Banks have been restructuring the education loans by extending the repayment period or revising the interest rates.

Though the possibility of loan waivers is far; the initial moratorium period is likely to be increased. It means that the students can repay the loans over a period of up to ten years, which otherwise ranges from 5 to 7 years.

Due to the economic slowdown and the poor job market, there have been increased instances of withdrawal of offer-letters, salary cuts, low salary packages and in worst case unemployment, considering which banks have been forced to restructure the education loans.

Empathising on the situation, K Venkataraman, chairman and chief executive officer, Catholic Syrian Bank, said, "We will be taking a call on revision of interest rates on educational loans soon. After all, it is in the interest of the bank that the customer has adequate cash flow to manage his liabilities."

Indian Bank has rephrased nearly 7,801 education loan accounts, with the total outstanding amount of Rs 99.24 crores on the student requests. M S Sundara Rajan, chairman and managing director, Indian Bank, said, "Our bank has undertaken re-phasement (extending the repayment period) of educational loan accounts, only where specific requests have been received."

The restructuring queries are mainly from the engineering students. S Balasubramanian, chairman, City Union Bank, said, "Most students, especially those who want to get into the IT field, have been witness to job offer withdrawals in recent months. As lenders, we are proactive to the situation. We have received some queries on restructuring of educational loans and we will proceed on a case-by-case basis."

In a similar move, the Central Bank of India has increased the repayment tenure on some educational loan accounts. A senior official of the bank said, "We have extended the moratorium period on these loans so that the EMI gets reduced."

In last few years, education sector had seen boom especially in the management and IT sector courses drawing large number of students. Banks and other financial institutions have been extending education loans to students aspiring to pursue higher studies and professional courses in India and abroad. Education loans up to Rs four lakh require no collateral or security. The loan repayment period usually commences 12 months after the course completion or six months after securing a job, whichever is earlier. The repayment is in form of equated monthly installments generally extending from five to seven years.