Moneymanagement’s Weblog

Back to School

Posted in Uncategorized by moneymanagement on July 29, 2009

Ajit Menon, an IIM-B graduate is working with an MNC. He is at the post of a regional sales head and the climb has been fast and hard.  But after being at this level for the last 2 years he feels that his career is stagnant.  Though he likes his job, he is ambitious for bigger things and wants a competitive advantage over his peers. Like Ajit, do you feel that your career graph is plateauing and you the next step up may be long way away?

The best way to give your career a booster shot is to go back to school. For the working professional, returning to academics is a great way of honing up skills and networking.

There are great choices in India but a foreign degree added to your resume will (literally) open up the world to you.

You can choose to study further in the field of your specialization or maybe explore new areas which have high growth potential.

The question at the top of the mind is how best to work out finances. If you are past your thirties you are likely to have some responsibilities like a home loan. You would also like to make sure that your family should not be deprived of any luxuries even for the period of your education.

A study loan often works out to be the most feasible way of financing your education. Some careful planning and voila! you will be ready to fly off to explore new paths.

Why take a loan?

Even if you have adequate savings, it may be wise to go in for a study loan to finance your continuing education. You saving and investments can continue their job of acting as a cushion for your family.

An education loan is widely available at banks at attractive rates. Banks infact prefer giving loans to individuals with work experience who would be able to pay off the loans quickly because of their higher start salaries.

What is the procedure to take a loan?

Most banks will provide you with an education loan for studying abroad. The amount prescribed by RBI is Rs.20 lacs for studying abroad. The rate of interest will vary from 11% to 16%.

The repayment period will typically start within 6 months of completing the education and the loan will have to be repaid within 10 years after finishing your education.

You will also be required to put in margin money of 15% of the loan amount…i.e. the bank will finance 85% of the loan.

Education Loan Comparison

There are several banks vying to give you a loan. At a glance the loan schemes seem to be similar since they are governed by RBI regulations. However the difference lies in the terms and conditions and the ease of documentation and disbursal. For instance the banks with the lowest rates may not provide you with the amount of loan you want. Or the bank with the fastest disbursal procedure may not have your institution of choice on their approved list. So you have to scout around and ask plenty of questions.

Tips for taking loans from Arun C. Vakil, Consultant and author of Gateway to America

  • Do not over borrow. Make sure you are covered for the first year and look around for financial aid in the college.
  • Look out for charges…guarantee charges, prepayment penalties, processing charges all add up to your cost.
  • Choose colleges with wider acceptance as this will make your loan procedure easier. Many lenders have a list of approved institutions.

This article has appeared in Moneycontrol.com

Advertisements

One Response

Subscribe to comments with RSS.

  1. Yasser said, on September 2, 2009 at 7:14 pm

    quite a nice article. although i am not in of those who need loan for the time being, but i completely agree with your statements

    The best way to give your career a booster shot is to go back to school. For the working professional, returning to academics is a great way of honing up skills and networking


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: