Educational empowerment: evolution, innovations and challenges of educational financing in commercial banks

This study critically examines the transformative landscape of higher education financing in India, focusing on the shift from traditional government funding to an increased reliance on educational loans provided by commercial banks. The paper employs a detailed methodological approach, utilizing secondary data sources to analyze various aspects of educational financing. The research is structured around key areas: the growth and status of higher education in India, the Gross Enrolment Ratio (GER) trends, patterns in the financing of higher education, and the performance of educational loan schemes under public sector banks. The study examines trends in aggregate public expenditure on education as a percentage of GDP and total expenditure, as well as the streamwise and bankwise distribution of educational loans. It also scrutinizes the growth and performance of educational loan schemes, evaluating the overall effectiveness and challenges within this financing model. The analysis reveals a significant increase in higher education institutions and enrolment rates, accompanied by a shift in funding sources from predominantly government-led to more diversified, including a substantial rise in educational loans. The paper highlights the challenges faced by commercial banks in managing these loans, including issues related to the distribution and repayment of educational loans. The study concludes with insights into the implications of these trends for educational policy, emphasizing the need for a balanced approach in financing higher education that considers affordability and accessibility while ensuring quality and equity.This paper critically examines the evolution and current challenges in the financing of higher education in India, with a particular focus on the role of commercial banks in this transformative landscape. Through an in-depth analysis of secondary data, the study identifies a significant shift from traditional government funding to an increased reliance on educational loans offered by commercial banks. This shift is pivotal as it reflects a broader trend towards privatization and market-driven models in higher education financing. The significance of this work lies in its comprehensive evaluation of the educational loan schemes implemented by public sector banks and their impact on higher education accessibility and affordability. By analyzing trends in the Gross Enrolment Ratio (GER), the distribution and performance of educational loans, and the challenges faced by banks in managing these loans, the paper provides valuable insights into the effectiveness of current policies and practices. It also highlights the critical need for a balanced approach that ensures equitable access to education while maintaining financial sustainability. The findings from this study are instrumental for policymakers, educational planners, and financial institutions as they seek to improve and innovate financing models for higher education. The paper emphasizes the importance of inclusive financial strategies that accommodate the socio-economic diversity of students and ensure that no capable student is deterred from pursuing higher education due to financial constraints. Moreover, the recommendations provided aim to enhance the structural and operational aspects of educational loan schemes, making them more robust and responsive to the needs of the student population. This research not only charts the evolution of educational financing but also serves as a crucial blueprint for future reforms, ensuring that higher education remains a catalyst for socio-economic development in India. By addressing both the achievements and the shortcomings of current financing models, this paper contributes significantly to the ongoing discourse on making higher education both accessible and sustainable.