Introduction
The COVID 19 pandemic has cast its shadow on millions of people in one way or the other. It has unquestionably caused serious threat to the health of the people but has also clouded the dreams of the students who took an education loan to pursue their higher education with an idea of repaying the loan soon after getting a job. With the wake of COVID 19 on one hand and with the economic situation collapsing on the other, people have suffered pay cuts, companies took a beating financially, many have been furloughed and countless numbers of people are left unemployed. With such a peculiar situation, what can a student do to repay his loan? What did the administration do to mitigate the financial distress of students who would start their repayment this year or the coming year?
If you’re fretting on all these questions and looking for a solution, you have landed on the right page. We have answers to all your questions. Read this article till the end to know about student loan extension and how it will help you to reduce financial distress.
What is a student loan?
Student loans are tailored to provide financial support to the students who are willing to pursue their higher education. Student loans cover expenses associated with your education like your tuition fees, living expenses, books, laptop, travel, examination fees etc. It has helped millions of students to pursue their dream career with the support of student loans.
To know more about student loans you can visit our blog where you can dive deeper to know about student loans and process in India and abroad
What is a student loan extension?
Student loan extension is basically the extension on student loan moratorium period for the students who took an education loan. This education loan extension has brought massive relief among the students by reducing the financial stress.
Story behind the education loan extension
COVID has gripped every walk of life where the world economy is deteriorating, companies are downsizing their employee strength, people are facing financial troubles and offer letters are being pulled back from the people who got a job.
So what can we do in this situation where there is no going back ? Why do we have to go through this? Could any of us have predicted a situation like COVID while taking the loan to fulfill our educational aspirations?
Here, the petition comes into the picture.
Ms Damini Mahajan, Co-Founder of WeMakeScholars filed a petition to Reserve Bank of India (RBI) and the Department of Higher Education (Ministry of Human Resource Development), demanding for extension on student loan moratorium period by another 6 months and the interest of this additional period should be waived off. She demanded the department to offer a loan moratorium and interest waiver to the borrowers so that the people can deal with the ongoing financial distress caused by COVID 19 across the world.
The main motive of this petition was to extend the education loan grace period to support the graduates struggling to find jobs as the world has frozen hiring and people are being rendered jobless. How will students repay when there is no assurance of a job in this crisis situation and how can banks expect students to start their EMIs? Many other students who availed an education loan for their study in abroad or India also participated and supported in filing this petition for student loan extension.
WeMakeScholars is the leading platform in India for free education loan support which has helped 50,000+ students. WeMakeScholars had always been there to assist students and ease them from the hectic bureaucratic process of banks before giving them the education loan. And WeMakeScholars will stand with these students in this crisis.
Results
As a result, the petition was approved. The student loan payment extension (moratorium extension) was extended and the interest was waived off for 6 months.
Finally, the RBI on 27 th March 2020 issued the circular which allowed financial institutions to grant student loan payment extension falling due between 1st March 2020and 31 May 2020. As the COVID pandemic did not decrease, the moratorium extension was extended till 31st August 2020.
In continuation of this, the Government also released a scheme where the financial lending institutions were directed to credit the difference between compound interest and simple interest collected on loans of up to Rs 2 crore in the accounts of the borrowers for the 6-month loan moratorium period i.e. during the student loan extension.
Did this moratorium extension come as a relief?
Yes, this definitely has given a sigh of relief to many students across India. It has helped lakhs of small businesses and individual borrowers who faced drastic financial loss during the lockdown imposed in states. Student loan extension has brought temporary financial relief to the students but students are still reeling under the monetary impact caused by the second wave of pandemic.
Note: This article intends to educate and inform students about the education loan deferment and about the moratorium extension where the interest is waived off. All the information mentioned in the article is collected from authentic sources. If you are looking for an education loan without collateral to pursue your higher studies, connect with our team at Vidyaloans. They will assist you with the entire education loan process through Government banks.
About the organization: VidyaLoans is an organization which helps Indian students in India to secure a non-collateral loan from Government banks up to 7.5 Lakhs. We have a dedicated team of professionals who assist students with queries and guide them throughout the loan process. Our Team at Vidyaloans is committed to sanction the best loan option suiting the applicant's profile and needs, in a stipulated time frame.