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Students fleeing Ukraine wary of loan repayments


Thousands of Indian students fleeing war-torn Ukraine are now staring at an unprecedented financial burden as chances of their colleges reopening anytime soon appear bleak, but they remain saddled with costly loans they took to fund their studies.

Bankers said they are assessing the impact of this crisis and that there is a possibility to extend the tenures for such borrowers on a case-to-case basis, although there has been no discussion at the Indian Banks’ Association (IBA) on this. According to the standardized format of IBA, education loans up to 4 lakh don’t need collateral, but loans up to 7.5 lakh can be obtained with collateral in the form of a suitable third-party guarantee. Education loans above 7.5 lakh require tangible collateral, and, in all cases, co-obligation of parents is necessary. Bankers said while there is a possibility of future defaults if these students cannot finish their courses and get employed, the collateral would bolster recovery.

“We are assessing our exposure to students in Ukraine. Since these loans are disbursed in tranches, the impact would also depend on when they can continue the rest of their education,” a private sector banker said on condition of anonymity.

Banks have outstanding education loans of 63,057 crore as of January, down 2.4% from the previous year, showed RBI data. However, a breakup of how much of this is to students abroad was not available.

The brother of a student who is stuck in Ukraine alongside other Indian students told Mint he plans to discuss the issue with lenders. Aman Mishra said his family took a 45 lakh loan for his sister’s education from State Bank of India (SBI). “Every year, we have to show receipts to the bank for the loan. My sister is in her second year of medicine, and we have taken a loan for five years. Right now, the focus is to get her back,” said Mishra. As of 4 March, his sister was in Poland and is expected back in Gorakhpur in the next couple of days.

Mint reported on 1 March how Ukraine is a popular destination among Indian students pursuing medical and engineering degrees. There were 19,000 Indian students in Ukraine before evacuations began, according to university admission platform LeverageEdu. Students primarily opt Ukraine because these courses are substantially cheaper than a private college in India, according to LeverageEdu.

Fee for an MBBS degree in Ukraine is 15-20 lakh against 80 lakh- 1 crore here. To be sure, experts said some parents fund children’s education out of their pockets. Also, though not mandatory, students are encouraged to buy insurance against education loans.

“Most of those who have taken loans also go for insurance,” said Akshay Chaturvedi, founder and chief executive, LeverageEdu. Chaturvedi said there should be a focus on the future of these students, and it would be helpful if universities in other countries accept them and get their study credits transferred. “Banks should give some relief, and one doubts if they will seek dues given the circumstances,” he said.

Meanwhile, expressing concern about the future of medical students who have returned from Ukraine, the Indian Medical Association has recommended that they be admitted to Indian medical schools as a one-time measure, PTI reported on 4 March.

K. Srinivasan, convenor of public awareness institution Educational Loans Task Force, said banks have never been quite keen to sanction loans for students going to countries such as Russia and Ukraine. “Lenders prefer popular countries in the West as it comes with some kind of an assurance that students would easily be employable later,” Srinivasan said.

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