Congress manifesto promises to write off all student education loans

Congress today promised to write off all the outstanding student education loan as a one-time measure in its manifesto for Lok Sabha elections 2024. "Due to widespread unemployment, as a one-time measure of relief, the amount due including unpaid interest as on 15 March 2024 in respect of all student educational loans will be written off and the banks will be compensated by the government.

The party pledged to compensate banks for forgiving student loans, citing widespread unemployment as the reason for this one-time relief measure. However, despite this ambitious promise, the manifesto lacks clarity on how it intends to generate the necessary funds to sustain such extensive welfare initiatives.

As per RBI data, after five years of stagnation and decline, education loans experienced a notable resurgence, recording a remarkable 17 percent increase in the fiscal year ending March 2023. According to data from the Reserve Bank of India (RBI), the outstanding portfolio of education loans surged to Rs 96,847 crore in 2022-23, up from Rs 82,723 crore in the previous year.


The education loan growth remained flat in 2021-22 and had been negative for the preceding three years, declining by 3 percent, 3.3 percent, and 2.5 percent in FY21, FY20, and FY19, respectively.

The surge in demand was due to large-scale loans for overseas education. Before the COVID-19 pandemic, high non-performing assets (NPAs) in education loans compelled banks to exercise extreme caution during loan processing, resulting in a negative trend in the overall loan portfolio. However, post-COVID-19, despite lingering concerns about NPAs, there has been a positive shift, as noted by a senior official from a leading public sector bank.

Congress also announced that government will give a one-time relief to applicants who were unable to write the qualifying public examinations during 1 April 2020 to 30 June 2021 due to the pandemic. It also announced that the party will abolish application fees for government examinations and government posts.