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Abstract
Higher education occupies a pivotal position in an economy. By providing human resources it influences practically every important national activity. Among the various issues related to higher education, the financing of higher education now days assumes utmost importance Of the different modes of financing higher education that emerged in India in the post liberalization period, student loan programme assumes considerable significance. The commercial banking system, given its dominance in India’s financial system, constitutes the dominant player in this regard. The provision of educational loans by the commercial banking system, however, has been experienced differently across states in India. Among the states, Kerala stands much ahead in the provision of educational loans by the commercial banking system. More than 47 percent of the enrolled students avail educational loan in Kerala. The increasing significance of educational loans in the state, to a great extent, is attributed to the shift towards professional education in Kerala over the past one and a half decades. The education loan scenario in the state, however, is in a crisis now. A large proportion of the educational loans remains unpaid and contributes largely to then on performing assets of the state’s banking system. Its high significance, no doubt, would undermine the very functioning of the banking system.