The Madhya Pradesh government has announced a new scheme under which parents who lose their children during studies will no longer have to bear the burden of repaying the remaining education loan.
This new initiative will see the government paying 50 per cent of the loan to the bank while the remaining 50 per cent will be borne by the bank. To avail this scheme, a net sum of INR 3,240 would be required per student as insurance.
“The parents who lose their children bear a double shock. First shock is the death of their child, and then (there are) banks that come knocking at their doors asking for repayment of the remaining part of education loan,” said Narottam Mishra, a state government spokesperson said to the media after a cabinet meeting on Tuesday.
Jayant Malaiya, the finance minister in the MP government, said that the amount that will be borne by banks could be insured under existing schemes like Pradhan Mantri Suraksha Bima Yojna and Pradhan Mantri Jeevan Jyoti Bima Yojna.
“The formula is being worked out but in any case parents would be provided relief,” he said in a statement to the Hindustan Times.
Also See : Banks providing Education Loans in India
Malaiya stated that the issue was brought to the government’s notice after a student from Tikamgarh passed away during studies and shortly after, the bank that issued the education loan started harassing the parents of the deceased student for repaying the remaining sum.
Implying that such cases are extremely rare, the minister also mentioned that since 2012, only three cases of this nature have been reported. The total outstanding amount in all three cases combined stands at INR 16.5 lakh. “The amount in such cases is not large but the social impact that this government scheme will bring is huge,” he said.