachelor degree course in a College. You might be a parent of any these aforementioned child or children. So what you have to consider first when you have a child ready to get admitted in a school or a college?

Well! I can surely say that it would be the cost of admission. Both the monthly fees and other miscellaneous expenditure related to it. Thus, in this article we will talk about issues related to education in India.

cost_of_education_in_India

How Parents Think Regarding Their Child’s Education?
Before I talk about the cost of education in India, let us first debate what parents think regarding their child’s education particularly in India. I mean, how they take education of their children. According to my personal experience, normally parents are very serious when it comes to education and career of their children.

It is a fact that most of parents in India take education as their first priority. Parents would spend less on everything else but they would never comprise on child’s education. Many parents even go to an extent that they would go hungry but still pay the monthly fees for the child. Hence, we can conclude that parents in India are really serious about their child’s future.

Why Cost is So High in India?
We all know cost of education in India is very high and it is soaring. It is a fact that still a large number of populations in our country cannot afford even primary education. Forget about the higher education.

The reason for this is very simple. Government still lacks a policy where it can regulate the private schools and colleges in a way that would guarantee that every child in India gets free and quality education. Moreover, there has been little done when it comes to physical and intellectual infrastructure.

Physical means lack of spacious classrooms and inadequate furniture. Children have to sit on ground. Intellectual means manpower to teach our children. A teacher to student’s ratio is very high and teachers are also not well trained. Then in government schools we see a trend that teachers do not teach in their regular classes and take tuition after the school is over.

Hence it means if you want to get quality teaching then you have to pay an extra money for tuition along with school fees. These things make education high in India.

Education in Private Sector vs. Government Sector
If we compare both, education given in private sector versus education in government sector then which one is good for you. Education in private schools is normally good but they are very costly.

Even fees for kinder garden are so high then you can imagine for higher education in private colleges. On the other hand, in government schools and colleges fees are very less but quality of education is surely comprised.

You will find teachers do not come to their classes because there is no accountability. Therefore, it simply means if parents have money then they opt for private schools for education and if they do not then they have no choice and send children to a nearby government school.

Cost for Primary, Secondary and Higher Education in India
Here, let me give you some figures. First is cost of getting admission in kinder garden and primary school. A private school can cost you around Rs 1500/- to Rs 2000/- per month for a child. You have to pay extra for initial deposit and it could run into lakhs of rupees.

In government school monthly fees could be 6 to 7 times less than a private school. Second is for secondary and high school. Again in private school a child can cost Rs 3000/ to Rs 4000/- per month. In a government school it could be Rs 1000/- to Rs 1500/-. Third is higher education for colleges.

Well! It could cover many disciplines like Medical, Engineering, dental, MBA etc. An engineering college course for one semester could cost Rs 50,000/- to Rs 70,000/-. A MBBS degree can cost Rs 10, 00000 to Rs 2000000/- Similarly, post graduation course like MBA could also cost in lakhs. Higher education is normally given in private institutes. There are few such government institutes where fees are relatively less.

Cost of Education in India Compared to Abroad
When we compare cost of education in India and abroad then it depends upon the courses you choose. Some courses which not available in India could cost you huge amount of money in countries like USA and UK. Courses which are readily available here do not cost much abroad because students would not like to go there.

Hence it depends upon availability of course by course. But one advantage in studying here is that you do not have to work while going to college. Abroad, you have to work because you do not have enough money to pay fees and your monthly expenditures. Hence, overall cost of education in India is less than compared to abroad.

What are Options to cut-down the Cost of Education?
As a parent your main concern should be how you can cut-down the cost of education for your child. The best way to cut-down education cost could be taking loans.

Today many banks whether government or private offer plans and scheme for child’s education. Private Banks like HDFC, ICICI etc have some great packages for child loans. You can go to their website and start learning about various loans.

As a parent you should prepare from now on if you want to give your child best education.

How to Shape Your Future Without Much of Formal Education
Finally, there is a way out if you really cannot afford education for your child. Schools and colleges are ways to impart formal education in your children. You could prepare your child for a future where he or she would require less of a formal education.

I simply mean to say starting something on your own. It could be a small business where formal education does not play any role. Here your child would need more of a real life experience rather formal education.

Hence, you could choose a career for a child that does not require much of a formal education so that you could save lakhs of rupees from spending on higher education.

