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As Maharashtra prepares to elect its leaders in the upcoming Assembly polls it is important to put the spotlight on student suicides. Why discuss student suicides in Maharashtra? According to a recently released National Crime Records Bureau (NCRB) report, the highest number of student suicides takes place in Maharashtra, even surpassing Kota in Rajasthan, which is often in the news for related developments.
It is believed that many students and graduates face mounting debt on student loans, yet find few stable employment opportunities to manage their financial burdens, and, thus, commit suicide.
Education is undeniably crucial for national development, yet the Bharatiya Janata Party (BJP)-led Union government's consistent underinvestment in this vital sector raises serious concerns. Allocating only ~2% of GDP, which is considerably below the global average of 4-6% recommended by the Incheon Declaration, reflects a troubling lack of commitment to building a strong educational infrastructure. This underfunding leaves students and institutions tussling with inadequate facilities, and a widening gap between public and private education.
This issue is further compounded by the challenges students face when seeking education loans. With the rising demand for higher education and escalating tuition costs, education loans have become indispensable for students aspiring to pursue their studies both domestically and internationally. This situation reflects the broader inadequacies in the educational system, highlighting the urgent need for the government to re-evaluate its spending priorities and provide the necessary resources to ensure equitable and accessible education for all.
Dreams on loan, futures on hold
The rise in education loans reflects the growing demand for higher education and the government's limited budget for educational subsidies. Data from the Reserve Bank of India (RBI) shows that the outstanding education loan portfolio grew from ₹84,677 crore in 2021-2022 to ₹96,847 crore in 2022-2023. A major factor behind this trend was the increasing number of students opting to study abroad.
One of the challenges faced was the priority list used by banks to determine loan eligibility. This list often favours students from prestigious institutions or those pursuing degrees in fields like management, technology, and medicine. As a result, students from less privileged backgrounds or those studying humanities and social sciences struggle to secure loans. Another significant concern is the high repayment burden associated with education loans. With limited job prospects and a competitive job market, many students hesitate to take on such financial commitments.
The loan disbursement process often lacks transparency, creating a trust deficit between students and banks. For loans above ₹4 lakh, banks require collateral or a co-signer. This disproportionately affects students from marginalised communities, who may not have access to such resources. This underscores the need for alternative methods of assessing creditworthiness, particularly for first-time borrowers.
According to the RBI's Financial Stability Report, non-performing assets in education loans were the highest among all personal loan categories. This trend is partly driven by the growing number of students opting to study abroad, where education costs are substantially higher. It also exacerbates the financial burden on families and increases the risk of loan defaults. Data from the Ministry of Finance shows a 215% increase in the number of students availing education loans for studying abroad over the last decade. This trend highlights the need for a balanced approach to education funding, where domestic education is equally incentivised and supported.
Even after graduation, students face an uncertain job market. According to recent studies, youth unemployment in Maharashtra (along with India) reached record levels — a worrying trend that highlights a mismatch between educational outcomes and labour market demands. While the government hesitates to fill the public sector vacancies, the gap is getting wider. As graduates grapple with debt and minimal employment opportunities, the pressures extend beyond individual students, affecting family finances and India’s broader economy. The lack of stable jobs often leads graduates to accept lower-paying jobs outside their fields of expertise, limiting their potential career growth, and economic mobility.
Policy gaps and necessary reforms
Income-Based Repayment Schemes: The government should introduce an income-based repayment scheme that links loan repayments to borrower’s income, ensuring manageable monthly instalments that align with students’ earning potential after graduation. This approach reduces default risks and offers relief to students in lower-paying fields or early in their careers.
Loans to reach the needy: The government could establish a National Observatory Committee on Education Loans (NOCEL) to co-ordinate with the IBA on subsidy matters. This committee would oversee the disbursement of government subsidies, ensuring they reach the students most in need. The NOCEL could also collaborate with universities to assess student’s financial backgrounds and academic performance, creating a fairer and more transparent subsidy distribution process.
Subsidising interest rates for low-income students: The government should consider reducing interest rates on loans under ₹4 lakh, particularly for students from economically weaker backgrounds. Ensuring these rates do not exceed the Prime Lending Rate (PLR) would make loans more accessible and affordable. Waiving or subsidising interest accrued during the course period could ease the financial burden further.
Support for domestic education: Since the Budget allocation is falling short, the government should invest more in improving the quality and accessibility of domestic education. Enhanced funding for scholarships, grants, and low-interest loans for domestic education would create a balanced education ecosystem and lessen the reliance on international education funding.
Legislative oversight on loan processing: A potential legislative framework could enforce strict timelines for loan processing and penalise unnecessary delays by banks. It would ensure a fairer and more transparent system for students.
In addition to education reforms, creating sustainable employment pathways is essential. The government could strengthen public-private partnerships to create skill development programmes tailored to industry needs, Implementing job placement guarantees and internship programmes linked to these training initiatives could improve employment rates and reduce youth unemployment.
By ensuring the government’s inevitable stamps, we can significantly reduce the financial barriers that hinder the educational aspirations of the millions. These changes will not only alleviate the financial strain on students but also contribute to a more educated, empowered, employed, and economically stable society.
(Nabeel Kolothumthodi is parliamentary secretary to Praniti Sushilkumar Shinde MP and alumnus of Faculty of Law, University of Delhi.)
Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.