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Karnataka HC Issues Notice to the Government to Extend Moratorium Period of Education Loan to All Students

Karnataka HC Issues Notice to the Government to Extend Moratorium Period of Education Loan to All Students
The Karnataka High Court has recently issued a notice to the State and Union governments, and the Reserve Bank of India in a Public Interest Litigation (PIL) seeking the extension of the moratorium period of the education loans to all students in view of the unfortunate financial constrains in the COVID-19 pandemic. 

A Division Bench comprising of Chief Justice Abhay Shreeniwas Oka and Justice Ashok S Kinagi passed the order on the petition filed by Dr. Ram Manohar Lohiya Thinker Forum, Bengaluru. However, the bench refused to consider two other prayers, made in the petition, seeking a waiver of either outstanding or interest amounts. 

The petition pointed out the adverse effects on the country’s economy in light of the ongoing pandemic, and that even the student community has been hit hard. It asked the Hon’ble Court to direct the Union and State governments to either waive outstanding education loans with effect from March 1, 2020 or waive the interest amount on all education loans for two years. 

The plea stated that in 2009, the Government of India had come up with Central Sector Interest Subsidy Scheme (CSIS) to ensure that no person is denied the opportunity of pursuing higher education because of any sort of financial insufficiency. The scheme provided full interest subsidy during the moratorium period on modern education loans without any collateral or third-party guarantee.

Further, the petition highlighted that in the scheme, the interest payable during the moratorium period, that is the course period and one year additionally, would be payable by the government in the case of students belonging to economically weaker sections. 

The plea sought directions to the Karnataka Government to extend the moratorium available to students belonging to economically weaker sections for repayment of educational loans under CSIS to all students, without any exception. Currently, the scheme is applicable to all those persons whose parents have an annual income of less than 4.5 lakh per annum.

The High Court accepted the prayers for the grant of extension seeing the unprecedented situation and circumstances that have occurred due to the pandemic and subsequently an order was issued to extend the moratorium period. However, the court denied issuing any directions to the Union and State governments to either waive outstanding education loans or to waive the interest amount on all education loans.

The matter will be heard further on September 4.


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