Advantages and Disadvantages of Distance Education

Advantages and Disadvantages of Distance Education

As we know, world is getting small and we are living in a global village. A person sitting in one corner of the world can talk to a person sitting on the other side of the world.

Technology has really shrunk the world. Technology has affected every aspect of our daily life. No one has remained untouched with this revolution.

However, in this article we shall discuss an aspect where technology has really made a big change and that is distance education.

Now you can sit in a remote area of a country and learn everything as if you are sitting in a college classroom.

Advantages and Disadvantages of Distance Education

Distance education has really changed the way we see higher education. It is a growing phenomenon around the world and people are interested to know more about it.

Before you make a decision to join distance education you should know what are advantages and disadvantages of distance learning.

Advantages of Distance Education
Study from Anywhere, Anytime
The best thing about the distance education is you could learn it from anywhere and at anytime. It does not matter in part of the country you are living you can join the course and start learning.

Even if your course is offered by an international school you could easily get access to course material if you are a citizen of a different country.

Get all the knowledge and training anywhere you reside on the planet.

Flexibility of Time
Normally, distance education offers flexibility of time. It gives complete freedom to choose your own time for taking up the course.

If you do not have time in day then you can learn at night or some other time because only thing that you need is a computer with an internet connection.

You do not need to go in person and submit anything. Time is the most important thing and you could save it through joining distance learning.

No Commuting
I hate commuting. If you are opting for a distance education then you do not have to commute in crowded buses or local trains.

As I said earlier, you need a computer with an internet connection in your home. Entire college would be in your bedroom and you do not have to go out.

Commuting is the most difficult part because you waste a lot of time, money and more importantly the energy. No one likes commuting for long hours.

Plethora of Schools and Colleges to Choose
There are many schools and colleges now that offer distance education. Hence you will not find any problem in finding a college.

You could choose a college which is best for you. In India, IGNOU is a great university for offering distance education. Although you do have to attend few classes in a week but it gives you real flexibility.

Similarly there are many other colleges & universities like IGNOU where you can join and get your education distantly.

Lower Costs
This is another great advantage of distance education. The total cost that you incur for joining Distance College is very less compared to joining a regular college.

If you are from a poor background then you could easily afford the distance college. Moreover, the fees for certain courses are in distance learning are very less compared to learning in a full time normal college.

Hence, if you feel you have shortage of money then you could get quality education at low price.

Learn While Working
You can learn or pursue your college while you are working. As I said earlier distance education offers complete flexibility of choosing time.

The distance learning is not going to conflict with timings of your day job. You could work all day and study at night or vice-versa.

Therefore if you are a working professional then you could choose distance education without affecting your 9 to 5 job.

Moreover, it is really good for the housewives who can learn sitting in their home.

So these were advantages of distance education.

Disadvantages of Distance Education
However, with advantages there are some serious shortcomings of distance education. Here are they.

No Interaction with Teachers and Professors
The worst thing about distance education is you cannot interact with your college professor or teachers.

In fact, you cannot even talk to friends and other colleagues that you do in a normal college course.

You seriously miss the human aspect because you are only engaging with the technology and machines.

You will not be able to socially mingle with your friends and enjoy a normal college life.

Moreover, if you have any doubt then you have to clear yourself without taking help from your teacher or friends.

Lack of Seriousness, Competition and Learning Environment
Sometimes you cannot replace a real college environment with a virtual college environment on your computer.

In distance education you lack a seriousness that is present in a classroom when lecture is given by the professor.

Moreover, here you are alone and you do not have anybody to compete because you are alone.

Without any competition you tend to learn less. Therefore the overall learning environment in a distance education is lot different than a regular college.

Job Markets Do Not Accept Online Degrees
This is could be quite dangerous if you are totally relying on distance education for a degree. You might get a degree but that is not going to be recognized by privates companies in the job market and the same problem in government jobs.

Still employers prefer a degree from a regular college over online or distance education. They think that distance education is still not a serious form of education.

Therefore, if you think you will get a job with an online degree then you might be wrong.

Not All Courses Are Available and Can be Learned through Distance Education
Moreover, online courses or distance education has some serious limitations when it comes to offering courses.

You want to do specialization or major in a particular subject then it might not be available for you.

Moreover, there are certain courses in which practical demonstration is more important than lectures on videos. So you cannot learn such courses.

