Education loan delivery by banks in India: A qualitative enquiry
-
DOIhttp://dx.doi.org/10.21511/bbs.16(4).2021.11
-
Article InfoVolume 16 2021 , Issue #4, pp. 125-136
- Cited by
- 581 Views
-
412 Downloads
Education financing is a key retail banking product for most commercial banks and a lifeline for large numbers of students seeking professional courses. This study aimed to identify the impediments in the successful delivery of this loan product in India, where it is marketed majorly by public sector banks under a common scheme devised by the government. The study adopted a qualitative approach to probe behavioral issues related to the credit appraisal process, which is the most suitable approach for unstructured exploratory design. Since credit managers in banks work with applicants for education loans, their insight becomes essential to understanding the issues plaguing with the smooth implementation and delivery of this scheme. Thus, ten public sector bank managers working in different geographical locations were selected using a homogeneity purposive sampling technique. The study collected 41 responses, which were then divided into 4 major categories. The responses were simultaneously transcribed manually to ensure that data remained close to the original verbatim of the participant. All transcribed interviews were imported into ATLAS.ti 8 Software for analysis. The 4 observational categories lead to a broad understanding that product accessibility, operational hurdles, scheme features and limitations in bad loan recovery are key bottlenecks in managing education loans. These responses had over 80% commonality on key issues of product feature and cost. It was concluded that education financing can perform better by improving access, rationalizing interest rates and liberalizing repayment terms. These findings can be used as input for tweaking the product for better performance.
- Keywords
-
JEL Classification (Paper profile tab)G21, I22
-
References51
-
Tables2
-
Figures0
-
- Table 1. Education loan portfolio at Indian banks in 2015–2019
- Table 2. Coding and categorization of responses from respondents (through Atlas.ti)
-
- Anderson, D. M., Conzelmann, J. G., & Lacy, T. A. (2018). The state of financial knowledge in college: New evidence from a national survey (Working Paper No. WR-1256). Rand Corporation.
- Armstrong, S., Dearden, L., Kobayashi, M., & Nagase, N. (2019). Student loans in Japan: Current problems and possible solutions. Economics of Education Review, 71, 120-134.
- Avery, C., & Turner, S. (2012). Student Loans: Do College Students Borrow Too Much--Or Not Enough? Journal of Economic Perspectives, 26(1), 165-92.
- Barr, A. (2016). Enlist or enroll Credit constraints, college aid, and the military enlistment margin. Economics of Education Review, 51, 61-78.
- Barr, N. (2004). Higher education funding. Oxford Review of Economic Policy, 20(2), 264-283.
- Barr, N., Chapman, B., Dearden, L., & Dynarski, S. M. (2018). Reflections on the US college loans system: Lessons from Australia and England (IZA Discussion Paper No. 11422).
- Bing, Z. (2012). A study of state educational loan demand diversity and its influencing paths – An empirical analysis based on SEM model. Energy Procedia, 17, 1932-1939.
- Brown, M., Haughwout, A., Lee, D., Scally, J., & Van Der Klaauw, W. (2014). Measuring student debt and its performance (Staff Report, No. 668). NY: Federal Reserve Bank of New York.
- Bryman, A., & Bell, E. (2015). Business Research Methods (3rd ed.). New Delhi: Oxford University Press.
- Canton, E., & Blom, A. (2010). Student support and academic performance: experiences at private universities in Mexico. Education Economics, 18(1), 49-65.
- Chitra, R. (2019). Education loans in India shrink 25 % in 4 yrs. The Times of India.
- Clendaniel, A. (2016). Student loan debt influence on graduate degree attainment (Master’s Theses). Rowan University.
- Connor, H., Dewson, S., Tyers, C., Eccles, J., Regan, J., & Aston, J. (2001). Social class and higher education: Issues affecting decisions on participation by lower social class groups (Research Report No. RR267).
- Creswell, J. W. (2002). Educational research: Planning, conducting, and evaluating quantitative. Upper Saddle River, NJ.: Prentice Hall.
- Creswell, J. W., & Plano Clark, V. L. (2011). Designing and conducting mixed method research (2nd ed.). Sage Publications, Thousand Oaks, CA.
- Deloitte. (2017). Annual Status of Higher Education of States and UTs in India.
- Despard, M. R., Perantie, D., Taylor, S., Grinstein-Weiss, M., Friedline, T., & Raghavan, R. (2016). Student debt and hardship: Evidence from a large sample of low-and moderate-income households. Children and Youth Services Review, 70, 8-18.
- Dewan, A., Goel, R., & Malhotra, R. (2013). Student’s Perception Regarding Student Financing. International Journal of Social Science & Interdisciplinary Research, 2(7), 97-103.
- Dynarski, S. (2014). An Economist’s Perspective on Student Loans (ES Working Paper Series).
- Edwards, D. (2016). How we can solve the student loan debt crisis. The Journal of The James Madison Institute, 79-90.
