Thread by @niaam_lee

Did you know that the US currently has $1.75 Trillion of Student Loan Debt!!

That is like ₹13,42,49,50,00,00,000.02 or simply put around ₹1.3 crore crores.
(1/n)
#studentloans #StudentDebtCrisis

This figure beats the GDP of Canada and would rank 10th in the world if compared in terms of the GDP size of different nations. This figure is significant because it accounts for 64% of our country's GDP!!
(2/n)

Coming to India, our country presently has a Student Loan Debt of ₹84,965 crores, or we can say around $11.08 Billion.

Compared to other countries, this seems very less. But it is indeed one prominent subject to ponder upon!
(3/n)

Why so? Why am I examining Students Loan in the first place? Because I want to make a point on how easy it is to underappreciate the tail events!

How will you react when I say that America's Student Loan Crisis today roots back in Afghanistan!!

Let's see how...
(4/n)

After the 9/11 attack, the Federal Reserve slashed the interest rates. This helped people secure housing loans. Loans were rendered to people who couldn't afford them. This worked in favour of what is famously known as "The Housing Bubble".
(5/n)

#housingbubble
#recession

The after-effects of this were witnessed by the entire world. The resulting financial crisis caused a lot of people to lose their jobs on a massive scale. This prompted many to seek a college degree, thus seeking an education loan which today has resulted in this condition.
(6/n)

But what about India? Can this can be a considerable issue in our country? And if yes, why is no one concerned yet?
(7/n)

The size of Student Loans accounts for 8.5% of America's GDP. For India, it is 0.4% as of now. The relative percentage seems much less, but there is a disparity between the nature of education loans offered by the US and India.
(8/n)

In the year 2018 - Reliance purchased Student Loan Debt from the Banks at which point of time the Student Loan Repayment was discussed. It was established that 71% of the Loans were irregular and almost 62% of the Loans were NPA.
(9/n)
#Reliance

Now, Let's see the basic difference between a Federal Students Loan Program, a State Education Loan - both issued by the US and the Indian Student Loan issued by an Indian Bank:
(10/n)

1. Interest - In India, the Interest is payable from DAY 1, but in the US, the Interest is payable only after 60 months or 6 months post Graduation whichever is lesser (Not for Private Loans made out for certain colleges).
(11/n)

2. Tenure - In the US, the tenure ranges from 14 to 30 years. In India, the tenure is 6-10 years. They say it's 10-15 years but the first four years are spent studying!!!
(12/n)

3. Minimum Repayment vs EMI - US has a range of EMI payable specifying that a student can pay a minimum of $463 a month for 300 months which means a student can pay more when he has more money and less when he has less. In India, the EMI is fixed.
(13/n)

4. Installment as part of Median Income - In the US a Graduate Student pays an average of 26% of his post-tax income as Student Debt or Loan compared to 53% for an Average Indian Student.
(14/n)

5. Collateral - In the US - Federal Loans require no collateral for Graduate, Post Graduate or Doctoral Courses. In India- the Banks require Collateral beyond a Loan requisition of Rs. 4 Lacs.
(15/n)

6. Chapter 7 - In the US you have the Chapter 7 where a student can defer a debt for a long time and the law protects him from any debtor even calling him on the phone. He can then resume the debt after say a year or two or a few months.
(16/n)

In India, there is no such facility. It's a Court Case, bank visits, phone calls and harassment of the highest order.
(17/n)

So, in conclusion...
Student Debt is not a serious Issue in India because most students facing the problem are middle class and educated and not Rabble or Gareeb or from a Lower Caste or a minority religion.
(18/n)

Otherwise the media would be onto the story in a matter of seconds and where the politicians would've descended to their support in a matter of minutes.
(n/n)

@threadreaderapp unroll