SCHOOLWATCH
Result-card may be misleading
Nanki Hans
"If we taught children to speak, they’d never learn’’, said education psychologist William Hull. Except for a handful, most students fail to develop more than a tiny part of their tremendous capacity for learning and creating with which they are born and of which they made full use during the first two or three years of their lives. Why? Because they are afraid, bored and confused, according to psychologist John Holt.

Red alert!!!

Marketing strategy for educational loans
Suresh Bedi

The counselling season for admission to various technical and professional courses has almost set in. Ideally, this is the time when the educational loan market should be bubbling. Most programmes offered by reputed private institutes in management, engineering, medicine, finance, fashion designing, advertising and mass communication, computer education and such other professions are pretty expensive, ranging between Rs 2-5 lakh and in a few cases even more.

Even in the university system in which the pressure for self-financing has escalated in recent years, the total cost of a professional course against a payment seat, including tuition fee, development fee, hostel expenses, books and equipment varies in the range Rs 2-4 lakh, depending upon the duration of the course.

Unfortunately, educational loans constitute an insignificant component of the loan portfolio of almost all commercial banks, both in the public and private sectors. Over the years there has been a tremendous growth in the number of students, courses and institutions in higher professional and technical education in the country, but the market for educational loans remains stagnant.

This should be surprising as the banks are flush with loanable funds and their overall credit offtake is low in the present recessionary circumstances. The RBI already circulated an educational loan scheme for commercial banks in July, 1999. Later, the Indian Banks Association (IBA) formulated a separate and additional scheme, which was adopted by the government with certain modifications and announced in the Union Budget 2001-02. The purpose of the scheme is to provide support from the banking system to deserving and meritorious students in the pursuit of higher education.

The moot question is why is the educational loan market insignificant in spite of the high pressure of demand for higher education, sufficient availability of bank funds and existence of a well-defined policy for educational loans.

Factors responsible for the situation fall both on the demand and supply sides. A large number of banks under the instructions and guidance of the RBI and the Ministry and Finance have floated educational loan schemes, but awareness of the same in the public is low, due mainly to poor publicity and advertising. Even among those who are aware of the existence of the schemes, there is little knowledge about course and student eligibility, expenses covered, loan quantum, margin money and collateral requirements.

There is a widely held belief that such loans are expensive and procedurally complex to obtain. Equally, there is little awareness about the tax advantage associated with the repayment of the loan. Section 80-E of the Income Tax Act, 1961, contains a provision for availing deduction on the total income on account of educational loans for the purpose of computing taxable income, provided the loan is in the name of the assessee.

On the supply side, there is considerable indifference on the part of the banks to make such loans. A number of branch managers particularly in public sector banks, view such loans as potential NPAs (non-performing assets) due to liberal margin and security requirements.

Under the model IBA scheme (revised) implemented by the Ministry of Finance, there is no margin and collateral security requirement on loans below Rs 4 lakh.

For loans above Rs 4 lakh, the margin requirement is 15 per cent for inland studies and 25 per cent for studies abroad. Scholarships and assistanceships are permitted to be included in the margin. Further, margin money is not a one-time requirement. It can be brought in on a year-to-year basis as and when disbursements are made on a pro-rata basis.

The collateral security requirement for loans of Rs 2 lakh and above is Rs 100 per cent of the loan amount. Guarantee of a third person known to the bank for an equivalent value is acceptable under the scheme. In case where the eligible collateral security like land or building is already mortgaged, the unencumbered portion is acceptable as security on a second charge basis, provided it covers the loan amount.

Another reason for the banks’ lack of enthusiasm in the long-term character of the loans. Now that the spectre of NPAs haunts bank managers, they are inclined to attach a high degree of risk to such loans which involve a repayment holiday or moratorium of the entire course period (with provision of extension of two years) plus one year as the waiting period for employment.

The loan is repayable in five to seven years after employment is obtained. Thus, a bank will have to wait for at least 10 (4+5+1) years before a loan granted to an engineering student at the entry point is fully paid back.

For a five-year masters degree programme, the maximum waiting period can go upto 15 (5+7+2+1) years with extension. Over such long periods, bank managers fear that the liability-holder may vanish, die, or get financially incapacitated or bankrupt. Such situations can drag the bank into litigation.

Higher professional educational financing has to be a priority area of national importance as it affords an opportunity to deserving students to acquire and develop skills, which are important for national development.

In this task, banks must enthusiastically come forward with a visionary and practical approach implemented.

The principal element of the strategy should be to reduce the riskness of educational loans. For that, the banks need to attempt market segmentation and product positioning. Market segmentation need not be equated with discriminating between different classes of borrowers.

The banks need to target basically two categories of borrowers. The first category comprises the sponsors, whose solvency or financial capability is well-established and can offer healthy collateral securities. This class of borrowers may have demand for educational loans not for financial reasons, but to take tax advantages on repayment or to impart a sense of stake-holding and responsibility in the mind of their wards so that they take their credit-based studies seriously.

