tag:blogger.com,1999:blog-4273139713770751485.post9029559680144057525..comments2024-03-29T11:45:43.197+05:30Comments on Musings of Dheeraj Sanghi: Education Loans: What is a good collateralDheeraj Sanghihttp://www.blogger.com/profile/06367519409840642182noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-4273139713770751485.post-39437349879023610952011-04-11T23:53:46.445+05:302011-04-11T23:53:46.445+05:30@Saurabh, A good idea. But who covers that default...@Saurabh, A good idea. But who covers that default when it does happen. If Institute is the guarantor, then Institute pays for the default. Then either promoters pay for it (Government in case of IITs) - which means that Institute has no incentive to do due diligence. It can guarantee all loans. Or else, it comes from tuition - so higher cost for all students - something that students are not going to be happy about. The third option is for the banks to increase the interest rate, and share some of the profit with the institute, and this fund is used to pay for the default. But this increases the interest rate. Since banks can do the due diligence much better than the Institute, therefore, when they do it, they will make sure that the defaults are lower, and hence the interest rate is lower.Dheeraj Sanghihttps://www.blogger.com/profile/06367519409840642182noreply@blogger.comtag:blogger.com,1999:blog-4273139713770751485.post-80024174026915288452011-04-11T22:27:20.707+05:302011-04-11T22:27:20.707+05:30Sir, in a perverse way, shouldn't the institut...Sir, in a perverse way, shouldn't the institute be a co-guarantor (if not the sole guarantor) of the loan. It is mostly because of the institute's education, reputation, & placement process that the student will land up a job and will be in a position to repay the loan.<br /><br />For cases where the institute is a co-guarantor the loan can be given out in tranches. There can be yearly benchmarks for the student to meet to be able to get the next tranch of loan payment.<br /><br />The benchmarks can be quantitative and qualitative to help the institute ascertain whether the student will complete the degree with a certain CGPA & whether he will possess the behavioral attributes to get placed in an adequately paying job.Saurabh Nandahttps://www.blogger.com/profile/00867453089820169282noreply@blogger.comtag:blogger.com,1999:blog-4273139713770751485.post-47310463216626734382011-04-04T20:47:47.471+05:302011-04-04T20:47:47.471+05:30Dr Sanghi,
Education loans are not really that su...Dr Sanghi,<br /><br />Education loans are not really that successful as they are being made out to be. My experience tells me that banks are more interested in giving out loans to students whose parents can actually afford to pay the fee. I could not get the loan (though I didn't try too hard) even after getting into IITK, while most of my batchmates who took loans were from pretty good financial background.Amit Srivastavahttps://www.blogger.com/profile/13044393048627449184noreply@blogger.comtag:blogger.com,1999:blog-4273139713770751485.post-59020897003906065012011-03-22T21:58:09.623+05:302011-03-22T21:58:09.623+05:30In this era of LinkdIn and Facebook, it may prove ...In this era of LinkdIn and Facebook, it may prove easier to discourage defaulters than previously. Most professionals need to be on LinkdIn or similar networks for professional reasons. Banks could post defaulters on such networks.Lhttps://www.blogger.com/profile/03186014514110985045noreply@blogger.com