RBI’s Raghuram Rajan warns against loans for ‘useless’ degrees
Reserve Bank of India governor Raghuram Rajan
said on Saturday that efforts should be made to make quality higher education
affordable and cautioned students to be careful of
“unscrupulous schools” that left alumni with high debt and “useless degrees”.
Speaking at the convocation ceremony of Shiv
Nadar University, Rajan said while banks must be careful to ensure that student
loans were repaid in full, there needed to be concessions for those who fell
upon bad times or opted for public service jobs.
“We have to be careful that student loans are
repaid in full by those who have the means, while they are forgiven in part for
those who fall on bad times or those who take low-paying public service jobs,”
Rajan said.
Middle-class students commonly obtain hefty
loans to fund higher educational aspirations. Rajan said even while inequality
between countries was diminishing, inequality within countries was rising and
that free market was not “fair”, saying even well-run market economies seemed
to be favouring those who already had plenty.
“This is because
skills and capabilities have become much more important in well-paid jobs, and
those born in good circumstances have a much better chance at acquiring these…
the income inequality is on the rise, with some having colossal incomes and
others worrying about the next meal,” he said.
The governor said providing access to
schooling and health care for all, a non-discriminating job market with many
jobs, equal opportunities for further advancement regardless of gender, race or
background would be crucial to restore faith in markets.
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