Format of Courses Not Suitable for Everyone
Format of online courses are not suitable for everyone. Sometimes you will not understand anything what is taught through an online video.

Certain students could never understand what they are trying to teach you.

So this is another limitation of distance education.

Internet Availability and Affordability
Finally, this is sad reality that everyone cannot afford a computer and an Internet connection because you need these things for distant learning.

All the lectures and conferences that would be given would through a webinar and you need a high speed internet connection.

Many people cannot afford it. So they cannot join a distance education college because of their financial condition.

So there were advantages and disadvantages of distance education. There are advantages and some disadvantages but the bottom line is if you want to learn something new then you could take up a distance learning course.

However, you cannot rely on it imagining that it is going to give you a job one day because employers still do not prefer distance education.

So don’t think of getting a degree through distance education but you can use it to learn something new.

10 Fundamental Problems with Education System in India

10 Fundamental Problems with Education System in India

We all want a job that pays us in six figures every month. But we are not ready to see the ground reality of our education system that how come it is going to help you in getting a job that could pay you in six figures.

With my own experience, I have jot down 10 fundamental problems with education system in our country. You need to know these 10 problems.

1. Education System Promotes Rat Race
Our education system basically promotes rat race among our children. They have to read and mug-up entire text book without any understanding of it.

So a student who scores 90 out of 100 and comes first actually remains a rat. I mean to say he or she does not have any analytical skills that a child must have.

It is time to change our education system.

2. Education Does Not Builds Persona of a Child
Unfortunately our education system is not helping to develop persona of a child. Remember, it is personality that is more important than academic qualification.

As I said earlier, our system demands good numbers from a child in an exam not to show his personality. Hence a child is not well exposed to outer world and he or she might not be able to develop a personality.

So this is another flaw in our education system.

3. No Critical Analysis, only Following the Establishment
Our children are not able to do critical analysis of anything, for example our history, culture and religion. They take the line of establishment or the views of predominant majority.

They are simply not able to look things from their own perspective. If you want a society should become a lot better than we must develop a culture of looking at things critically.

We are simply failing at this because of our education system. Children must learn to criticize our own culture and other established narratives.

4. Too Much Parochialism Rather Global Outlook
Our education teaches too much of nationalism and it could create a negative mindset in our younger generation. Loving your country is good thing but just blind love is dangerous.

In our schools children are not able to get a global outlook. It means how to see yourself that you are actually a global citizen rather confined to a place or a country.

I myself was not able to feel that I am a cosmopolitan rather I was thought to become a jingoistic.

5. Teachers Themselves are Not Trained and Efficient
To make things worse, our teachers themselves are not sufficiently trained to teach kids. They do not have proper training that how they are going to impart values in children that are going to change the future of the country.

If they can teach properly then the government does not have enough salary to pay. Hence, to improve our education system teachers should be better trained and more importantly better paid.

You cannot imagine a country without respecting teachers.

6. Medium of Language of our Education System
This is also a big problem that needs to be addressed. We are not able to decide on the medium of language of our education system.

Still emphasize is given on English where majority of children cannot understand the language. So how does they are going to understand what teachers are teaching.

Moreover, subjects like mathematics, physics and arts have nothing to do with the medium of communication. Hence, over-emphasis on English could be wrong.

7. Education Given is Irrelevant to Job-Market
This is perhaps the most apparent failure of our education system that after completing graduation in any discipline students are not able to get jobs.

It is simply because skills that are required in a job market are simply not present in a fresh graduate. All that a student is taught in his entire school and college life is almost redundant for job markets.

Skill that is required by them is not taught in schools and colleges. Hence our education system is needed to be revamped and must be designed according to our economic policies.

8. Missing Innovation & Creation because Only Aping West
If we talk about the privileged children in India then even they are not able to innovate and create new things. Although they have everything that a child need but still they lack something in them.

What they are doing is only aping western culture and not being able to do something new. On the one hand children are not able to go to schools and on other hand, if they are going then are not able to innovate or solve the problems that the country is facing.

Hence, this is yet another fundamental problem with our education system.

9. Students Happy in Getting a Highly Paid Salary Job but Lacks Ambition to Become Entrepreneur
Now, in college campuses it has become a common thing that every young student is interested in a getting a job that pays them well. However, they would never like to become an entrepreneur.

