How bank gives loan to MBA students?

“Many students from average MBA colleges and other private institutes need to pay R4 lakh to R8 lakh as tuition, but they may not get placed well and hence may be unable to repay loans. Thus banks are unwilling to sanction loans to this price-bracket. On the other hand, students who opt for specific industry programmes that cost less than R2 lakh, and pick up specialised skill sets and land jobs, are a safe lending option.”
Sonya Hooja, co-founder and director, Imarticus Learning, an industry specific education programme expert

“Though the rule of awarding loans only to meritorious students might be unfair to average students, one cannot solely blame the banks, because they have to minimise the risk of non-repayment. What is unfortunate is that India has one of the highest education loan interest rates in the world, and this is what should be altered.”

Akhil Daswani, partner, OnCourse Global, an education consulting firm

FINDINGS OF THE SURVEY

According to the data compiled by the Indian Banks’ Association from 26 public sector and 24 private sector banks: The number of Indian students who took education loans in 2011-12: 8.6 lakh
The number of Indian students who took education loans in 2010-11: 8.1 lakh
Increase: 7%

The total funds disbursed by banks in 2011-12: R8103.06 crore
The total funds disbursed by banks in 2010-11:
R11,200.53 crore
Decrease: 28% Decrease in the loan amount per student: 32% Thus, while the number of students who took loans went up by 50,000, the funds disbursed by banks towards student loans fell by more than R3000 crore in 2011-2012.

STUDENT SPEAK

“When I took a loan from Union Bank of India in 2010, they already had a grading system for courses and institutes on the basis of the institute’s ranking. IIMs and other premier institutes provide higher guarantee of jobs, so getting a loan was not a problem for me. Banks have a basic decree for student loans—higher the job guarantee, higher the loan amount sanctioned.”

 

  Sulabh Jain, took loan for MBA in IIM-Ahmedabad in 2010, now working with Boston Consultancy Group

MEET THE EXPERT

Tara Kennedy is a director of the Research Base, an organisation specialising in business research and evaluations. An experienced project and programme manager, Kennedy has led organisations including the City & Guilds Centre for Skills Development. She has delivered education projects in Australia, the UK, India and Africa. She specialises in programme evaluations and education research, particularly into skills development and vocational education.

BACKGROUND

NASSCOM reported earlier this year that almost 50% of engineering graduates are not fit for employment; it said that the problem is ‘quantity over quality’. The figure for unemployability in the IT sector is reported to be near 70%.