Educational loan and repayment blues.

ravi · **Educational loan and repayment blues. -** 28-05-2003, 02:13 PM

Hi guys.

I had been planning on taking out an educational loan 2 put me thru B-School. But sort of confused as to how much i should have to repay per month. Anybody got a clue like how many thousands we'll have 2 shell out for a loan amt of a Lakh 4 a repayment period of 7 yrs (i chose a 7 yr repayment period coz that's the max u can avail of the tax benefits ).
Sbdy i know told me that it comes to approx 2K per mth per Lakh. Is that figure in the ballpark or totally out of the league? I tht that 2K per mth was a bit steep coz then u end up paying abt 168K for 100K.

And btw how many of u r planning 2 buy laptops? I personally tht that a laptop was a waste of money - too expensive considering that a desktop would do almost just as well.
Ravi
Ravi

**uRmad** · 28-05-2003, 04:26 PM

hi ravi.....yep....the figure of 2k is something around the actual....however there's another issue here....the interest will be calculated based on a diminishing basis....so it won't be the same figure of around 2k for the whole of the repayment period..... so the overall payable amt, considering an interest rate of 12%, would work out to somewhere in excess of 140k+, i guess.....

laptop....hmmm.....i feel a desktop could do just as well, at a fraction of a cost of a decent laptop.....and i don't c particular sense in buying a laptop unless one has complete wireless access to the campus network....otherwise, the college lab or ur room would do just fine, i guess,... my 2p...

Cheers

philiptj · 29-05-2003, 10:43 AM

Hi Ravi,
There is a loan calculator and the SBI site. I guess u will have a lesser amt for 1 lakh.

For IIMs I guess a desktop is better bcoz
- One they dont allow laptops in class (most profs) so no advantage of laptop.
- Ppl usually keep desktops on 24 hrs and most IIMs have some internal communication software thru which all internal comm comes thru.. U can t keep a laptop swithced on always

Only advantage the lattop has is that it saves valuabe table space in ur room. U got only a single table chair ir ur room at iim...

ravi · **Re: Educational loan and repayment blues. -** 29-05-2003, 02:14 PM

Hi guys.

Philip: Thx 4 the tip. Found the site and the link 2 the EMI calculator is

http://www.sbi.co.in/personalbanking/emicalculator.asp

The interest rate is 10.85%. So i checked out the repayment for a 7 yr period loan.

For 3 Lakhs the EMI is 5113.10
For 2 Lakhs it is 3408.73
For 1.1 Lakh (i.e the 2nd yr fee at K) it is 1874.80

I think that means a Laptop is def out of Qn - 2 bloody expensive ! I'll end up shelling out about 1300 Rs per mth 4 7 years if i buy a laptop !!!

BTW, r u guys taking out a loan 4 the entire course fee and living expenses ?

Ravi

manduks · 29-05-2003, 03:33 PM

Ravi, as far as i understood the loan scheme, you have to pay Simple Interest on the disbursed amount on an monthly or annual basis during the course and after completion of your course, you start paying the monthly instalments. For example, if the amount disbursed during year 1 is Rs. 1.5 lakhs then you have to pay Simple Interest at 10.85% for that year only. The first year you would pay Rs. 16275, and slightly more in the following year.

Correct me if i am wrong, but the amount computed from your post would be huge!!! You would be paying 43% extra over 7 years!!!

Manu

philiptj · 29-05-2003, 04:59 PM

Hi Ravi/Manu,

You DONT have to pay any interest on the loan amount till you start paying back the loan after 2 years. Also for the time you are studiying, they will be adding only a simple interest to the loan amt and not compound interest.

However if you DO pay the interest during ur studies, you get a interest reduction of 1%.
That is the interest rate for you would be 9.85%.

Ravi, I am planning to cover my entire expenses including amt on food itself via the loan. But as I have a 10% margin, and as I plan to pay the interest, I will have to pay abt 90K from my pocket during the studies.

I plan to show the mess bills as the margin amt and try to get the full amt of tution fees. Abt the interest, I may or may not pay it based on the availability of funds with me. Also I will try to persuade the bank guys to lift the margin amt.

ravi · **Re: Educational loan and repayment blues. -** 29-05-2003, 05:17 PM

Hi there.

Philip:

Quote:

I plan to show the mess bills as the margin amt and try to get the full amt of tution fees.

Forgive me 4 being the ignoramus that i am, but what does the term "margin amount" mean? And yeah, going in for a loan for the entire amount and then paying simple interest through the course seems like a good idea to me - much better than getting a loan from your parents

Ravi

philiptj · 29-05-2003, 05:46 PM

Ideally the education loans are supposed to cover the entire amt of ur expenses. But as I dint have a prior acct at this bank, and they dint knew me well, they said they will fund only 90% of my expense.

So only if I show bills for 1 lac, they will give me 90K. So if wanna get 3.6 lac from me, I have to provide proof for expense of 4 lac.

manduks · 30-05-2003, 06:23 AM

Philip/Ravi,
Margin amount has to be paid irrespective of whether you have an account or not. At least this was true of Bank of Baroda and even State Bank of India. My dad has had an account with Bank of Baroda for the past 20 years or so and he was also asked to pay a margin amount.

Manu

philiptj · 30-05-2003, 10:47 AM

Well I guess the margin amount is the discretion of the Bank manager. Till 4 lakh they are allowed to give loans without any margin. In fact the SBI policies also says so. But if any branch has any reservations about any loan, they could ask you for some collateral and may keep some margin.

Atleast the local branches of SBT, Federal Bank etc was ready to give me loan without any margin, where we had good relations, but their interest rate was higher compared to SBI