Funding higher education: Easy financial assistance is not enough

The market for education loans in India has evolved significantly over the years, with the outstanding portfolio under education loans growing by 17 per cent to Rs 96,847 crore in 2022-23

The debate on using public money to fund higher education is not new. While most of the gains from higher education accrue to the person receiving it, it also produces positive externalities including direct economic gains, higher research and innovation, and a more skilled workforce in the economy. Given the costs involved in higher education, especially STEM (science, technology, engineering and mathematics) courses, students often have to pay more. In this context, the Union Cabinet’s recent approval of the PM Vidyalaxmi scheme must be welcomed. Covering more than 2.2 million students, the financial-assistance scheme will provide educational loans to meritorious