This lack of ambition does not allow our country to excel in any field. This attitude of our children making them slaves of few multinational companies.

Therefore our education system should be designed to make our children a successful entrepreneurs rather going for a salaried job.

10. Gross Failure of Our Education System to End Social Disparity
The last but not the least failure of our education system is after so many years it has not being able to reduce social disparity in our country. In fact, social disparity has gone up.

It is such a shame that education itself has become a tool for creating divisions. A child of a rich parent would get good education and a child of poor parent cannot afford even a basic education.

Government should intervene and make education its prime responsibility.

Conclusion

Finally, I would say education is very important but we spend only few percent of our GDP on education, so our government should make education its first priority and try to address issues those are mentioned in this blog.

If government is able to take note of these 10 problems then we can definitely overhaul our education system.

Are student loans broken? What I told Uni Minister Jo Johnson

If you read the papers you’d think the answer is a clear cut yes. I too agree, to an extent. Yet the most commonly quoted problems tend not to be what worries me most, and the things least mentioned can hurt.   

On Tuesday, MSE organised an event at the Tory party conference, where I debated this subject with University Minister Jo Johnson, chaired by Nick Hillman, Director, Higher Education Policy Institute.

My core aim was to try and push that if this scheme is to continue it needs renaming and reshaping. That was picked up by The Times Higher that reported Minister agrees student loans should be renamed as did The Telegraph. While the tabloids focused on Tory minister tells students to live frugally – though to be fair what he actually said is that some students want to do that, rather than all should.

This was an important debate, so I thought, as we weren’t allowed to broadcast it, it’s worth noting down for posterity my opening remarks (it’s up to the minister if he chooses to publish his). Below is a transcript (edited to make it a bit easier to read and with added sections), though I speak freehand and sometimes with venom, so it’s not the easiest transcript to scan as it misses that tone.

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The Chair opened by asking me what I thought of the announcement a few days before, that the student loan repayment threshold was to be increased to £25,000 u-turning the prior decision to freeze it (read why the student loan repayment U-turn is so important).

I think as somebody who has called the Government liars, backtracking, sold out a generation of students on behalf of freezing the threshold, hired lawyers to investigate trying to overturn it you could say I’m a little bit pleased at the U-turn this week.

So, yeah, absolutely the right move, important to say that I am not opposed to cutting interest rates at all. I just think if you’ve got a block of money the first place to put it is in increasing the repayment threshold. Cutting interest rates, increasing maintenance loans are very important too. But if you’ve got one block of money, start with increasing the threshold, that retrospective change was bad, but I’ll come on to that formally in a second.

First, I’d like to frame exactly what I’m going to talk about today.

Today’s debate is about how we reshape the current system

Clearly, the landscape in student finance has changed, the Labour Party are talking about no tuition fees, so they are saying the cost of their education should be met through general taxation – a perfectly valid and honest theory and philosophy.

But we are here at the Conservative Party Conference and rather than going through that bigger debate, which frankly is not going to wash with the Minister. So I want to be practical, if we accept that the individual is going to have to contribute to the cost of their higher education, is the structure of the way we do that right now correct or not? And that is what I am going to be talking about, but don’t take that as a reading that I discount the Labour view.

Marketisation – fail

The idea that each university is going to be able to charge different fees, that gives the individual a choice of how much they want to pay for their education, has been a robust and absolute unmitigated failure.

Almost every institution charges the same amount. It hasn’t worked, it should be scrapped. And it is rather ironic that one of the prime reasons it is a failure, is because it should have been a failure.

The way we have set up the repayment of student finance which says you repay 9% of everything above a threshold, currently £21,000 (but going up to £25,000) for 30 years before it wipes means for the vast majority of graduates higher tuition fees won’t cost them much more.

Only higher earning graduates would repay more on a £9,000 course than a £6,000 course (the original range) once you incorporate the maintenance loan. So, my advice from day one to students was to choose the right course and ignore the tuition fees, because you will only have to repay more if you earn a shed load of money once you leave – in which case chose the right course to hope that happens.

So it would be counter logical for marketisation to have worked in any way. So I think we really need think about how that one is affected and I think part of the problem of that I am going to come onto later is the naming of the way that we do the system. Now let’s move on to that retrospective change.

