Wanting to do an MBA course isn't as easy as it seems. It requires lots of practice and determination to crack the entrance exam. Also, after getting through an MBA college, it becomes highly essential that you should be able to provide for the insurmountable amounts of fees the colleges seek from the students who have cleared the exams. As a plus, there are many students from wide educational backgrounds, who appear for the exam. Some may be working part time in offices to fund their college admissions, some might be freshly graduated and some might belong to the lower economic section of the society. Thus, logic begets, how to finance the fees of the MBA courses and college?
Well, in times where technology is booming at a fast pace, and mobile has made it easy for people to communicate from all over the world in just a bit, it becomes really easy for the banks to reach out to the students, who wish to seek admissions into various colleges. As a plus, facilities are provided to those who want to go abroad for their MBA degree as well. The facility of student loan provision has made it abundantly easier for the students to swim through their college fees.
What exactly do education loans offer?
Educational loans offering institutes - the banks, directly offer the educational loans to those students, who have cleared the entrance exam. Usually, they are partnered with the MBA institutes, who disclose the student information with them, so in most of the cases, the banks themselves offer loans to the students. They don't often require collateral, but still they need a guarantor regarding the repayment of the loan back. A lot of it depends upon the nature of the degree, you have chosen. Once the institution lets out all the estimated costs which would be incurred, the banks place an estimate and according to your course degree, they will decide, if you are worth the money or not. Mostly, top B-school students, get the educational loan easily.
But when does the repayment begin?
There is something called a grace period, which means that you would be given an additional leverage of 6 months along with the full time course duration. After the grace period gets over, you can start repaying your loan little by little. Or choose to pay the amount in a bulk, whichever option suits the conditions that moment well. The loans offered by the USA are of two different categories - federal and private. The federal loan is provided only to U.S. citizens, which has an added benefit of being consolidated as a whole and also, doesn't require a whole lot of credit check.
Though interest rates, on Federal loans, are significantly lower, at about 5%, it is still largely unavailable to international students. As far as private international loan providers are concerned, the interest is usually decided upon by considering the global nature of the lending scheme -
- Prime Interest Rate, decided by the US Federal Reserve.
- LIBOR, the London Interbank Offered Rate, decided by the British Bankers Association, and dependent on the interbank lending rate in the UK.
- Euribor, which is the interbank lending rate in Europe.
An additional interest is added to one of the variable base rates, to make up a subjective interest rate for each student loan applicant. The additional amount is usually decided upon by the creditworthiness of the consigner, or in the case of a non-consigner loan, by the quality of degree and institution.
This additional rate is usually of the order of less than 10% above the variable base rates. An additional one time application fee (a small percentage of the principal amount), and an APR is also charged.
The repayment period is usually 10-25 years, including the grace period.