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Student Loans

A studeте loan is one of the most popular banking sevices in many developed countries: in the USA, Canada, Australia, New Zealand, as well as in European countries, the majority of university and college students (about 60%) use a student loan. Educational loans are becoming popular in many other countries: China, Ukraine, Singapore and the United Arab Emirates.

It is noteworthy that you can get a bank loan not only for studying at a higher school, but also for paying for short-term and long-term courses, internships, as well as the MBA program. The loan amount is not handed out, but transferred to the account of the educational institution, as a rule, in several tranches: to pay for each next semester or year. In addition, there is an accompanying educational loan that can be taken to pay for accommodation or other expenses during the period of study can be covered with credit funds.

Benefits

The main advantage of a student loan is the availability of a deferred payment option, which distinguishes it from other banking products. This is a “long-term loan”, which enables the borrower to first become independent, and then gradually begin to pay off the debt (4 or 5 years after graduation).

You can also get a loan for a short term – from 1 to 3 years. Students turn to this type of loans if they failed to get a few points for admission to the budget.

Another advantage of a student loan is a lower interest rate (about 5% less compared to other types of loans). For example, if the rate on a consumer loan is, on average, 20%, then on an education loan – about 15%.

The advantage of a bank student loan also consists in the fact that the student himself can act as the borrower, and he does not need to prove his solvency. Co-borrowers in this case can be parents.

The main difficulties in issuing a loan

Additional requirements for borrowers

  • For example, you need to insure life and health to issue a loan.
  • Not all banks issue loans for study abroad.
  • Funds issued by domestic banks can only be used to pay for education in your country.

Academic requirements

Loans can only be issued for students with good academic performance, which they must prove from year to year, bringing certificates of successfully passed exams. Otherwise, the bank has the right to cancel the deferred payment, and the tuition fee will have to be paid after receiving the first marks, which did not satisfy the bank.

Payment of the loan immediately after graduation

The graduate will have to pay the loan immediately after receiving the certificate. The burden of “adult life” will fall on his shoulders: getting a job, paying off credit debt, paying for a rented apartment if the graduate decided not to return to his hometown.

Loan abroad

Foreign banks are reluctant to issue loans to foreign students. They can refuse to issue a loan without explaining the reasons. But getting a loan is still possible. To do this, you need to contact the international department of the selected university, where the applicant will be provided with all the necessary information. For example, a list of partner banks of this university. It will be much easier to get a loan from one of them than from a “third-party” bank.

In addition, the applicant has the opportunity to sign a surety agreement with the business school, where he plans to study under the MBA program, which significantly increases the chances of issuing a loan.

A set of documents for a foreign bank includes:

  • ID;
  • student visa;
  • agreement with the university;
  • payment solvency certificate.

Preferential terms

Over the past few years, the demand for MBA programs has grown significantly in the world, which can be enrolled in business schools working at universities. Obtaining a master’s degree in business administration opens doors for the graduate to new career heights and income growth. But not all students can afford such a course. Its approximate cost in Europe is around $40,000 – $60,000, in the USA – around $50,000 – $65,000, excluding accommodation expenses, purchase of educational materials and travel.

You can use special programs to ease the loan burden. For example, in the USA (North Carolina, Durham) the Fuqua Business School at Duke University offers The Fuqua Loan Assistance Program. It allows you to get assistance in the amount of $8,000 annually and covers up to 100% of the tuition fees. This program can be used by students who will study in the MBA course in the daytime. It is designed for those who, prior to admission, worked in non-profit organizations, US government agencies, or similar structures in other countries.

Depending on the level of income, the student pays part of the amount as a down payment. If he earns from $75,000 to $90,000 per year, then about 20% of this income will need to be paid. If the income is $90,000, then you will have to spend 30% of the income plus $3,000. Moreover, if the annual income “does not reach” and up to $75,000, then no down payment is required. After graduation, graduates will be required to reimburse a portion of the cost of completing an MBA at Fukua Business School . The amount will depend on the amount of income. Accordingly, the higher it is, the more former students will have to pay for tuition. There should be no difficulties: the income of middle managers after completing the program grows by about 45%, while the salaries of managers – by 60-70%.