Retrospective Change: Lack of faith isn’t fixed by a U-turn

Note this refers to the Governements freezing of the student loan repayment threshold at £21,000. It was supposed to go up with average earnings from 2017. 

This was disastrous, and the fact there has been a u-turn hasn’t stopped the disaster. The disaster is very plain.

When a student and their parents, grandparents make the decision to go to university they are weighing in many factors. We hope they are looking at the finance. It is over a very long period. And what they want to know is what I am signing up to is what I will get.

In the past we had never seen a substantial retrospective change to the terms and conditions of going to university. We got it for 2012 starters. The breach of the very loud promise made by David Willets – and I have letters written by David Willets to parents that say from 2017 the threshold will go up, with no caveats, no mention of terms and conditions.

There is no commercial company who has a loan based system who would have been allowed to make that change, even though it wasn’t in the small print when the FCA regulates loans. It says your core marketing terms must be honoured even if they’re not in the small print, same with mortgages, go check it out – we’ve had this before. They would not have been allowed to do that. The Government have done it.

That breach of promise does two things. First of all, it has knocked the faith of students in the student loan system we have. How can you trust it when there was a change to the terms?  “I signed a contract and you have unilaterally changed the terms – that was wrong.”

The second thing, it has knocked the faith of students in the entire political system because the political classes, and lets be straight as we are sitting here, the conservative political classes, primarily, lied to them and misled them. And while the u-turn is welcome in practical terms, the shaking in the faith has not been fixed.

As someone who put myself out there because I believe my own political view should be secondary to making sure there isn’t one young person in this country who is put off going to university for the wrong financial reasons. The biggest questions I get is what if they change the rules. And that retrospective hike has knocked that forever and that hasn’t fixed it.

We have to ensure that every student knows what the terms and conditions are when they start and there wouldn’t be any retrospective changes. This is crucially important and should be locked into statute or at the very least if we are going to have variable rates and conditions within the student loan that need to be overtly declared and transparent.

For example you could say, “We will never change the 30 year limit. That is locked into statute. We may change your interest rate. We may change your repayment threshold.”  Not in the small print. If we are going to have to explain it, let’s be upfront.

One of the misunderstandings out there this year is that the Government has increased the interest rate. No, the interest rate is unchanged, the rate of inflation changed, and the interest rate is based on the rate of inflation. I’ve been out there defending on that, because it is unfair to accuse the Government of changing interest rates.

You can have terms that are changeable but you must declare them and be open and transparent about them. That has been breached and as always when you breach a rule, putting it right a year and a half later doesn’t put you back to where you were. Faith has gone.

It is no longer true that there’s no need to pay upfront to go to university

I will be publishing a further blog on this next week

This isn’t about tuition fees. This is about the most import and biggest practical problem that students face at university. Affording to live.

[Pause for a cheer, including from the President of the National Union of Students]

Quite simply, we have increased the means testing. We have mislead parents. On my roadshows, parents come up to me and say my kids are given £5,000 and their hall fees are £6,000 why don’t they get more? And I say to them, how much do you earn and they tell me £50,000 and I say you do realise that the full loan they would have got is, let’s say £9,000 and there is a parental contribution of £4,000 and they say, no.

There is an official parental contribution on the maintenance loan.  I wrote to the Minister, he will remember it, asking that in the loan letter, instead of telling parents “your child’s loan is £5,000”, it is changed to say “the full loan for your child is £9,000 because of means testing your child will only receive £5,000 therefore, there is a parental contribution of £4,000 to be had”. Though I would accept “there is an extra £4,000 gap that you need to make up”. That level of transparency is crucial.

It isn’t that the loan isn’t big enough for those parents, it’s that they have been means tested and don’t get the full loan but we hide it and it is somewhere like page 32 in the small print of the student loan literature. It is absolutely unfair and what we are doing now is knocking the faith of people in this system and meaning students cannot afford to go to university because the truth is your parents will need to give you money, they will need to save up and if you’ve got two kids at university which over 60% of parents have two kids within a 4 year gap.

Two kids at university at the same time, even though you are having to contribute £5,000 to your first kid they only reduce the residual income by £1,130 in other words, if you’ve got triplets you’re really screwed because it’s not taken into account. So, what we have here is a real practical problem for middle class parents. Lower income parents get the full loan.

