Funding Options
Once you receive your letter of admission, you'll need to start thinking about funding your degree.
Management education at a quality business school is likely to involve an investment of Rs. 7 - 25 lacs, depending on the type of program and business school. While candidates who have prior work experience can contribute their savings and undergraduate candidates can count on financial support from parents, an education loan is one of the most feasible options for availing part financing for a graduate business degree. However, the indebtedness of students who have completed business education using education loans is much lower compared to their counterparts in the West.
Choosing an Education Loan
In recent times, education loans have become more widely available through both public sector (nationalized) and private sector banks. According to the Reserve Bank of India’s (RBI) sectoral deployment of bank credit as on 20 May 2011, banks’ loans for education amounted to Rs 43,937 crore, while education loans categorised as priority sector loans were Rs 43,100 crore. According to the Indian Banks’ Association (IBA), education loans worth Rs 15,207 crore were sanctioned to nearly 25,000 students in FY2011. The growth rate in student loans is not much higher than credit growth across the system, at 18.9 per cent as on 20 May 2011.
The important factors in choosing an education loan are interest rate, flexibility of repayment terms, prepayment penalty and collateral requirement. Updated information about these are available from the websites of leading banks such as State Bank of India, Union Bank of India, ICICI Bank, HDFC Bank and several others.
Generally, collateral requirements for granting loans to students include the following (Please note these are at best indicative and not updated; and might differ from bank to bank):
- Loan up to INR 4 lacs - No collateral security.
- Loan above INR 4 lacs and up to INR 7.5 lacs - Security in the form of satisfactory third party guarantee.
- Loan above INR 7.5 lacs - (a) Acceptable collateral security (b) Co-obligation of parents / guardians / third Party along with assignment of future income of the student for payment of instalments.
