To help students pursuing higher education, the government plans o set up a higher education finance corporation.

The proposed corporation will provide scholarships and soft loans to students in close coordination with banks and the corporate sector.

Officials in the human resource development ministry said such a body was necessary for economically needy meritorious students who could not get education loans.

In addition, education loans also have to be repaid within one year of graduating or six months after getting a job, whichever comes first.

The ministry is sending a background note on this to all other government ministries and departments.

"The plan is expected to be discussed with the education ministers of states at a conference on April 11-12," Bhalchandra Mungekar, member, Planning Commission told Business Standard.

He added the involvement of states was crucial as they were more involved with higher education than the central government.

Earlier, a panel of the Central Advisory Board of Education that went into the issue of financing higher and technical education had pointed out that educational loan programmes could not be run solely on commercial lines.