Middle class parents struggling to find the money to send their kids to university and their children don’t have the cash, nobody tells them about this and their children have no way of forcing them to give them the money.  The biggest problem with student loans if we keep the current system is that the loans aren’t big enough, not that they are too big.

The language of debt is psychologically damaging – it should not be called a debt

This is all about changing the name to a graduate contribution system see my student loans aren’t a debt blog for more info.

For over 20 years we have educated our youth into what we call a debt and we have never educated them about debt properly. Even though financial education is now on the national curriculum – I campaigned for it – it is a pyrrhic victory, we’ve not put any resources into it. But secondly what we’ve done is we’ve inured an entire generation into borrowing, because if we say you’ve got to get a debt to go to university then they go on and get their credit cards and their payday loans, it has been tremendously damaging.

The language of debt is misleading. I can’t explain the system, because everyone says, I am going to have this debt hanging over me that I am going to have to repay. No, this is a contribution system in proportion to your financial success after university. By calling it a debt it makes it more difficult to explain. That is why people call to have the interest rate cut rather than raising the repayment threshold. They don’t understand it. If you change the name it will be closer.

So my big ask, if you want to fix this, you are going to stick with this system then get rid of the name of debt. Get rid of the word interest, call it an uprating. This in every other country is called a graduate contribution system. That’s effectively a graduate tax, but technically you can’t call it that because you can’t hypothecate it and you can’t tax people abroad.

Wrapping up (at speed due to time constraint on speakers)

The system is a graduate contribution system and should be called so, but don’t do that in isolation. Give people a guarantee of what can change and what can’t change.

You want to make changes, fair enough. That’s politician’s remit, but be really up front for example – it will be wiped after 30 years, the interest will be related to inflation but we might change it exactly the proportion it relates to inflation. You will repay 9% above the set threshold but we may change the threshold.

Call it a contribution system, lock it in, give people respect so they know exactly what they’ll sign up to. People might understand it better, might respect it better and might start to understand your argument a little bit better about it being shared between the individual and the tax payer. Right now the system is broken cos it aint a loan, and we call it one. 

If you managed to read through all of this, well done, its not easy in the transcript form. After that, then as well as the Ministers statement there was 40 minutes of often robust Q&A and debate, hopefully it did some good. 

 

Why cutting the student loan interest rate will only help richer graduates…

This weekend the papers have been mooting that Theresa May’s Government is looking to cut the English and Welsh student loan interest rate – now at a 6.1% headline rate for those who began uni in or after 2012 – in order to appeal to the youth vote.

I find this frustrating. Not because I object; I’ve always believed on principle that student loan interest shouldn’t be higher than inflation – charging students for their education is one thing, charging them for the financing of their education is a step too far.

Yet if the Exchequer has limited resources to finally shell out something to relieve student loan pressures, cutting the interest rate is far from a priority – in fact, it’s poorly targeted.

Student loan interest rates change every September, based on the RPI rate of inflation the prior March. For this 2017/18 academic year, the rates are as follows:

– While studying: Interest is charged at RPI + 3% (= 6.1% for this academic year)
– From the April after leaving: Then the rate is RPI (3.1%) for those earning under £21,000 and RPI + 3% (6.1%) for those earning over £41,000. Those in between are charged on a sliding scale.

Do note I write students are CHARGED interest, not students PAY it.

That’s because student loan repayments solely depend on what you earn, not what you owe.

Graduates repay 9% of everything earned above £21,000 for the shorter of 30 years from the April after they graduate, or until they clear what they borrow (see my five things every student and parent should know blog).

So if someone earns, for easy maths, £31,000 (ie, £10,000 above the threshold), they repay £900 a year, regardless of whether they owe £10,000 or even if they (absurdly) owed £1,000,000. The same is true of the interest rate: at £31,000 earnings, people repay £900 a year regardless of whether the interest is 3.1% or 500%.

In other words, what you borrow and the interest rate have no impact on annual repayments. Instead, all it changes is whether or not you’d clear the loan plus interest within the 30 years.

Who would cutting the interest rate would actually help.

According to the Institute for Fiscal Studies, it’s currently likely only the highest earning 23% of graduates will clear their debt within the 30 years.

So they would definitely save money from an interest rate cut (as would some who earn a little less than them as they’d now join the club of those who’d ‘clear within the 30 years’.)

