Higher Educational Financing – A Utilitarian Approach

As a gate pass to a successful career, the educational loan, ideally, should bring utility to economically weaker students. The present study attempts to develop a Structural Equation Model (SEM) for educational loan utility, which springs out of job prospects from the basic factors, namely awareness, adequacy, utilization, effectiveness, and perception of loan financing on the one hand, and defaults in repayments, on the other. The study is posted to an uneven premise of a popular assumption among loanees that education loan is more of an aid and less of a retail product. The proposed model can decipher the research paradigm by delineating how different factors contribute to derive the utility of educational loans. The model articulates a strong tenet that job prospects (precisely with skills gained) and repayment (financial behavior) are the two core elements for the sustainability of the education loan scheme. The present study signifies the need to develop a standardised tool for the selection of potential candidates to assess their employability quotient to improve the quality of financing and is placed in the range of demand-side perspectives of educational loan financing.