The other category comprises parents of the upper layers of brilliant students who have high probability of employment after education. IBA guideline permit relaxation of security, margin money and repayment norms in such deserving cases.

In order to generate demand for such loans, appropriate and timely advertising with informational and rational appeal is required so that the target borrowers could be motivated. As a part of promotional strategy, banks can gainfully tie up with leading educational institutions from where they can obtain reliable data about parents’ financial position and students’ academic merit and involve the institution in the disbursement and subsequent follow-up and supervision of the loans.

For such arrangements, banks will have to carefully design their loan products within the contours of the overall policy and arrange suitable training for managers in this sensitive and non-traditional area.

The writer is Director, Institute of Management Studies and Research, Maharshi Dayanad University, Rohtak.

SCHOOLWATCH
Result-card may be misleading
Nanki Hans

"If we taught children to speak, they’d never learn’’, said education psychologist William Hull. Except for a handful, most students fail to develop more than a tiny part of their tremendous capacity for learning and creating with which they are born and of which they made full use during the first two or three years of their lives. Why? Because they are afraid, bored and confused, according to psychologist John Holt.

They are afraid of disappointing their elders, with clouds of expectations hanging over their heads. They are bored because what they are told to do in school is almost always dull and makes only a limited demand on the wide spectrum of their capabilities and talent. They are confused as the avalanche of words/instructions that pour over them make little or no sense, with one thing often contradicting another. This is why children fail. It is in fact a study of how schools fail them. For example the science book may have a picture of a leaf, which on a tree is living but fallen on the ground non-living.

When comprehension gets tough because children are bored, afraid and confused, they develop strategies to dodge or meet the demands made by schools. They devise methods to give the right answers. ‘‘Producer’’ strategies are developed by the students who is interested only in getting the right answer and makes scant use of his analytical and critical abilities. In contrast we have a ‘‘thinker’’ student who wants to comprehend step by step the concept or formulae to reach the conclusion.

A student who jumps at the right answer and misses often sinks into defeatism. The ‘‘thinker’’ is more willing to rectify errors. Schools, unfortunately encourage the ‘‘producer’’ student and not the ‘‘thinker’’ student.

One reason for student failure could be lack of intimacy in the student-teacher relationship. You may have heard more than once a parent saying his ward did well in studies when he liked the teacher and felt he was liked by the teacher in return. In other words, this teacher had developed intellectual intimacy with the child, which is a pre-requisite to the teaching-learning process.

We do not expect teachers to be clinical psychologists, but we do expect them to be sensitive human-beings. Just as emotional intimacy is a must between a child and mother, intellectual intimacy is necessary for all learning in the classroom.

A teacher must help the student overcome the fear of saying. ‘‘I do not understand and keep explaining, with steady and resolute pressure, till he understands. When children fail to comprehend, the teacher’s voice begins to fade and their minds wander off the subject. There is no good or bad student, only a willing and attentive one and an afraid and evasive one.

Failure in a success-oriented culture is hard to take. Our children are failing in schools at an alarming rate. Even children who achieve enviable grades fail to learn much of what we had hoped to teach them. There are numerous instances of students termed ‘‘bright’’ in schools failing to make it in the entrance tests to various courses in colleges, universities or professional institutes.

Clearly, there is a vast chasm between what they appear to have learnt and what they have actually learnt. Most of all, our schools ‘‘fail’’ students in the larger sense — in that they fail to teach them abstraction, curiosity and appreciation — the ultimate educational goals.

For most children, school is a place where elders make you go and where they tell you to do things and where they make your life unpleasant if you don’t do things or don’t do them right!

‘‘For children the central business of school is not learning...... it is getting tasks done with a minimum of effort and unpleasantness. Each task is an end in itself. The children don’t care how they dispose of it’’, explains John Holt.

Parents and teachers of both ‘‘bright’’ and ‘‘dull’’ students need to be wary of the "learning strategies" that their wards develop. Result-cards can be misleading.

Red alert!!!

Jul 25: Delhi College of Engineering, Delhi (Univ of Delhi).

PG Diploma, dist (Busi Admin/Personnel/Mktg Mgt)

Jul 31: Makhanlal Chaturvedi Rashtriya Patrakarita Vishwavidyalaya, Bhopal (www.makhanlaluniversity.org / mcu.ac.in)

MSc (Electronic Media/Electronic Media Informatics) (2-yr)

Jul 31: Apollo School of Nursing, Indraprastha Apollo Hospitals, New Delhi (violet@apollohospdelhi.com)

Jul 31: Dr Bhim Rao Ambedkar Univ, Agra

Jul 31: Electricity Service Commission, UP Power Corp Ltd, Lucknow

— Pervin Malhotra