Yet those who earn less will feel no change whatsoever from a lower interest rate. In other words, cutting the interest rate ONLY HELPS THE HIGHEST EARNING GRADUATES. Lower/middle-earning graduates are unlikely to gain as they won’t clear much more than their actual borrowing – never mind the interest – within the 30 years.

In fact, for a good percentage of lower-earning graduates, student loans are interest-free (full info on this in my Will you really pay 6.1% interest? guide).

The real horror is the freezing of the repayment threshold.

Contrast that to the Government’s real student loan horror this year – the April 2017 freezing of the repayment threshold at £21,000 until at least 2021 – when it was supposed to rise with average earnings.

All students earning over the threshold will repay more each year than they would’ve done – a real hit especially for lower and middle-earning graduates. And in the long-run that hurts almost every graduate EXCEPT higher earners (see why high earners gain).

The problem here is one of psychology. The interest rate seems scary so we hear large cries – even though in practice it doesn’t affect most. Freezing the repayment threshold is complex so we hear little – but it affects millions. Reversing that is a far greater priority for graduates.

To make policy just to appease fundamental misunderstandings is wrong. The sooner student loans are renamed a graduate contribution system, the sooner we can start to be rational and protect young people who need help, rather than illogically prioritising helping those who don’t.

So to summarise, cutting interest rates – while not bad – should be far from top of the priority tree.

For graduates, unfreezing the repayment threshold is a priority. For current students, interest rates have no practical impact – what does is the fact that many don’t have enough money to live off.

The priority there should be money to give bigger, fairer loans for living and to clear up the poorly operating hidden parental contribution system.

PS: I originally bashed out a slightly shorter version than this on social media over the weekend, in case you think you’ve seen it before.

Related past blogs: 

Is your student loan being sold? The answers we must get from Government

Scrapping of student grants – what it means & how bad is it?

Labour’s plan to cut tuition fees to £6,000 is financially illiterate

Panicked about interest on your student loan statement? For many, it’s nonsense!

Viral letter about mis-sold student loans due to retrospective interest hikes is well meaning but wrong

Five things EVERY student and their parents should know

Fear grabs votes and makes headlines. Sadly, though, both sides’ political spin and spittle over student finance have resulted in widespread rampant misinformation – and it’s got worse again this year. 

So with a new academic year about to start, my message to students and their parents is simple – forget the politics – ensure you understand the real impact on your pocket of going to uni.

Don’t confuse explaining the system with unblinkered support of it. I do have issues with the system. Yet the big issue – how much of the cost of higher education should be paid by the state (ie, taxpayers or through Government borrowing), and how much by the individual benefiting from the education – is political, not financial.

Yet that isn’t my aim here. I simply want to tool people up to make appropriate decisions. As finance differs across the home nations, I’m going to focus on the most common (and costly) system, English loans for English students who started in or after 2012 (see how it works elsewhere in the UK).

I should point out this is my summary blog – if you’ve got an appetite to understand it in detail, do read my full 20+ Student Loan Mythbusters guide.

1. Student loans’ price tag is up to £50,000, but that’s not what you pay.

Students don’t pay universities directly. Tuition fees, typically up to £9,250 a year, are paid for them by the Student Loans Company. Over a typical three-year course the combined loan for fees and living costs can be up to £50,000. Yet what counts is what you repay…

– You only repay once you’ve left uni and earn £21,000+/yr. Earn less & you don’t repay.
– You repay 9% of earnings over £21,000, so earn more & you repay more each month.
– The loan is wiped after 30 years – whether you’ve paid a penny or not.
– It’s repaid via the payroll, just like tax, and doesn’t go on your credit file.

For full info on this see the full how you repay info in the 20 student mythbusters guide.

2. There is an official amount parents are meant to contribute, but it’s hidden.

The student loan doesn’t just pay for tuition fees, it also includes a living loan (officially called the maintenance loan) paid directly to the student to help with living costs.

Yet for most under-25s, even though they are old enough to vote, get married and fight for our country, their amount of their living loan is dependent on household (in other words parents’) residual income.

From just £25,000 family income upwards, the loan is reduced, until for those earning around £60,000 and above, it’s roughly halved.

This missing amount is the expected parental contribution. Yet parents aren’t told that, never mind told the amount. I wrote to the Government asking it to start to do so – it refused.

