Preeti Mehta was fiercely determined to do her MBA after she completed her graduation from SIES college in Mumbai. All of 20 years then, she was confident of scoring good grades in her MBA programme and knew that even if she took a study/education loan, she would be able to repay the same without too much of a trouble.
It is this confidence that helped her get a Rs 3 lakh loan from State Bank of Saurashtra for a tenure of 5 years and an interest rate of 12.25 per cent on a reducing balance basis. She will start paying her first EMI of about Rs 12,000 six months after she completes her two-year, full-time MBA in marketing and finance from Indian Institute of Planning and Management, IIPM, in about a month's time.
"I was pretty confident of getting a good pay packet after the course," Preeti, now 23, told this correspondent in a telephone conversation from her home in Mumbai when asked how she plans to repay her loan.
Here, Preeti talks about her experience of taking a study loan to finance her MBA.
What prompted you to go for an education loan?
Actually, my parents did not have enough money to pay for my MBA programme. Also, being very self-dependent, I did not want them to share the financial burden of my higher education.
What was this education loan for?
After completing my B.Com (Bachelor of Commerce) I wanted to do an MBA in marketing and finance. I have taken a Rs 3 lakh loan at an interest rate of 9 per cent from State Bank of Saurashtra.
How do you plan to repay this loan?
The terms and conditions states that six months after I complete my MBA I should start repaying the loan. So, suppose if I complete my studies by August 2008, then by February of the 2009 I will start repaying the loan installments.
However, I can even start the EMI repayment as soon as I complete my course. The choice is mine.
How did you go about getting an education loan?
In a way it is difficult to get education loan. The banks ask you for too many irritating details. There are a few fixed documents that one needs to provide for availing education loans. They are graduation certificates, and in my case, since I took the loan only during the second year of my MBA, the mark sheet for the first two semesters.
Apart from that they also asked for my bank account statements, IT returns.
How does the entire system work? Do banks give you the entire loan amount or is it phased out over the course of your study programme?
This depends from one bank to another. In my case they gave me the whole amount on the spot. In turn, I paid the entire amount to IIPM, Indian Institute of Planning and Management, from where I am doing my MBA.
Do you ever get tensed when you think about how to repay this loan?
I would say yes because the kind of work we get after completing the MBA and the kind of package we get does create some initial problems. This is what some of my friends who took a study loan experienced.
However, this gap of six months during which you don't have to pay anything to the bank after completing your course is really a very good thing.
Do you think taking a study/education loan is a viable option and really helps students who do it? What's your personal experience like?
I do think this is a viable option. The banks design such loans in such a way that the repayment has to be done only six months after completing the course. In this time those students who don't get a campus placement, can look out for a job and once they get it start their repayments.
What are your future plans? What do you plan to do after completing your MBA?
I was with Anagram stock Broking earlier even while doing my MBA and now I am working with Neo International Sports Academy as Marketing Research Manager.
This is possible even while doing my MBA because many colleges offer this facility to the students wherein they can work during the last two semesters of their course and lectures are held only on Sundays. I got a job with Neo during a campus interview.
I am into my sixth semester during which we have to only submit our theses to the college. So I worked through the week and attended college on Sundays earlier. Now that I am just a month away from completing the programme I get enough time to go to work as well as complete my theses.
Is your current salary package matching your expectations?
The pay packet at Anagram was not satisfying as I was a fresher then and the company policy did not allow higher salaries to freshers there. But Neo International has given me a great package and I am really happy with it.
In your view what kind of a package can any average MBA student expect after completing the course?
An MBA graduate can expect an average package of Rs 4 lakhs after completing her/his course. When I began my MBA course I was pretty confident of a good placement at the end of the course.
Were you worried about what kind of job you will get after completing your MBA and how will you repay the loan?
No. I was pretty confident of getting a good pay packet after the course. Also, my institute, IIPM, had assured of a good package and assured placement.
Since you already have some experience of taking an education/study loan, what do you think should students guard against while going for such loans?
Though this may sound a bit whacky but I would advice students not to go for study loans as far as possible. The reason is, even if you may not be stressed about repaying the loan at the back of your mind you will always have the thought nibbling at you.
What I would say is if you have already taken a study/education loan then plan your course and academic career in such a way that you get a pay packet that will help you to repay your loan as well as save something for the future.
