Union Budget 2024 — A Leap Towards Greater Accessibility in Higher Education

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While presenting the interim budget on February 1, 2024, Finance Minister Nirmala Sitharaman had stated that, “In the full budget in July, our Government will present a detailed roadmap for our pursuit of ‘Viksit Bharat’.” If India does aim to become a developed country by 2047 as per Prime Minister Narendra Modi’s vision of Viksit Bharat, the Union Budget 2024 which will be presented on July 23 must prioritise the education of children, who are the future of the country. Read on to find out what experts from the education sector shared with us at Brainfeed about their expectations from the Union Budget 2024.

The Union Budget 2024 has introduced a transformative initiative designed to address one of the most pressing issues in Indian higher education: accessibility. The proposal to subsidize student loans up to ₹10 lakh marks a significant step toward making higher education more attainable for a broader segment of the population. This move, which includes a 3% subsidy on these loans, is poised to create substantial positive change across the educational landscape. One of the most commendable aspects of this new scheme is its targeted approach. By focusing on students who have previously not benefitted from government schemes, the budget directly addresses financial barriers that have long impeded access to higher education. The introduction of financial assistance through subsidies is a strategic intervention designed to enhance student enrollment and engagement in domestic institutions.

It promises to benefit both students and educational institutions as students  from economically disadvantaged backgrounds, who face obstacles in funding their education, this initiative offers a crucial lifeline. Educational institutions are expected to see increased enrollment and higher standards as more students are able to pursue their academic goals without financial constraints.

The current landscape of education loans in India is fraught with complexities. Loans up to ₹4 lakh do not require collateral, but those between ₹4 lakh and ₹7.5 lakh require a third-party guarantee, and loans exceeding ₹7.5 lakh necessitate tangible collateral and a co-obligation of parents. This convoluted structure often discourages students from pursuing higher education or confines them to institutions within their financial means. The new subsidy scheme simplifies this process, thereby reducing financial barriers and making higher education more accessible.

The Reserve Bank of India’s (RBI) data underscores the scale of the challenge, with outstanding student loans amounting to ₹1.2 trillion as of May 31. The financial strain on students and their families is further compounded by the State Bank of India’s (SBI) high interest rate of 11.15% on student loans. By reducing interest rates and extending support to loans up to ₹10 lakh, the new scheme is poised to alleviate this financial burden and promote greater equity in education.

This initiative also aligns with the objectives of the National Education Policy (NEP) 2020, which aims to improve the gross enrollment ratio and enhance educational accessibility. Incorporating performance-linked funding models could further enhance the scheme’s impact. By tying financial support to academic achievements, the scheme could ensure that funds are used effectively, promoting excellence and accountability within the education sector.

However, the scheme’s current focus on students who have not previously received government support raises concerns about inclusivity. Expanding eligibility criteria could broaden the scheme’s impact, ensuring that more students benefit and that the promise of higher education becomes a reality for a larger segment of aspiring individuals.

Dr Rajat Gera, Professor, Cluster Dean, Management, Economics, Commerce, Liberal studies, Director School of Management, OMBR, CMR University, Bangalore

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