What is Higher Education Financing Agency?

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HEFA is higher education financing agency that has the vision to help India’s best schools do well and reach the top of global rankings by paying for world-class infrastructure, including R&D infrastructure. It is an agency dedicated to providing education to the financially backward and making it more democratic. In this article, we will look at the various aspects of HEFA and higher education finance.

What is Higher Education Financing Agency?

HEFA website

Canara Bank and the Ministry of Human Resource Development work together to run the HEFA company. It gives money to India’s best educational institutions to help them build new facilities and do research and development. All higher education institutions that get money from the government will be able to join the HEFA. For an educational institution to become a member, it must agree to escrow a certain amount from its own earnings to the HEFA for a period of 10 years.

Functions:

  • It will get the money it needs from the market by selling shares of stock to individuals and businesses and issuing bonds.
  • It gives money to India’s best educational institutions to help them build new facilities and do research and development.
  • Encourages the development of science and technology by giving money to R&D facilities that do high-quality research.
  • Donations and CSR contributions from companies are used for a variety of programmes to improve higher education.

Why is HEFA topic important for UPSC?

Green Board | What is Higher Education Financing Agency

Here are some reasons that make Higher Education Financing Agency an important topic for UPSC.

  • HEFA can be used as a keyword when answering questions or writing essays about education, especially higher education under government steps.
  • You can also suggest in your answer that the government should create agencies like HEFA for health, primary education, etc.
  • For the Prelims, a factual question can be made about how HEFA is put together and what it does.

Is Higher Education Financing Agency a Govt company?

Higher Education Financing Agency is a Private Company, officially based in Bangalore, Karnataka, India. Higher Education Financing Agency (HEFA) is a business that Canara Bank and the Ministry of Education GoI started together.

When was Higher Education Financing Agency established?

HEFA was founded on May 31, 2017, and is 5 years old. The place where it as a partnership between the Ministry of Human Resource Development (HRD), the Government of India (GOI), and Canara Bank. The Ministry of HRD, GOI, and Canara Bank each have a stake in the company worth 90.91% and Canara Bank has a stake worth 9.09%. HEFA is registered as a Union Government company under the Companies Act of 2013 and as a non-deposit-taking NBFC with RBI.

What is HEFA loan interest rate?

Stacks of coins

Educational finance is very important for achieving the goals of higher education and other things related to it. Higher education in India is mostly paid for by the government, self-governing bodies, tuition fees, donations, scholarships, educational cess, and other things.

Public Funding: Higher education in India is paid for by both the Centre and the State. Every year, both the Union Budget and the State Budget include money for improving higher education. The Central Government gave more money to the Central Universities than to the State Universities. As of 1st April 2022, the HEFA loan interest rate is 7%.

Also Read: 7 Free Courses Online with Certificates for your CV

Higher Education Finance Organizations

There are different organizations in India that are in charge of higher education finance, i.e., paying for higher education. Here are some of them:

1. University Grants Commission

UGC website

University Grants Commission’s main jobs are coordinating, deciding on, and keeping up with higher education. It gives grants to colleges and universities run by the government and scholarships to students.

Every year, the UGC spent an average of 725 crores on scholarships for doctoral and post-doctoral students. UGC started a number of scholarship programmes, such as Ishan Uday and the Postgraduate Merit Scholarship for university undergraduates who got first or second place.

2. NITI Aayog

NITI Aayog | What is Higher Education Financing Agency

NITI Aayog official V K Saraswat said, “If we don’t pay attention to higher education, we don’t pay attention to the growth of the country as a whole, because higher education helps the country grow.” Both the Central and State governments of India spend almost 3 percent of their GDP on education. NITI Aayog has suggested that at least 6% of GDP should be spent on education by 2022.

3. Ministry of Education

Ministry of Education of India

There are two parts to the Ministry of Education. The Department of School Education and Literacy and the Department of Higher Education. In the speech of the finance minister, it was said that the Ministry of Education will get a total of 93,224 crores in the Union Budget for 2021-2022. This includes Rs. 54,874 crores for the Department of School Education and Rs. 38,350 Cr. allocated to the Higher Education Department.

4. Higher Education Financing Agency

HEFA like Organizations help pay for college: It is an independent body set up by the Ministry of Education and the Canara bank. Its main goal is to pay for the building of infrastructure for education and research and development, so that the institutions can be among the best in the world.

What is HEFA budget?

Person picking up coin | What is Higher Education Financing Agency

The budget for higher education in India has gone down from Rs. 39,466 crore in 2020-2021 to Rs. 38,350 crore in 2021-2022. After India got its independence, the Central and State governments set up different groups to help pay for higher education and raise the country’s standards.

The Indian higher education system still has problems, like a low Gross Enrollment Ratio and good infrastructure, among other things. The New Education Policy 2020 says that the government should spend 6% of GDP on education and that students should get a well-rounded, multidisciplinary education.

India is thought to be a young country because 70% of its people are under the age of 35. So, the government needs to put more money into raising the standard and quality of higher education so that it can turn out people who are smart, well-rounded, and thoughtful.

What is RISE scheme?

Graduation cap

RISE stands for Revitalizing School Infrastructure and Systems. In the Union Budget 2017-18, the RISE scheme was announced. Its goal is to give money to government colleges and universities at a low cost. Under it, all centrally-funded institutes (CFIs), like central universities, IITs, IIMs, NITs, and IISERs, can borrow from a Rs 1,000,000 crore fund over the next 4 years to grow and build new infrastructure. It will be paid for by a non-banking financial company called the restructured Higher Education Financing Agency (HEFA).

Here’s how the RISE Scheme loans are given out, with specified HEFA loan interest rate:

HEFA’s Job: With the introduction of RISE, all funding for infrastructure development at CFIs in higher education will go through HEFA. HEFA was set up by the government as a Section 8 company (a company with charitable goals) in 2017 to raise money from the market and give centrally-run institutes 10-year loans.

Share of Equity: In order to raise Rs. 1 lakh crore for the Rs. 1 lakh crore corpus under RISE, HEFA will need Rs. 10,000 crores in equity. The government will give Rs. 8,500 crores, and Canara Bank and other corporations will give the rest. HEFA’s goal is for all infrastructure and research projects to be finished by the end of 2022.

Also Read: 10 Best Banks For Education Loan In India

What is HEFA annual report?

The status of the company is ‘Active’, and it has filed its Annual Returns and Financial Statements up to March 31, 2021. (FY 2020-2021). According to the MCA, it is a limited company with a paid-up capital of Rs. 5,293.75 cr and an authorized capital of Rs 10,000.00 cr.

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