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MBAUniverse.com Exclusive: Guide to Financing your MBA

The admissions process at top B-schools has entered its final stage with the GD-PI rounds getting started this month. Once you are finally selected by a B-school you will have to tackle the fees part. So how are you looking at financing your MBA education? MBAUniverse.com shows you the way.

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Most large commercial banks have increased their educational loan portfolio. Process of applying for education loans is made easier & the banks have started accepting online applications.

MBAUniverse.com Exclusive: Guide to Financing your MBA

First, if you gain admission to a reputed institute, you should approach the banks with whom your institution has a tie-up. These banks may offer loans at lower rates and may be more responsive. If you can’t find such options, consider the bank in which your parent or guardian has an account or the banks that are in your locality. You can also apply on websites of some banks.

Recently, most large commercial banks have increased their educational loan portfolio. The total loan amount is generally upto Rs 10 lakhs for studies in India and Rs 20 lakhs for studies abroad. The process of applying for education loans has also been made easier. Many banks have started accepting online applications wherein you need to fill your details and the bank representative will get back to you.

MBAUniverse.com brings to you answers on few important questions:

Q. What is the Educational Loan Scheme?

A. The Reserve Bank of India has evolved an educational loan scheme to facilitate financial assistance to students seeking admission to private professional colleges to pursue the full time graduate/post-graduate courses. The scheme got effective from August 1, 1999. All public sector banks have been directed by RBI to provide educational loans to students who fulfill certain eligibility criteria.

Student will have to submit a certificate every year from the college authorities regarding fees payable by him. Loan amount will be remitted by the lending bank to the college concerned. Loan granted in each academic year may be treated as a separate loan account for determining rate of interest, security, etc.

The assistance from the bank should be available to the student for the entire duration of the course. The student will not be required to submit a fresh application for loan every year but will only submit to the bank proof of his continuing to fulfill the eligibility criteria.

Q. Am I eligible for education loan?

A. According to the norms prescribed by various banks, all courses having employment prospects are eligible for an education loan. Graduation courses, post-graduation courses, professional courses, other courses approved by UGC/Government/AICTE are considered for loans. So you should check if your institute’s programmes have got relevant approvals from government bodies.

Q. What all expenses are covered?

A. Pursuing higher education may call for many expenses other than the course fee. Make sure you factor in these while applying for the loan. Banks usually cover following expenses while granting a loan:

Fee payable to college and hostel

Examination, Library, and Laboratory fee

Purchase of books, equipment’s, and instruments

Caution deposit, building fund, refundable deposit supported by Institution bills or receipts.

Travel expenses, passage money for studies abroad

Purchase of Laptops, computers-essential for completion of the course

Any other expenses required to complete the course- like study tours, project work, thesis etc.

Even the cost of a two wheeler is covered as part of education loan by leading banks. <>

Q. What & When do I pay?

A. Interest rates on the loans are generally on floating basis with respect to the bank’s benchmark prime lending rate (PLR). All banks offer interest rates depending on the amount of loan taken. Repayment is in the form of equated monthly installments (EMIs) and it generally commences one year after completion of course or six months after securing a job, whichever is earlier. The tenure can be from five years to seven years.

Leading banks providing loans to MBA course

Some of the leading banks providing loans to MBA course are as follows (in alphabetical order). You can visit the websites of these banks to get the latest offers on the loans, such as Union Bank of India which is offering special loans to candidates who will be finally selected to XLRI and IIMs:

ALLAHABAD BANK

Quantum of Loan

Need based finance subject to repaying capacity of the parents / students with following ceilings:

Studies in India: Maximum Rs 10.00 lacs

Studies abroad: Maximum Rs. 20.00 lacs.

Rate of Interest

For IIT/ IIM/ ISB (loan upto 10.00 Lacs): PLR-1.75%

For Other: Loan upto 4.00 Lacs: PLR-0.75%c; For loan above Rs.4.00 Lac: PLR-1.00%

 

BANK OF INDIA

QUANTUM OF FINANCE

Need based finance subject to repaying capacity of the parents/students with margin and the following ceilings :

Studies in India - Maximum Rs.10.00 lakh.

Studies abroad - Maximum Rs.20.00 lakh.

RATE OF INTEREST:

-- Upto Rs.4.00 lacs – 2.50% below BPLR., Min. 9.50% p.a.

-- Above Rs.4.00 lacs upto Rs.7.50 lacs – 2.00% below BPLR, Min. 10.00% p.a.

-- Above Rs.7.50 lacs - 1.25% below BPLR, Min. 10.75% p.a.

 

CORPORATION BANK

Quantum of Finance

Need based finance subject to repaying capacity of the parents/students with margin and the following ceilings:

Studies in India - Maximum upto Rs.10 lakhs

Studies in Abroad - Maximum upto Rs.20 lakhs

Rate of interest

Upto Rs.4.00 Lakh

Aplicable or fresh loans sanctioned/initially disbursed on or after 14.08.2009 1.00%

Above Rs. 4 Lakh & Upto Rs.7.50 Lakh

Applicable for fresh loans sanctioned/initially disbursed on or after 14.08.2009 12.00%

Above Rs.7.50 Lakh

New Loans disbursed on or after 14.08.2009 11.50%

 

HDFC BANK LIMITED

-- Student Loans Upto Rs. 15 Lakhs for education In India

-- Unsecured Lending Upto INR 7.5 Lakhs

-- Loan available upto tenure of 7 years including moratorium period

-- Repayment to start 1 year after course completion / 6 months after obtaining employment (whichever is earlier)

 

UNION BANK OF INDIA

Special Education Loan Scheme

The following institutes are covered under the ‘Special Education Loan Scheme’ :

IIMA, B, C, I, K, L, MDI Gurgaon, SPJIMR Mumbai, XLRI Jamshedpur

Highlights

-- Interest rate of 10.50% fixed; 0.50% concession for women

-- Loan amount up to Rs. 15 Lacs

-- Expenses considered for loan: Tuition fees and cost of books, Hostel and mess charges, Laptop, Living expenses, Student exchange program

 

VIJAYA BANK

QUANTUM OF FINANCE

Studies in India … Rs. 10.00 lakh

Studies abroad … Rs. 20.00 lakh

Rate of interest

BPLR-1.25 = 11.00%

BPLR-1.75 +10.50%

Disclaimer: All the above mentioned interest rates are as of date and are subject to changes by the respective banks.