Financing Higher Education and Education Loans in India: Trends and Troubles

The paper attempts to investigate the trends in financing higher education which convey that student loans is the dominating source of financing higher education in India. This leads us to explore various factors that influence, viz., enrolment growth, growing private sector, bulging youth population with growing middle class with a wider acceptability of loan culture and increasing earning premium of higher education and the willingness to pay. Using various secondary data sources besides using the unique data set made available on Interest Subsidy Scheme on Student Loans, we examine various troubles, namely who gets access to student loans and interest subsidy, what are the risks associated in terms of default or recovery and how the employability is linked with better repayments. We conclude that fees, grants/scholarships and student loans need to be examined in the context of increasing cost and role of markets in higher education along with affordability within the domain of family characteristics.