PGPX IV - 2009-10: Application Process and Beyond

[expedite]

Originally Posted by RR_ez

In fact, I am adopting this strategy. I'll park part of my savings in fixed maturity deposits for 18 mos (10.5%) and take edu loan (SBI schola at around ~11% and maybe falling further over next month) at marginally higher rates. This will give me:
1. Some basic liquidity (for stuff like school admission/small car etc.)
2. Cushion for throughout the program
3. Flexibility to use these same funds, if under utilized after MBA, to prepay part of the loan. Cost of maintaining buffer will be just 1.5% of the buffer (after taxes), a negligible cost in current volatile environment.

In fact, this is very good strategy, in my opinion, to take big edu loan and park savings at 10%, and prepay after the program. Tax benefits are too small to be a decision swinger.

Agree with your strategy, I am thinking along the same lines.
> Do not liquidate any assets (shares / MF) at this point as this is not the right time.
> Cut down on any unneccesary monthly expenses, since you'll be away at Ahd, consider moving into a smaller house closer to your spouse's office. [will help her manage without the chauffer, you ]
> Park your savings in a FMP / Flexible FD.
> Since you will be moving out of your companies group insurance cover, get medical insurance for self & dependents.
> Max out on the education loan (I'll have to check on the split between self & spouse...)

[bharat_bharat]

guys, did anyone check the IIMA website lately? I have been trying to access the website for quite some time now but of no avail. did anyone else notice the same?

[kiran_special]

The payment schedule for the PGPX 2009-10 is out in IIMA website. The most worrying part is we need to pay 3.7 lacs by Nov08 ( for single accommodation) and another 2 lacs by Jan 08 i.e offcourse if selected. So one has to pool in 5.5 lacs ( for single acco) in next 2 months. Little more for married acco.

How do you want to finance this ? Options are

1. With the most of the savings in equities and considering the present market conditions, it is not advisable to liquidate this saving at loss. Hence this option is out.

2. Any idea, whether we will be able to get edu loan just on acceptance of the offer. Looks like a remote possibility and I believe banks offer loan only upon confirmed admission and upon joining.

3. Or take personal loan at high int rate and pay back the full amount once you get the edu loan upon joining.


Somebody can throw some lights on how to pool in 5.7 lacs in next 2 months, considering the present market condition

Cheers

Originally Posted by RR_ez

In fact, I am adopting this strategy. I'll park part of my savings in fixed maturity deposits for 18 mos (10.5%) and take edu loan (SBI schola at around ~11% and maybe falling further over next month) at marginally higher rates. This will give me:
1. Some basic liquidity (for stuff like school admission/small car etc.)
2. Cushion for throughout the program
3. Flexibility to use these same funds, if under utilized after MBA, to prepay part of the loan. Cost of maintaining buffer will be just 1.5% of the buffer (after taxes), a negligible cost in current volatile environment.

In fact, this is very good strategy, in my opinion, to take big edu loan and park savings at 10%, and prepay after the program. Tax benefits are too small to be a decision swinger.

[kiran_special]

Check out IIMA website. They have included few more info

1. Payment schedule and options



2. Individual Profile of PGPX -3 batch students. This may help you to compare your profile with existing batch

3. No of seats are 80 only .

cheers

[civ_ad]

RR_ez,

Your post mentioned ~11 %.
as per the SBI website for SBI scholar, the interest rate is


"1.5% below SBAR effective rate 12.25% p.a. (floating)".

can you clarify?

[RR_ez]

civ_ad

interest rate for normal loan was communicated to me as 12.5%, that was a while back though. Interest rate have risen in the past few weeks, but I would bet on getting Scholar loan at around 11.5% and normal edu loan going to about 13% by the time I get approval.
I am holding back my loan app for the time being.

Originally Posted by civ_ad

RR_ez,

Your post mentioned ~11 %.
as per the SBI website for SBI scholar, the interest rate is


"1.5% below SBAR effective rate 12.25% p.a. (floating)".

can you clarify?

[RR_ez]

You can get edu loan after receiving admission offer. So, if you keep all your documents ready, you can apply the day you receive 'letter of offer' by e-mail.

Amount of documentation required is not as simple as it looks on the website. But though it may be little more trouble getting it done by SBI, they have the best loan products in India for most situations.

Even if edu loan takes time to approve, Personal loan will set you back by huge sum. Suppose you take a 1L personal loan@15%, then you end up paying lot of interest in first six months (most banks do not allow personal loan foreclosure before 6 months) and then you'll definitely have to pay prepayment penalty of about 5% which will significantly jack up your borrowing cost. You must try to avoid this route, even if you have to exit some investment at minor losses.

Below is table of payment for 1L loan at 15% for 12 monts (minimum tenure for personal loans)...Add the 5000 Rs as foreclosure charges and you see the trouble - huge interest outgo at 10K per lakh for 6 month.

EMI Number EMI Amount Interest Amount Principal Reduction Balance Due
1. Rs.8903 Rs.1139 Rs.7765 Rs.83332
2. Rs.8903 Rs.1042 Rs.7862 Rs.75470
3. Rs.8903 Rs.943 Rs.7960 Rs.67510
4. Rs.8903 Rs.844 Rs.8060 Rs.59450
5. Rs.8903 Rs.743 Rs.8160 Rs.51290
6. Rs.8903 Rs.641 Rs.8262 Rs.43027
7. Rs.8903 Rs.538 Rs.8366 Rs.34662
8. Rs.8903 Rs.433 Rs.8470 Rs.26191
9. Rs.8903 Rs.327 Rs.8576 Rs.17615
10. Rs.8903 Rs.220 Rs.8683 Rs.8932
11. Rs.8903 Rs.112 Rs.8792 Rs.140

Originally Posted by kiran_special

The payment schedule for the PGPX 2009-10 is out in IIMA website. The most worrying part is we need to pay 3.7 lacs by Nov08 ( for single accommodation) and another 2 lacs by Jan 08 i.e offcourse if selected. So one has to pool in 5.5 lacs ( for single acco) in next 2 months. Little more for married acco.

How do you want to finance this ? Options are

1. With the most of the savings in equities and considering the present market conditions, it is not advisable to liquidate this saving at loss. Hence this option is out.

2. Any idea, whether we will be able to get edu loan just on acceptance of the offer. Looks like a remote possibility and I believe banks offer loan only upon confirmed admission and upon joining.

3. Or take personal loan at high int rate and pay back the full amount once you get the edu loan upon joining.


Somebody can throw some lights on how to pool in 5.7 lacs in next 2 months, considering the present market condition

Cheers

[BuffetFan]

If you get 10% tax-free on your savings and have to pay 11% on student loan, you might end up in positive, considering the tax bracket (the highest) most people will fall into after PGPX. Correct me if my Math is wrong here.

100000 savings will yield 10000Rs interest
100000 loan will cost 11000Rs in interest.
You take 11000 as deduction. if you are in 30% tax bracket, that saves you 3300Rs in taxes. So overall you only pay 7700Rs in interest. Effective rate of 7.7%.

This looks too good to be true. I might be off here.

[gmat_buf123]

Quick question about one of the line items in the fees: What is computer fees for 42,000???
Was hoping someone here might have a better idea of the same.

Thanks!

[goformba]

I had the same question as well. I was assuming that this is a "laptop" fee. Can someone confirm?

Originally Posted by gmat_buf123

Quick question about one of the line items in the fees: What is computer fees for 42,000???
Was hoping someone here might have a better idea of the same.

Thanks!