For most students, finishing school is meant to be a moment of arrival. Admission letters bring relief and a sense of earned possibility. But for thousands of families across India, that moment is quickly overtaken by anxiety. Tuition fees, transport costs, devices, hostel charges and daily living expenses pile up at once. What should mark the start of higher learning becomes a financial gamble—one misstep away from debt or dropout.
This is not a marginal problem. It sits at the heart of how India finances education beyond school, and how the state understands risk in young lives. Scholarships are still framed largely as welfare: discretionary, conditional and rationed. They should be treated instead as social protection—a preventive instrument that stabilises learning pathways before economic shocks force irreversible decisions.
The Problem with the Welfare Lens
Most scholarship schemes operate through rigid income thresholds. These cut-offs age badly. Household costs rise steadily; education costs rise faster. Yet eligibility criteria often remain unchanged for years, sometimes more than a decade. Families that fall just above the line face nearly the same vulnerabilities as those below it but receive no support.
Recent debates around revising income limits for Scheduled Caste pre-matric and post-matric scholarships underline the problem. The limits were set when fees were lower, transport cheaper and digital access less essential. Today, laptops and data are no longer optional; they are prerequisites.
The welfare lens also produces volatility. Beneficiary numbers swing year to year because of funding constraints, administrative delays or narrow definitions of eligibility. When scholarships are delayed or reduced, families cannot pause their expenses. They borrow or they withdraw their children from courses. Education decisions are time-bound; assistance that arrives late may as well not arrive at all.
Welfare frameworks invite suspicion and rationing: Who qualifies? Who deserves help? Social protection asks a more practical question: What risks threaten a child’s uninterrupted education, and how do we reduce them?
Why Scholarships Function as Social Protection
Life rarely follows a smooth income curve. A medical emergency, a failed crop, a parent losing work—any one of these can destabilize a household. For families already operating close to the edge, education is often the first casualty.
That is precisely where scholarships matter most—not as rewards for merit alone, but as buffers against disruption. Pensions protect against old age. Health insurance cushions medical shocks. Crop insurance spreads climate risk. In the same way, scholarships protect educational continuity. They prevent small shocks from cascading into permanent loss.
When scholarships are treated as welfare, they are optional and fragile. When treated as social protection, they become predictable, preventive and rights-adjacent—designed to avert harm rather than respond to it after the fact.
Education is becoming a Debt Problem
India’s education financing has become a debt story. Education loans have grown rapidly, with banks and non-banking financial companies now holding portfolios exceeding ₹1 lakh crore. On paper, this signals aspiration. In practice, it exposes a structural gap.
Formal loans demand collateral, guarantors and credit histories—conditions many low-income families cannot meet. When banks turn them away, families often resort to informal lenders. Interest rates are punitive. Recovery practices are coercive. Debt lingers long after degrees are completed, shaping career choices and mental health.
For students, the pressure is immediate. Anxiety disrupts learning. Part-time work crowds out study. Dropout becomes a rational, if tragic, choice.
Scholarships reduce the need for borrowing at the point of maximum vulnerability—at entry into higher education or during transitions between levels. They protect households from predatory credit and protect students from the cognitive load of debt.
Protection Matters Most for those Already at Risk
Scholarships matter for all low-income students, but they are particularly decisive for girls. Financial stress intersects with social expectations, care responsibilities and safety concerns. When money is tight, education is often the first sacrifice, especially for daughters.
Consistent, multi-year support changes family calculus. When schooling is stable, the pressure to marry early declines. When costs are predictable, girls are more likely to persist through transitions—secondary to tertiary, diploma to degree.
Evidence from multiple programmes shows that scholarships paired with mentoring, counselling and academic support improve retention and completion. Social protection works best when it is reliable. Stop-start assistance reproduces uncertainty; continuity builds confidence.
What Protection-grade Scholarships Look Like
If scholarships are to function as social protection, design matters.
First, adequate value. Awards must reflect real costs—tuition, books, transport, devices and connectivity. Small shortfalls are often what push families toward loans or force withdrawal.
Second, timely disbursal. Funds must arrive at the start of the academic cycle, when decisions are made and risks peak. Delays defeat the purpose.
Third, smart targeting. India already collects data on income, caste, gender, geography, disability and first-generation status. Using this systematically can prioritise those facing the highest risk—not those best at navigating paperwork.
Fourth, layered support. Financial aid works best alongside mentoring, career counselling and academic assistance. Protection is not just about money; it is about reducing uncertainty.
Finally, sustainability. Blended models—combining public funding, CSR capital, philanthropy and community participation—can ensure continuity across educational stages. Policy should learn from such models and scale what demonstrably works.
Learning from Practice
Several non-profit and corporate initiatives have moved in this direction, designing scholarships as part of comprehensive support. Smile Foundation, for instance, integrates financial assistance with mentoring and academic support to address the drivers of dropout, not merely the fees. The lesson for policy is not replication of programmes, but adoption of principles: adequacy, predictability and continuity.
A policy shift worth making
Reframing scholarships as social protection would have concrete implications. Income thresholds would be indexed to inflation and education costs. Disbursal calendars would align with academic timelines. Eligibility would reflect risk, not just income. And evaluation would measure continuity and completion, not just enrolment.
This is not an argument for unlimited subsidies. It is an argument for smarter protection. India already invests heavily in education. Ensuring that investment is not lost to avoidable dropouts is fiscally prudent and socially just.
The Larger Stake
India’s demographic promise rests on whether young people can complete education without being derailed by debt, delay or distress. When scholarships help students avoid these traps, they stop being welfare and start being infrastructure—preventive and foundational.
A country that treats education as a pathway must also treat educational risk as something to be insured against. Reimagining scholarships as social protection is a necessary step in that direction for growth.
