Here is some information which I felt would be useful for those who are exploring educational loan options for their MBA.
This is based on information gathered from various B-schools which offer guaranteed loans without co-signor and Indian banks which offer educational loans.
Guaranteed loans or loans without a co-signor mostly cover both years and some schools include living, books & supplies expenses.
Loan documents are also sent to the admitted students so they could show them to the visa officer as proof of funding. If one gets admitted to any B-school which offers a guaranteed loan(most of them have an excellent reputation considering that banks agree to give loans on their word), visa officers should not probe for other funding options beyond the bare minimum. But, it is always better to show whatever funds one can show. There is no advantage in not going prepared with all the funds related papers for the visa interview. On the other hand, one can only show as much as one can. Normally, if one can show funds equivalent to the first year's expenses visa office should be satisfied.
Banks in India would ask the loan requestor to sign an undertaking that she would not be taking any other loans apart from the loan being issued to her for that purpose. This also becomes important as banks issue loans on the basis of the co-signor's payment capacity and the kind of debt burden the co-signor is already under or is planning to go under.
Banks in India look into the payment capacity of the co-signor, normally parents, as a guarantee. Some banks do not allow loans beyond 40% of the liability free income of the co-signor during the repayment period. e.g. if X's father earns Rs.5 lacs per annum and there are no liabilities in terms of exisiting loans and X can pay the loan in 10 years, banks could sanction a loan of upto Rs.20 lacs(which is 40% of Rs.5 lacs X 10 years). However, for any amount over Rs.4 lacs banks would also ask for a collateral of equal or higher value.
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