So work it out yourself. The maximum living loan for this year’s NEW starters is £7,097 if living at home, £8,430 away from home, and £11,002 away from home in London. Subtract the amount of the living loan you get from this to find the amount parents are expected to contribute. See the maximum loans for ongoing students.

That doesn’t mean parents can afford it – but at least you’re aware of the gap – and students should at least make sure they have the discussion with parents.

But even the max may not be enough to live on. Bizarrely the biggest practical problem with student loans isn’t that they’re too big, it’s that they’re not big enough.

3. The amount you borrow is mostly irrelevant – it works more like a tax.

What you repay each month depends solely on what you earn, ie, 9% of everything earned above £21,000. As proof, take £31,000 earnings, as it’s easy maths…

– Owe £20,000: you repay £900/yr.
– Owe £50,000: you repay £900/yr.
– Owe £3,000,000 (if tuition fees were absurdly hiked to £1m a year): you repay £900/yr.

The only difference what you owe makes is whether you’ll clear the borrowing within the 30yrs before it wipes. The Institute for Fiscal Studies estimates only the HIGHEST-earning 23% of graduates will.

So unless you’re a seriously high earner, ignore the amount you ‘owe’. In practice you’re paying an increased rate of tax for 30 years. In fact, at current rates, it works like this:

Effective marginal tax rates 2017/18
Earnings Uni-goers Non uni-goers
Up to £11,500 No tax No tax
From £11,500 – £21,000 20% 20%
From £21,000 – £45,000 29% 20%
From £45,000 – £150,000 49% 40%
£150,000+ 54% 45%

This doesn’t make it cheap, but it does mean that all the talk of burdening students with debt is often misleading. Instead we’re burdening students with higher taxes over a certain amount, and they should decide if that’s worth it.

Remember, though, that just like tax, the ones who tend to pay more tend to earn more – so it’s to be hoped there is, financially at least, a ‘no win, no fee’ element here.

This is why I campaign to rename student loans to the far more descriptive ‘graduate contribution system’, as other countries call it. Calling it a loan is dangerous; it means our young people are educated into a ‘debt’ and then end up getting other types of much worse borrowing too.

4. Interest is added, and the headline rate is 6.1%, but many won’t pay it.

Student loan interest is set based on the rate of inflation – which measures how quickly prices are rising. The rate changes each September based on the Retail Prices Index measure the prior March (3.1% last March). The rate is set as follows…

– While studying: RPI + 3%, so this year it’s 6.1%.
– From the April after leaving uni: It depends on earnings. For those earning under £21,000 it’s RPI, for those earning over £41,000 it’s RPI + 3%. For those who earn in between it’s a sliding scale.

I’ve seen anger this year at “the Government hiking the rate” – that’s a little unfair, as the RPI rate changes each academic year with inflation, and that hasn’t changed – it works as it always has. For more details see past years’ rates.

Another confusion here is people talk about students paying 6.1% interest.  That’s not correct – 6.1% is the amount added to the amount owed. And as explained already that doesn’t usually change what you repay.

The interest only has an impact if you’d clear what you borrowed initially in full over the 30 years – many won’t, and if so, student loans are, in practice, interest-free. And even of those who will, all but the highest earners won’t come close to repaying all the interest.

If you’re a graduate, and that’s getting you thinking, do read my full Should I repay my student loan now, as it’s accruing 6.1% interest guide.

5. The system can and has changed.

Student loan terms should be locked into law, so only an Act of Parliament can negatively change them once you’ve started uni – but, they’re not. So sadly my explanation needs the major caveat of ‘unless things change’.

This is especially true as we’ve seen a very poor change this year (that I’ve been ranting against, sadly to no avail). It was promised the £21,000 repayment threshold would start increasing with average earnings, but it’s been frozen until 2021. The effect of that is recent graduates are repaying more each month than they were promised when they started. See more on the campaign to stop the threshold freezing.

The practical impact of this isn’t enormous in the grand scheme of things, but the unfairness is. However, you can’t second-guess future changes (as we don’t know who’ll be future Governments) and we have to hope in future it’ll be respected. See more on if changes are likely.

If you hear any student, prospective student or parent panicking about student finance, and worried about the ‘horrid debt’, do feel free to point them in the direction of this blog.

STILL GOT QUESTIONS? Do read the full 20+ Student Loan Mythbusters guide.