Financial crisis at times makes a student unable to achieve his goals even after having a significant potential. Poverty and too many responsibilities can tie up your dreams, leaving you with no option but to give up and settle for the second best.
Not everyone has an ability to afford the burden of expenses of fees, books, travel and rent.
Past a decade we have seen a significant increase in the number of candidates aspiring to become an MBA. The number of colleges offering these courses is also on rise. With fees of these MBA courses skyrocketing, students are queuing for educational loans from banks.
In terms of expenditure on education (Higher education) during 2011-12, the government spent around 15,440 Cr, (Out ) which was roughly around 4.1% of its total spending, compared to US 5.7% and France 5.6%, amazingly
Switzerland spends the highest amount of its toal expenditure on education at ~5.8%.The recent 66th round of NSSO (National Sample Survey Office) says that government spending on education jumped up by 345% in 10 years. The organization also added that spending on Children’s education jumped by 63% for rural and 73% for urban families in the country.
Loans can be of a great financial assistance in the beginning but can turn out to be hefty later on. Almost all nationalized & private banks today offer educational loans to students for MBA studies in India and abroad. Besides some private trusts are running study loan scheme, the terms and conditions of which vary from organization to organization.
As a student, we don’t expect you to know much knowledge about educational loan. A Basic layout of what your MBA Loan should be like:
Duration: Before getting the loan sanctioned, calculate the number of EMI’s expected to be paid and whether you have the capacity to pay that in the given time. The shorter the span of the loan the quicker one will be free.
Rate of Interest: The rate of interest may vary from Nationalized Banks to Private Banks. Do a proper research on interest rate and go for if the bank having minimum interest rates. There are two types of interest rates: Fixed & Fluctuating. A fixed rate of interest is most advisable to salaried people. The fluctuating rate of interest will vary depending on markets, trends & RBI rules and regulations. which usually varies from 9 to 13% PA calculated quarterly excluding public holidays.
Prepayment Charges: Mostly the private banks charge the takes for paying the loan beforehand. Nationalized Banks however don’t come under this list. Go for a bank which won’t ask for prepayment charges and will save your hard earned money, well, I guess you all know, jugaad is needed to get loan from a government bank without getting your and their hands dirty.
Hidden charges on student loans: Read the student loan agreement very carefully. There might be some hidden charges and hidden clauses in it, which you should be aware of before signing the agreement. Make sure you have completely understood the loan disbursement and repayment methods.
Time required for getting loan sanctioned: Make sure about the time that is required for getting the loan approved before the deadline. Some banks might require more than 15 days for loan approval (Yes, government bank, ) and hence your schedule might be affected based on the loan approval. Some banks have a list of MBA institutions associated with them. If you join them you will get the loan easily or some MBA institutes have tie up with banks. Please check with your institution and bank for the details.
According to the National Commission on Population, it is expected that the age profile of population of India will experience changes in the coming years. By 2016, approximately 50 per cent of the total population will be in the age group of 15-25
years, which means a lot of Indian government’s spending on Education will go in Educational loans.
If you plan to go for MBA in India or abroad, be prepared to shell out lakhs. Staying financially strong throughout is also a major factor of being an MBA. Make sure your Educational loan covers all your expenses from tuition fees, Exam fees, library and laboratory fees to Purchase of books, uniforms, equipment, instruments, buying computers.
UGC scheme envisages loans up to Rs.7.5 lakh for studies in India and up to Rs. 15 lakh for studies abroad., which was revised to 10 lakh for studies in India and up to 20
for abroad last year.
You don’t require security for Education loan if its under 4 lakhs, above that land/home/gold of equal value can be used as security.
Expenses related to education tours, project work and thesis work. A proper financial help will reduce your financial insecurity and will help you to fit in your dream MBA College more easily.
Repayment : Course period +1 year or 6 months after getting the job, whichever is earlier.A breakthrough can be seen coming in by private players entering the market and creating new markets in the education domain.
MBA Ka Keeda suggests doing a good amount of preparation and research when planning to get you a MBA loan.
Keeda tip : If you are among those lucky kids who got their first pay check of 2 lakh+ PA, (Income tax applicable), you can get a exemption for the amount of interest you pay to the bank for the educational loan.
And also make sure you get the college brochure mentioning that your college is DTE/AICTE approved, and approval letter for the admission from you college.
Talk to your CA for more details.
In India, education spending is 12.7 percent of its total spending.