- Gale, W., Harris, B., Renaud, B., & Rodihan, K. (2014). Student Loans Rising: An Overview of Causes, Consequences, and Policy Options. Washington, DC: The Brookings Institution.
- Gross, J. P., Cekic, O., Hossler, D., & Hillman, N. (2009). What Matters in Student Loan Default: A Review of the Research Literature? Journal of Student Financial Aid, 39(1), 19-29.
- Gurgand, M., Lorenceau, A. J., & Mélonio, T. (2011). Student loans: Liquidity constraint and higher education in South Africa (PSE Working Paper No. 2011-20). Paris-Jourdan Sciences Economiques.
- Hays, C. (2018). A global view of household debt. Bloom Economic Research Division, 20(11), 1-9.
- Hershbein, B., & Hollenbeck, K. (2014). Student Loans: A Multidimensional Public Policy Issue. Employment Research Newsletter, 21(2), 1.
- John, M. (2016). Current Scenario in Education Loans in India. IRA-International Journal of Management & Social Sciences, 3(1), 96-109.
- Johnston, A., & Barr, N. (2013). Student loan reform, interest subsidies and costly technicalities: lessons from the UK experience. Journal of Higher Education Policy and Management, 35(2), 167-178.
- Liu, Y., Green, A., & Pensiero, N. (2016). Expansion of higher education and inequality of opportunities: a cross-national analysis. Journal of Higher Education Policy and Management, 38(3), 242-263.
- Lochner, L., & Monge-Naranjo, A. (2016). Student loans and Repayment: Theory, evidence, and policy. Handbook of the Economics of Education, 5, 397-478.
- Mark, E. (2013). Student satisfaction and the customer focus in higher education. Journal of Higher Education Policy and Management, 35(1), 2-10.
- Mukherjee, A., & Satija, D. (2012). The consumption pattern of the rising middle class in India. Indian Council for Research on International Economic Relations.
- Narayana, M. R. (2005). Student loan by commercial banks: A way to reduce state government financial support to higher education in India. The Journal of Developing Areas, 38(2), 171-187.
- Nissen, S., Hayward, B., & McManus, R. (2019). Student debt and wellbeing: a research agenda. Kōtuitui: New Zealand Journal of Social Sciences Online, 14(2), 245-256.
- Pisaniello, M. S., Asahina, A. T., Bacchi, S., Wagner, M., Perry, S. W., Wong, M. L., & Licinio, J. (2019). Effect of medical student debt on mental health, academic performance and specialty choice: a systematic review. BMJ Open, 9(7), e029980.
- Puttaswamaiah, S. (2010). Financing Higher Education: A Study of Educational Loans (CMDR Monograph Series No. 61).
- Rani, P. G. (2016). Financing higher education and education loans in India: Trends and troubles. Journal of Social Science, 12(4), 182-200.
- Solis, A. (2012). Credit access and college enrollment (Working Paper No. 2013:12). Uppsala University, Department of Economics.
- Sonavane-Shelke, S. (2015). A critical study of students’ financial issues in higher education in India (Doctoral Theses).
- Srivastava, N. (2019). A study of Performance of Education Loan in India with reference to Higher Studies. Journal of Development Research, 12(1), 21-28.
- Talreja, C. (2014). India’s demographic dividend: Realities and opportunities. Indian Journal of Labour Economics, 57(1), 139-156.
- Thulasi Priya, B., & Esakkiammal, M. C. (2018). A Study On Bank-Wise Performance of education Loan Lent by Public Sector Banks in India. International Journal of Pure and Applied Mathematics, 119(18), 3081-3090.
- Tilak, J. B. (1993). Financing higher education in India: principles, practice, and policy issues. Higher Education, 26(1), 43-67.
- Tilak, J. B., & Varghese, N. V. (1991). Financing higher education in India. Higher Education, 21(1), 83-101.
- Tumen, S., & Shulruf, B. (2008). The effect of student loan schemes on students returning to study. Journal of Higher Education Policy and Management, 30(4), 401-414.
- Varghese, K. X., & Manoj, P. K. (2012). A Review of Educational Loans Disbursed during FY: 2005–2011. Mirror, 2(2-A), 94-108.
- Varghese, N. V. (2015). Challenges of massification of higher education in India. National University of Educational Planning and Administration, New Dehli, India.
- Walsh, K. (2014). Medical student loans – why they matter to general practice. British Journal of General Practice, 64(624), 354.
- Wang, X. (2001). A policy analysis of the financing of higher education in China: Two decades reviewed. Journal of Higher Education Policy and Management, 23(2), 205-217.
- Whitsett, H., & Mishory, J. (2012). High debt, low information: A survey of student loan borrowers. National Economic Research Associates Economic Consulting, 1-27.
- Williams, G., & Light, G. (1999). Student Income and Costs of Study in the United Kingdom. European Journal of Education, 34(1), 23-41.
- Zainal, N. R., & Ismail, N. (2012). Debt composition and attitude towards education loan among Malaysian graduates. Procedia-Social and Behavioral Sciences, 36, 280-286.