NEW DELHI: India’s ambitious education loan schemes are missing their mark, leaving thousands of deserving students tangled in red tape, high interest rates, and unequal access, a Parliamentary panel has warned. In its 372nd report, the Department-related Parliamentary Standing Committee on Education, Women, Children, Youth and Sports said the gap between promise and performance is “glaring,” with well-intentioned schemes like Pradhan Mantri Vidyalakshmi, CSIS, and CGFSEL falling short on reach, transparency and fairness.The report paints a worrying picture of a system that, instead of closing the opportunity gap, continues to exclude large sections of aspirants. “The States of Tamil Nadu, Kerala and Maharashtra account for the bulk of education loan borrowers. This skewed distribution of loan disbursal shows that there are gaps in implementation of the education loan schemes and there is a dire need to make efforts to raise awareness across States” .Students in northern and rural regions remain largely cut off, despite being among the most in need. Even though schemes promise collateral-free, low-interest access, the panel noted that in practice, banks still rely heavily on formalities: “Loan applications are accepted only on proper documentation and the presence of a co-applicant or guarantor. Due diligence is carried out before loan sanction” .Processing lags continue despite digital platforms. The panel highlighted the government’s directive that “loan applications received through Vidya Lakshmi portal by PSBs should be disposed of within 15 days”. However, it noted that implementation remains uneven and slow.Most alarmingly, the committee turned the spotlight on the mental health cost of mounting education debt. “The pressure from lenders, family and society, and the emotional strain caused due to loan repayment burden, in some cases, turns deadly,” the report observed .The committee has called for sweeping reforms: simplified paperwork, enforcement of no-collateral rules for eligible students, interest subsidies beyond the course duration, and special awareness drives in underserved regions. Without these changes, it warned, education loans may “fail to ensure equitable access to higher education and may instead end up perpetuating inequity rather than eliminating it” .
