‘It should be based on projected future earnings of students’
The Kerala High Court has held that the repayment possibilities of education loans should not be assessed based on the financial position of the parents, but should be based on the projected future earnings of the students on employment after education.
Justice P.B. Suresh Kumar made the observation while disposing of a writ petition filed by Devik Soniraj, a second-year BAMS student, challenging the decision of Bank of India, a public sector bank, to reject her request for an educational loan.
The court observed the revised guidance notes on Model Education Loan Scheme issued by the Indian Banks’ Association in 2015 said that repayment possibilities of education loans under the scheme should not be assessed based on the financial position of the parents, but should be based on the projected future earnings of the students on employment after education.
The liability of the parents shall not be an impediment for the bank in considering an application for an educational loan.
The bank took the stand that since the father of the petitioner had not divulged his liabilities with other banks in the application, the application of the petitioner could not be said to be a bonafide one. The bank contended the family of the petitioner might not be in a position to pay the fee payable by the petitioner for the course and, therefore, the petitioner was not entitled to an education loan loan.
According to the petitioner, she had paid the fee payable for the first year of the course and a portion of the fee payable for the second year. However, as her family was unable to raise the entire balance fee for the course, she had applied for an educational loan of ₹7,50,000. However, the bank turned down her request saying that she had not shown the liability of her father owned to other banks in her application.
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