Financing your international MBA

Resigning from a secure job, moving country, even leaving family and friends behind - potential MBAs seem to take such obstacles in their stride. But with programmes at top-flight schools now costing as much as US $75,000, one question seems to occupy business school applicants more than any other – just how can I find the money to pay for my education?

Every year, as part of its ongoing research project, TopMBA surveys nearly 4,000 aspiring MBAs to establish whether the issue of finance was likely to prove a barrier to study. The latest poll found that practically all had already looked seriously into how they would fund their time at business school and a wide variety of methods were cited from scholarships to personal loans. Scholarships, perhaps not surprisingly, were the most popular option around the world, favoured by 74 pc of respondents. Next came the student’s own savings at 68 pc and then some form of external loan at 61 pc. Only 28 pc realistically expected to get financial help from their employer.

The emphasis that students place on funding methods seems to vary considerably from area to area. Help from family and friends appears to be most common in the Asia-Pacific region where it was cited by 48 pc of those questioned, in contrast to only 43 pc in the USA and Western Europe. Personal loans were the preferred source for over 81 pc of US students, but less than 57 pc of those from Latin America. Company sponsorship was expected from 36 pc of respondents in the Middle East and Africa, but only 21 pc of those in Latin America and a student’s own savings were the favoured method of 80 pc of Western European candidates, but only 62 pc of those from the Middle East and Africa.

Whatever a student’s initial preference, the most common source of finance in practice is now the education or career loan. We look at some of the sources of such loans across the globe:

Finance sources around the world
India
Indian nationals have access to a wide range of education loans geared to fund MBA study. Key suppliers include State Bank of India, Allahabad Bank, State Bank of Mysore, Bank of Baroda and the Industrial Development Bank of India. Loans can be used to cover the cost of fees, travel to an overseas school, the cost of books, computers, etc and living expenses. In most cases candidates will already need to have secured a place at a recognised institution and may need to supply a guarantor, such as a parent or close relative, with sufficient funds to cover the loan. Repayment periods range up to four years after graduation and interest rates are currently around 8.5 to 8.75 pc.

Complete Article at link
Courtesy: PagalGuy/TopMBA.com

Edu Loan sanctioned!!

Finally got my Education Loan sanctioned!!

Thanks Dad and Mr.Banga.

Case of availing 2 education loans for 1 course

Question:
Not being able to take a loan from 2 diff banks for the same course, why is this a problem?

Answer: (Courtesy NK)
While applying for an educational loan, in the student educational loan form there is an undertaking which we have to sign. It explicitly states that ¡§I have not taken any other loan for funding this course. That makes it impossible to apply for more than one loan for the same course. Had it been allowed otherwise then everyone would take loans worth 5 lakhs from four different banks. This way we would save a lot of money also, since the interest rate charged increases proportionately with the loan amount. The only other option is to give a false undertaking i.e sign that part of the form and still take loan from some other bank. How ever I would strongly advice against it as there is every possibility of this matter coming to the banks notice. Under such a situation the undertaking is considered "fraud" and the offender is liable to be tried under law.

Tips for Education Loans

Two points mentioned in a mail by one of my friends.

1. Availing more than one education loan for the same course is not allowed. This means it is not possible to take two loans of 7.5 lakhs from two different banks.
2. A financial adviser strongly recommends that I should take the loan at the fixed rate instead of floating (though there is a difference of 1.5% currently in favor of floating rate), since our repayment period will definitely exceed 3 years, so in the long run fixed interest rate works out better as the floating rate is increasing continuously.
   

Thanks N for this

SBI Education Loan details

Visited the SBI's (State Bank of India) St. Marks Road Branch to check out details of Educational Loan

Details:

• Amount of Loan: 20 Lakhs INR
• Loan Processing Time: 1 month (approx) (Valuation of property takes time)
  
• Applicants: Student as main applicant and parents are co-applicants
• Repayment Period: 7 years (max)
• Rate of Interest: 12.5% pa# (Floating)
• Processing Fees/File/Miscellaneous Charges : Nil ^
• Margin money: Didn't check
  
• Security: Tangible property like House as collateral
• Conversion Charge from INR to $: To be checked
  
• Money transfer mode: The money will be transferred directly to the university upon request-takes approx a week. Rs 600 charged every time for draft mode and Rs 1000 for TT mode.
  

# The Rate of Interest is decreased by 1% (i.e. its 11.5%) if the interest is paid during the moratorium period (the time period when the re-payment of loan has not started)
^ SBI collects a cheque of Rs 5000 for processing, but this is returned if the loan facility is availed. In case, the applicant doesn't avail the loan, Rs 5000 are not refunded.

Documents Required:

1. Loan Application form
2. Copy of the offer of acceptance from University
3. Details of expenses from University including Tuition fees, living expenses etc.
   
4. Mark-sheets of 10th, 12th and qualifying degree (e.g. B.Tech)
5. Photograph of applicant (2)
6. IT Return and Form 16 for co-applicants for last 3 years (not for applicant-student)
7. Copy of applicant's passport
   

Certain answers to questions in particular

• Which location should the loan be taken? Preferably at the location where the collateral is there
• Can I get a loan sanctioned for Rs 20 Lakhs, but use only 10 Lakhs? If yes, what about interest? YES, this can be done. The amount which is withdrawn from the sanctioned amount only is calculated for interest [You might need to withdraw a small part of loan initially-can be as small as 50,000. Its like using your credit card the first time to activate it. Check with bank as this can very with bank to bank]
  
• Can I get a loan sanctioned for Rs 20 Lakhs, but withdraw 10 Lakhs now and rest 10 Lakhs after 6 months? If yes, what about interest? YES, this can be done. The interest will start to be calculate only when the amount is withdrawn. e.g. In May, the first 10 Lakhs is withdrawn, the interest will start the time the money has been withdrawn. In December, the second 10 Lakhs is withdrawn, so the interest on the second 10 Lakhs start from December
  

Related Links:

• Education Loan@ SBI : http://www.sbi.co.in/viewsection.jsp?id=0,1,20,118
• Education Loan Application Form @ SBI: http://www.sbi.co.in/downloadfile.jsp?fileid=82
• Education Loan Details from Indian Bank's Association : http://www.iba.org.in/educational_loan.asp
• Education Loan Details of various banks in India: Link

Terms used:
A collateral loan is also called a secured loan. It is a loan obtained from a banking or other financial institution, where in exchange, the creditor may sell that which is offered for collateral if the loan is unpaid. A collateral loan is often offered at a lower interest rate than an unsecured loan, because there is a guarantee of repayment should the borrower default on the loan (http://www.wisegeek.com/what-is-a-collateral-loan.htm)

Margin Money: Banks lend out huge money in the form of home loans. Margin money can be best described as an upfront down payment that reassures the lender of the borrower's financial stability and commitment. The upfront down payment can range from as low as five to as high as 15 percent. ( Economic Times Link )