MP Su Venkatesan Urges Centre to Reduce Interest Rates on Education Loans

In a move that could significantly impact students and their families, Madurai Member of Parliament (MP) Su Venkatesan has urged the central government to lower the interest rate on education loans, which currently stands at around 10.5%. The MP also appealed for reforms in eligibility criteria, particularly asking that parents’ CIBIL credit scores should not be used as a deciding factor when sanctioning loans. His remarks came during an Education Loan Mela held at Lady Doak College, Madurai, where students, parents, and bankers gathered to discuss the growing challenges in accessing affordable higher education finance.

Education Loans in Madurai: The Current Landscape

According to officials present at the mela, Madurai alone issues over ₹100 crore worth of education loans every year, reflecting the increasing demand from students aspiring to pursue higher education both within India and abroad. However, many students and parents expressed concerns about the burden of repayment, citing high interest rates and the stringent eligibility checks applied by banks.

Parents and educators pointed out that the CIBIL score requirement often penalizes families where parents may not have a strong credit history, even if the student has excellent academic potential. This, they argued, disproportionately affects first-generation learners and students from middle- and lower-income families.

MP Su Venkatesan’s Demands

During the event, Su Venkatesan emphasized that access to education should not be treated purely as a financial transaction but as a fundamental right and social investment. His key recommendations included:

1. Lowering Interest Rates:

The current average of 10.5% is considered too high compared to developed countries where education loans are subsidized or interest-free.

He suggested that loans for higher education, particularly professional courses, should have a much lower interest rate or be interest-free until the student begins employment.

2. Removing CIBIL Score Restrictions:

He stressed that parents’ credit scores should not determine a student’s educational future.

Instead, banks should assess academic merit and institutional credibility when sanctioning loans.

3. Expanding Access and Coverage:

Venkatesan called on the government to ensure that rural students and those from marginalized backgrounds are not left behind.

He proposed simplified documentation processes and government-backed guarantees to encourage banks to lend more freely.

Student Voices and Concerns

Several students and parents spoke at the mela, sharing how loan rejections due to low CIBIL scores had forced them to either abandon higher studies or resort to private lenders charging exorbitant interest rates. Some final-year students highlighted that, while banks advertise educational loan schemes widely, the reality of approval is far more complicated.

One student preparing for studies abroad said, “I got admission into a reputed UK university, but my parents’ CIBIL score became a hurdle. I had to defer my admission because the bank refused to sanction the full amount.”

Why Education Loan Reform Matters

Madurai is one of Tamil Nadu’s key educational hubs, with prestigious institutions like Madurai Kamaraj University, The American College, Lady Doak College, Thiagarajar College, and several engineering and medical colleges. Every year, thousands of students aspire to pursue higher education, both domestically and overseas.

Yet, the financial barriers often limit these aspirations. Critics argue that high interest rates on education loans discourage talented students from pursuing advanced studies, particularly in fields like medicine, engineering, and research. By reducing rates and removing credit-based restrictions, policymakers could unlock the potential of a much larger student base.

Possible Economic and Social Benefits

If the reforms proposed by Su Venkatesan are implemented, experts believe the benefits would be both immediate and long-term:

Increased Gross Enrollment Ratio (GER): More students from Tier-2 and Tier-3 cities could access higher education.

Economic Growth: A larger pool of educated youth would contribute to skilled workforce development and entrepreneurship.

Reduced Dropouts: Financial support would prevent students from abandoning education midway due to lack of funds.

Social Equity: First-generation learners and students from disadvantaged groups would get a fair chance at success.

Challenges Ahead

While the demand for lower interest rates and relaxed eligibility is strong, there are also challenges in implementation:

Banking Sector Concerns: Banks fear higher default rates if loans are given without credit-score checks.

Government Subsidy Requirement: Lower interest loans may need government subsidies, adding pressure to public finances.

Monitoring Mechanisms: Ensuring that loans are used strictly for education purposes will require tighter regulatory frameworks.

Conclusion

Madurai’s Education Loan Mela became more than just a financial outreach event—it highlighted the urgent need for policy reforms in education financing. MP Su Venkatesan’s call to reduce interest rates and remove CIBIL restrictions reflects the growing demand for affordable, accessible, and inclusive education opportunities.

If implemented, these measures could relieve thousands of families from financial strain and empower students to pursue their dreams without compromise. As Madurai continues its journey as a knowledge hub, reforms in the education loan system could become a turning point in shaping the city’s academic and economic future.