Enrolment in a central government education loan scheme has fallen steadily, primarily because the eligibility criterion of an annual parental income below ₹4.5 lakh has remained unchanged since the programme was started in 2009.

Data obtained by The Telegraph under the RTI Act shows that an average of 3.2 lakh new students had benefited per year during the first seven years of the Central Sector Interest Subsidy (CSIS) scheme, launched by the UPA government.

Over the next seven years — from 2016-17 to 2022-23 — the average yearly number
of new beneficiaries has been less than one lakh.

In 2009, the government had set the ₹4.5-lakh criterion because this was also the cut-off for the identification of the “non-creamy layer” among the Other Backward Classes.

The OBC cut-off has been revised twice since then — to ₹6 lakh in 2013 and ₹8 lakh in 2017. But the cut-off for the CSIS scheme has never been revised despite an average yearly inflation of about five per cent.

That the failure to raise the parental income cut-off is the key reason for the fall in the number of new beneficiaries is suggested by sharp drops in the years after the two OBC cut-off revisions.

The scheme is available for students of professional or technical courses. Students who have secured the loan for their undergraduate courses cannot again apply for it while doing their postgraduate programme.

The scheme offers full interest subsidy for a moratorium period of 12 months
after the beneficiary has completed the course, or six months after they have taken up a job, whichever is earlier.

After the moratorium period, the beneficiary has to pay interest on the outstanding loan amount on a par with the regular education loan scheme of the Indian Banks’ Association.

Apart from the unchanged income cut-off, there have been other problems with the scheme.

Subham, a Scheduled Caste student from Chikhli taluka in Maharashtra’s Buldana district, had applied successfully for a loan under the CSIS scheme.

After he applied through the Jansamarth portal — the national portal for credit-linked government schemes — his application was forwarded to the Union Bank of India branch in Khamgaon taluka for loan disbursement.

“There is a Union Bank of India branch in Chikhli too but my application was forwarded to the bank branch in Khamgaon, which is 60km from my place. I visited the branch; they said they would not give me a loan since my place is 60km away,” he said.

Subham, who is doing an MA in development studies at the Tata Institute of Social Sciences (TISS), Mumbai, borrowed money from his relatives to pay his first semester fees.

An email has been sent to the higher education secretary-in-charge, Sanjay Kumar, seeking the education ministry’s perspective on the declining numbers of CSIS beneficiaries and the reasons for not raising the parental income cut-off. His response is awaited.