Soumi Das gave up a lucrative job to pursue an MBA. She is enrolled in a dual MBA programme at Purdue University in the US. Her dreams wouldn’t have materialised without a scholarship. But, not everybody is lucky.
A professional course costs anything between Rs 4 and 12 lakh, which may weigh heavy on a middle-class family. Expenses increase manifold for a course abroad.
While both private and public banks offer loans to students, public banks usually score over private ones as there is no hidden cost. Santosh Kumar, all set to go to Ireland for a Master’s in computers and communication systems, has applied for a loan of Rs 7.5 lakh from the State Bank of Mysore.
He points out, “Though there are too many procedures and it takes a little longer, nationalised banks are reliable. They deliver what they promise. They do not ask for property as security for loans up to Rs 7.5 lakh. They do not charge unnecessary compound interest. They give you an option to settle the amount anytime. I had taken a loan from them for my undergraduation, which I had paid off after I started working,” says Kumar. He has also got a scholarship of Rs 5 lakh.
Course Criteria
S Das, manager, Central Bank of India, says: “The bank provides education loans starting from +2 stages to Master’s and PhD courses including technical/professional courses both in India and abroad.” National banks give loans for courses approved by regulatory authorities i.e. AICTE, NAAC and state/central universities. Distance learning approved by UGC-AICTE-DEC Joint Council is also recognised. Loans are also given for postgraduate and PhD programmes abroad.
What You Need
- Students must have a consistent and good academic record
- “Credentials of the institution like affiliation, approval, etc, are important because of brand value standardisation and students’ employment opportunity,” says a senior official of Axis bank
- Parents’ source of income
Loan Amount
- Starting from Rs 50,000, for studies in India, it goes up to Rs 10 lakh
- For studies abroad, the upper limit is Rs 20 lakh
Shares Manish Singh, financial consultant officer, Credila Financial Services (HDFC bank’s education loan agency): “We have approved even a crore.”
Kamalika Guha, working at JWT Kolkata, who took Rs 4 lakh from PNB for her MBA at International School of Business and Media, Kolkata, says, “It was convenient as my institute had a tie-up with the bank.”
Girl students, SC/ ST candidates as well as those making it to AIIMS, IITs and IIMs, in some banks, enjoy an additional concession of 0.5%.
QUICK FACTS
- Identity/ address proof for both borrower and guarantor
- Education certificates, including mark sheets
- Proof of admission or offer for the same
- Year/item wise estimates from the educational institute
- Proof of income - salary certificate/ IT returns/ assessment orders (of parents/guarantors as applicable)
- Details of collateral securities. The clause differs from bank to bank. “I did not take any student loan, because I do have a little waiver for my MS and banks require a mortgage/ security for loans over 7.5 lakh. I was not comfortable handing over property papers,” says Bedashrita Chattoraj, TU Delft.
Margin money
Margin money is a kind of test on the bank’s side to see that you also bring in some money.
Moratorium
Course period +2 years after completion of course or six months after getting a job, whichever is earlier. Many banks offer students a 1% waiver for full tenure of the loan, if the entire interest is paid during the moratorium or course duration.
Repayment
The loan is to be repaid in 5-7 years after moratorium period. In case a student fails to complete the course within the stipulated time, the time may be extended to a maximum of 12 years (including course period).
Other Side
Banks in India, both nationalised and private, charge high interest rates. “If you can avail of a guarantor who is a permanent resident of the US then try for loans from banks in the US like Citibank, JP Morgan Chase, Sallie Mae as interest rates are about 4.5% as against 12% in India. Moreover, tenor of repayment is 15 years,” advises Shekhar Niyogi, education consultant.
source :TOI
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