Financing higher education and education loans in India: interstate differentials and determinants

Abstract

An attempt is made here to examine financing of higher education across states using interest subsidy as a case of reference. Hence, we make an analysis of the relative shares of interest subsidies in student loans, enrolment, etc. The paper uses various published and unpublished secondary sources to answer these questions. Using the pooled OLS regression across 23 states for the period from 2008–2009 to 2012–2013, the present paper attempts to explore the question whether government expenditure on higher education and student loan is substitutes or complements. Also the present paper attempts to estimate the magnitude of influence of state income on government expenditure on higher education. Other factors such as institutional access, secondary school enrolment rate, share of young population and region are included as explanatory variables in the models. The interstate disparity can be understood better if we examine the enabling environment to access interest subsidy. In other words, we raise certain basic questions such as: How is higher education distributed across states? How this distribution has evolved overtime?