So, does Indian education need its own version of the Jan Dhan Yojna to ensure that it becomes as socially and financially inclusive as banking aspires to be?
That was the placeholder that concluded my previous post, which I shall pick up herein.
In recent times, financial inclusion has become an understandably high profile social mandate for the government. With a target of opening 75 Million accounts by end January this year, the banking industry has already delivered a whopping 106.3 Million basic savings bank deposit accounts in a record time of just four months.
The big question now is if financial empowerment will have a trickle-across effect on education in terms of affording access or ensuring affordability of education loans? Or does there have to be a focused model that addresses the issues that currently isolate many from the educational system in the country?
At this point it would be quite illuminative to take cues from some of the most productive and efficient global models. Government-funded education is a working reality in many developed countries, including Canada and Australia. But one of the best examples comes from the United Kingdom where the Student Loan Company (SLC) has been facilitating student access to higher, secondary and part-time education since 1989. A non-profit government-owned organization, SLC offers loans and grants to over a million students each year.
With diversity and inclusion being part of its core agenda, SLC offers grants that are specifically designed to help students from different sections of society, such as low-income families, students with permanent disabilities etc. More importantly, repayment of these student loans is based on a unique concept called Income Contingent Repayments that allows borrowers to pay back loans after a certain holiday period based on how much they earn rather than on how much they owe.
Typically less expensive than normal bank loans, these programs are even generating profits for government with interest payments offsetting the borrowing cost and provision for losses. Having evolved over time, the programs are now tightly linked with other nodes of the financial ecosystem, like employers, for example, who are authorized to automatically deduct payments required of a salaried borrower and transfer it to the governing body.
Finally, if access to higher education is to be broadened, it will take a well-choreographed effort led by the government and supported wholeheartedly by academia and industry. But the key takeaway is that the urgency and efficiency with which we pursue this particular agenda will eventually determine our success as a nation in converting our demographic opportunity into demographic dividend.