There has been an increase in the defaults on education loans. Private players were always reluctant to provide education loans and the burden was mainly on government institutions. Now the government institution also seems to give up. This is despite the fact that education loans have higher interest rates than other loans. Under such circumstances, seekers of higher education are in distress.
Education loans defaults
As per the CNBC, more than 3000 students default on their education loans every day in the US. There is 17 percent increase in federal student loans default from 2015 to 2016. In 2016, 4.2 Million borrowers were in default up from 3.6 million in 2016. As default period in the US is 270 days, no payment is made in these default accounts for more than 270 days. This is despite the rise in stock market & falling Unemployment levels. The situation is similar across other nations also – in Europe & developing nations. In India, there has been 142 percent rise in default loan over past few years. As per RBI, at the end of December 2016, loans worth of Rs 6336 crore was at default against Rs 2615 crore in March 2013.