HRD Ministry proposes education finance corporation

Union HRD Ministry has proposed to set up an education finance corporation to provide easier credit at lower rates for investors in the education sector, and loans to students with government providing guarantee.

HRD Minister Kapil Sibal said here that while infrastructure projects get priority lending rate, education attracts commercial one.

"The question we are asking ourselves is - is education less important than infrastructure?" he said, delivering the Sir Vithal N Chandavarkar Memorial Lecture at the Indian Institute of Science Bangalore and later responding to questions from the audience.

"We believe education is as, if not more, important than infrastructure. Therefore, same priority lending rate should be given to investors in education," Sibal said, adding, the repayment period for loans availed by these investors in education would be 20-25 years, as per the proposal.

The other part of the Commission is it would ensure that every student irrespective of his background would get loans once he gets admission into a professional college.

These loans to be extended by banks would be guaranteed by the Centre and would carry an interest rate of four per cent. The students need to repay the loans only after they get employed.

Sibal said the proposal on setting up this commission was in discussion stage and it would need budgetary support for "some of that". The Ministry is currently in discussion with the Planning Commission and once there is agreement, it would be taken to the Finance Minister and then to the Cabinet for approval.