Loaning out advice
Students who’ve taken loans to fund a dream degree come clean about their experiences, learnings and mistakes
Taking an education loan is a daunting proposition; it takes years to pay back, plus, you end up shelling out an obscene amount of money as interest. Yet, for many, it’s the only way to take up that course they’ve set their eyes on. Students who’ve been through the grind of taking a student loan share first-hand mistakes made and lessons learnt. Their experiences are an education in itself.
“COULD’VE TAKEN UP A JOB TO FUND PART OF MY EDUCATION”
In 2017, when Nisarg Pandya, 24, got into Symbiosis Centre for Management and Human Resource Development, Pune, for an MBA course, he was faced with a difficult choice - pay Rs 4.5 lakhs within the next five days or forfeit his seat.
“We were in the process of applying for a Rs 10 lakh no-collateral loan from a co-operative bank, but we knew that it would take time for the money to be disbursed,” says Pandya. “So my father sold some of his stocks to pay the initial amount. I’m glad that my father had strong investments, otherwise I could’ve lost the seat.”
Pandya feels that while it’s common for middle-class children to take education loans, one can take steps to reduce the loan amount. “After finishing my engineering degree, I took a year-long break. Looking back, I should’ve taken up a job in that time to fund part of my MBA fees,” he says. “It’ll take six to seven years to pay it back. And that’s a real challenge.”
“CIRCUMSTANCES SHOULDN’T COME IN THE WAY OF GOALS”
Pune-based Namrata Bhosle, 23, remembers working part-time to fund her graduation studies. But when she got into a top B-school in Pune for a Post Graduate Diploma in Management, she wanted to focus on her studies full-time. So she decided to take a loan to fund her Rs 7 lakh fees.
“I approached every bank I could think of in Pune and Nagpur, but they all turned me down because I didn’t have an earning family member,” says Bhosle. “In addition, they asked for property papers for collateral, but I didn’t have those either. My sister and I make ends meet with my grandfather’s pension, so how could a person in my situation meet all these requirements?”
Bhosle was on the verge of passing the opportunity by when her college informed her about Credenc, a startup that disburses no-collateral education loans based on merit and future earning potential of the student, rather than conventional parameters like family income and credit score. Plus, the platform offers to connect you to job opportunities post the completion of the course.
“People are hesitant to take up loans from new-age platforms, but it was the less-conventional platform that helped me. Being able to get a loan has inspired my sister to dream big too, because she knows that there is a way to fund it,” says Bhosle.
“COLLEGES SHOULD TEACH US ABOUT THE INTRICACIES OF LOANS”
Paris-based Natasha D’souza, 23, who is currently pursuing a Master’s degree in International Security at Sciences Po, a research university in the social sciences, took up a Rs 35 lakh student loan to pay for the course after her attempts at bagging a scholarship fell through.
Her parents zeroed in on a low-interest education loan offered by a local co-operative bank, but had to pledge property as collateral.
“Soon after my course gets over, which is in just a few months, I’ll have to start repaying the loan, irrespective of whether I get a job or not. I’m really feeling the pressure because, if you’re not fluent in French, it is difficult to get a job in France. I don’t want the burden of paying the loan to fall on my parents,” says D’souza.
Looking back, D’souza wishes she had done more research on no-collateral loans.
“I also wish we were taught about the intricacies of loans in college. There should be space on campus to ask questions like how that extra 0.5% in the interest rate will impact you or what clauses you should be vary of when applying for a loan. We end up having to ask banks these questions, and they don’t really have our best interests at heart.”
“DON’T BE TOO WORRIED ABOUT GATHERING FUNDS”
When Los Angeles-based Ayan Halder, 30, decided to pursue an MBA at Simon Business School, University of Rochester, New York in 2017, he approached both banks and NBFCS for unsecured loans. It didn’t work. Then he chanced upon MPOWER Financing, a start-up offering zero-collateral, merit-based education loans for courses in America and Canada.
“Everything could be done online, I received my loan approval within a week; plus, they provided a visa support letter which helped me secure a visa easily,” says Halder.
Looking back, Halder wishes he wasn’t so apprehensive about funding his MBA. “I took an additional loan from an NBFC. I never used that money, but ended up paying origination fees, insurance payments and interest on it,” he says.
To students planning on taking a loan, he recommends considering scholarships, summer internships and on-campus jobs. “If you still need a loan, consider delaying the disbursal process to save on the interest. At my university, I could pay fees once a year or once every three months. Choosing the latter saved me some money since with my loan, interest was charged only on the disbursed amount.”