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‘Student loan repayment’ is now a concern for Indians who fled war-torn Ukraine!

Following Russian President Vladimir Putin’s declaration of war on Ukraine, thousands of Indian students fled the country. Even as they managed to flee the war-torn country, students seeking higher education in Ukraine are now facing an unprecedented financial hardship, with debt repayment an imminent concern.

According to the Ministry of External Affairs, around 22,500 Indian people, predominantly students, have returned to India from Ukraine since February 1, 2022. The government gave all available help, including housing, food, and medical care, to displaced Indians who traveled into Ukraine’s western neighboring countries. They were finally evacuated through planes operating as part of Operation Ganga.

However, the Indian students’ concerns have not been alleviated by their safe return home. According to the government, as of 31 December 2021, a little more than 1,300 students had obtained education loans to pursue study in Ukraine, based on information gathered from public sector banks and 21 private sector banks, according to the Indian Banks’ Association. The total outstanding education loan sum for 1319 students is Rs 121.61 crore.

The government claims that the current situation is fluid and that the repercussions of the ongoing conflict can only be analyzed and corrective measures addressed once the situation has stabilised. Meanwhile, Indian students who have returned home from war-torn Ukraine are stressed out since their studies have been hampered by the fighting. Those who must repay their student debts are in a stressful situation.

If a prompt decision is not made, these students may suffer penalties for late loan repayment, which may negatively affect their credit rating for future loans as well as their job placement possibilities. While lending banks are said to be ‘assessing the impact of the crisis on education loan repayment,’ the government has asked the Indian Banks’ Association to assess the impact of the conflict on outstanding education loans of returnee students and to initiate stakeholder consultations in this regard.

What complicates matters is that student loan agreements do not include provisions for war-related relief, whereas life insurance plans do. Meanwhile, the banks, who are bound by the arrangement and concerned about their balance sheets, have one clear principle: what has been borrowed must be returned in some way. If a student fails to meet his or her repayment obligations, the consequences can be severe, including a penalty, a drop in credit score, and the seizure of collateral.

On a case-by-case basis, banks and lenders can consider modifying loans, extending repayment terms, or even giving a lengthier loan moratorium. However, if the banks or the government do not take a stance for all of them, each student may be obliged to undertake separate corrective procedures.

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