Kommersant: "State support of education falters"
Soft loans stuck between the Justice Ministry and the refinancing rate
The programme of subsidising education loans Prime Minister Vladimir Putin promised students as of December 1 was never launched. The paperwork is held up by the Justice Ministry. The government has kept loans for students at the annual rate of 5% on its agenda, but the banks are not in a hurry to grant them, citing the high cost of borrowed money.
The soft student loans programme was scheduled to be launched on December 1. "The scheme will be introduced from December 1. The Ministry (of Education and Science jointly with the Finance Ministry - Kommersant) has developed the methodology and procedure of implementing the resolution," Prime Minister Vladimir Putin was quoted by RIA Novosti in October. The resolution on government support for education loans was signed on August 28, but Kommersant was told at the Education and Science Ministry that the executive order that would set the scheme in motion is still awaiting approval by the Justice Ministry. "We are disappointed by the delay in preparing the document because until it is approved the banks and higher education institutions will not be able to sign agreements on participation in the programme," the Education and Science Ministry said. The Justice Ministry has been slow in commenting.
Under the government's soft students loans programme, the government will subsidise three-quarters of the refinancing rate (currently 9%). The maximum rate for the student should not exceed one quarter of the refinancing rate plus 3 percentage points, which amounts to 5.25% a year. Soft student loans should be granted without trusteeship or collateral. The budget was supposed to allocate about half a billion roubles a year for the programme, which would cover 10,000 students, according to the Education and Science Ministry. The programme was to be in force until the end of 2013.
Initially, it was assumed that students would be able to sign soft loan agreements based on the results of the mid-year exams. Prime Minister Vladimir Putin announced in March that the state would compensate students for interest rates. A month earlier President Dmitry Medvedev called "for more active development of education loans" in his videoblog. A corresponding directive was given to Finance Minister Alexei Kudrin, Education Minister Andrei Fursenko and Deputy Prime Minister Alexander Zhukov.
Before the government initiative, education credits to students were offered by several banks including Sberbank, RSKhB, BSZhV, Soyuz and Raiffeisen Bank. The lowest interest rate, 10% a year for a term of ten years, was offered by Soyuz Bank. Soyuz has suspended the issue of education loans. Other banks offer far less attractive terms. Sberbank and RSKhB demand trustees for loans and the rates are respectively 12% and 13% a year, BSZhV offers loans at 12-14% depending on the currency and requires life insurance from the borrower. Raiffeisen Bank's interest rate is 16.9% a year.
In the process of preparing the document on state support, the Education and Science Ministry conducted negotiations with Sberbank, VTB-24 and Rosselkhozbank, but in principle any bank can take part in the programme, says deputy Education and Science Minister Vladimir Miklushevsky. However, in contrast to the programme for subsidising car sale loans, the banks are not rushing to join the programme and constant lowering of the refinancing rate (it was cut five times since August by a total of 2 percentage points) makes easy-term education loans unattractive for banks. "One should understand that the cost of borrowing by banks is not going down as fast as the refinancing rate," says Andrei Khandruyev, chairman of Soyuz Bank. He says that Soyuz still plans to take part in the programme. VTB-24 says its considering joining the programme, but a final decision has yet to be made. Sberbank and Rosselkhozbank declined to comment. "Interest among commercial banks will not be large-scale because of the caps on the maximum rate," Khandruyev predicts. The much-publicised programme of state support for loans has already misfired because of the high cost of borrowed money for banks. At a time of crisis, the state has repeatedly revised the amount of support for mortgage loans under the "Affordable Housing Programme" and the programme's main operator the Housing Mortgage Crediting Agency concentrated on restructuring problem loans. The level of housing mortgage loans refinanced by banks dropped by 14.6% to 99 billion roubles in 2008, and by three times to 33.4 billion roubles since the beginning of 2009. As a result, in its review of the mortgage loan market at the end of the first six months of the year, the Central Bank noted that "the main cause of reduced levels of house mortgage loans was the rising cost of capital, the growing risks of investment in long-term assets and reduced possibilities of refinancing earlier issued loans."
Yulia Lokshina
