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PGDM vs MBA and other dilemmas: How to decide?

Q. I hear there was some controversy between AICTE and B-schools and the Supreme Court of India has given some judgement. What is the current status of PGDM programmes?

A. Yes. The AICTE had issued its notification in December 2010 to B-schools listing a new set of rules for the B-schools of the country to follow. The circular instructed not only the doing away with important MBA entrance exams, such as the XAT, ATMA or MICAT, but ascertained that only CAT, MAT or any state government-conducted exams (such as the Maharashtra CET) can serve as entry points to B-schools.

The SC verdict provides relief to more than 500 AICTE-recognised B-schools as they are now at liberty to select students subject to the use any of the entrance tests of CAT, MAT, and XAT for the admissions to the 2011-13 batch and retain the power to conduct their own GD-PI for admissions to the 2011-13 batch.

They are also entitled to charge fee determined by them subject to sharing the details with the fee fixation committee to be formed by the respective state governments.

The verdict has brought big relief to the B-schools that were keeping their fingers crossed and had pressed the stop button for conducting the Admission process for the Academic year 2011-13. Now the admissions process for the 2011-13 batch at B-schools are in full swing.

The admissions at PGDM institutions are currently on.

Q. How should I choose from PGDM by AICTE approved B-school, MBA by University, or a management program by autonomous Institute?

A. Let us analyse the various segments of B-schools. This will help you in picking up the B-school of your choice.

AICTE approved B-schools: Today, you will find there are various colleges that offer PGDM but what makes the difference is the AICTE approval. All India Council for Technical Education is a national level government body that gives approval and certification to PGDM institutes in India after surveying their standards and quality of the technical education. Hence, the students should try for colleges that are AICTE recognised.

The advantages of studying in an AICTE approved B-school are the following: You can get Education Loans from national and private banks, the industry recognition is there. It is easier for you to apply for management jobs in Public Sector Undertakings. And also if you want to go for further higher studies, it will be easier for you.

There are many advantages of AICTE approved B-schools, but these B-schools charge high fees from the students, as the courses are in self-financing mode. As these B-schools do not get any government funding, the cost of operation is passed on to the students. The tuition fee generally ranges from Rs. 6 lakh to 12 lakh for the 2 year full time PGDM course.

University B-schools:

MBA programmes from Universities can be segmented into two: Public funded universities that offer highly subsidized MBA, and private universities offering MBA.

The B-schools under the universities are also an option for MBA aspirants. Most of the major universities in India have a department of management studies or faculty of management studies. The leading University B-schools are JBIMS, University of Mumbai; FMS, University of Delhi; UBS, Panjab University; FMS, Banaras Hindu University and others.

The major advantages of pursuing MBA from these university B-schools is that their fees are highly affordable. At FMS Delhi the fees for two years is around Rs. 21,000. At JBIMS Mumbai the fees for two years is Rs. 2 lakh. These B-schools are comparable to the IIMs in terms of faculty and industry exposure.

The competition is also very high for these B-schools as there are lesser number of seats compared to the AICTE approved B-schools.

Although university B-schools are many, but the good ones are few. Most of the university B-schools, leaving aside the top ones, face challenges on many fronts.

State-level Private Sector Universities/Deemed to Be University: These are also a good option, but the MBA aspirants should be beware as there are many private universities which have been banned by the UGC, and the Deemed to be University of many these have been declared illegal.

But there are some good B-schools under this category as well. The leading ones are Symbiosis University & NMIMS Mumbai which are a Deemed to be University. The other leading private universities which have management departments are NIIT University, and Amity University.

Autonomous Private B-schools: Some institutions do not seek AICTE approval, or any affiliation with any university by choice. These are known as autonomous B-schools. The torch bearer in this category is the Indian School of Business, Hyderabad, which is ranked in the global top 20 B-schools. Some other B-schools in this category are SOIL Gurgaon, and Infinity Business School.

Q. Should I pursue a PGDM or an MBA? What is the difference between the two?

A. In India only those schools which are affiliated to a university can offer an MBA degree. For this reason institutes like JBIMS, PUMBA, FMS can offer MBA degree while IIMs do not. Institutes which are not affiliated to university are autonomous and can offer PGDM (Post Graduate Diploma in Management) degree. These programs are sometime approved by Government accreditation bodies such as AICTE.

The curriculum of the PGDM and MBA degrees are equivalent, although the MBA degree is examination oriented and concentrates on theoretical aspects of management whereas the PGDM is industry-oriented and mainly focuses on building soft skills. While an MBA curriculum is designed by a university, a PGDM course gives freedom to the institute to design its own curriculum. This is sometimes beneficial to the students because institutes can change the curriculum as per the industry requirements and changing business environment. A university affiliated program will essentially follow the university guidelines and changing this curriculum is a very slow process.

Before deciding you should take note of the fact that the leading PDGM institutions provide good industry exposure and the MBA schools provide quality MBA at lower budgets.

Q. I am confused about MBA education loan? How to apply for it?

A. Education loans are provided for studying in India and abroad. There are some specific courses and programs for which you can get the education loan.

For studying in India, most graduate, post graduate and professional courses like engineering, medicine, veterinary, law, dentistry and management; programs from the institutes like Institute of Cost and Work Accountants of India, the Institute of Chartered Accountants of India, the Institute of Chartered Financial Analysts of India; courses recognized by the University Grants Commission, the All India Council for Technical Education, the government, the AIBMS, and the Indian Council for Medical Research and less conventional courses like biotechnology, fashion technology and aviation are offered loans. Banks are usually flexible in approving and disbursing such loans.

For studying abroad, programs like Undergraduate job-oriented professional or technical courses offered by reputed universities; Post-graduate courses like MCA, MBA, MS, etc. Post-graduate courses like MCA, MBA, MS, etc. and courses conducted by CIMA, London, CPA, USA, etc. are qualified for loans.

If you are an employed person and want to better your prospects, you can avail of a loan to get additional educational qualifications and or receive training in modern technology in India or abroad.

Procedure to apply for the loan: The education loan process may vary from bank to bank but there are some fundamental steps. Like in case of every loan, the applicant has to fill in an application form, which may ask for details such as contact details, details relating to academics etc. it is important to fill in accurate information.

Once the applicant, i.e. the student fills in the form, there is a round of personal discussion wherein he or she may be asked various question relating to the academic performance, the course one has selected, probably the institute etc. At this stage, it is very important to be lucid and clear about one’s selection of course and its future potential of generating income. While some banks are known to hold the academic record important, some may give it a slightly lesser attention. This does not go to say that one needs an excellent academic record. But, make sure that there are answers to those mishaps that could have occurred during the academic life.

Unlike other loans where the talk of documents relating to say property, might come in at a later stage and may cause delay-documents are a must. In case of education loans, documents relating to admissions are mandatory even before the bank considers the loan application. The bank will verify the enrollment of the student from the concerned institute. One may also require collateral security such as papers relating to property to be mortgaged if the loan amount is above Rs. 4 lakh.

When one takes some other kind of loan, there is a co-guarantor, especially in case of personal and home loans. For an education loan, a guarantor is mandatory. The guarantor could be an applicant’s parents or guardians. The bank will run a thorough check of the guarantor and his/her credit history before sanctioning the loan. After completion of the process, the loan may be sanctioned or denied.

While the parents or guardians are guarantors or co-borrowers, the student is a necessary borrower of the loan. Once the loan is sanctioned, all the borrowers have to sign a promissory note to the bank.

Once the formalities are completed (additional documents and signed post-dated cheques may be required), the bank will disburse the loan. The bank may disburse the institute fee directly to the concerned institute.

In the current times, availing an education loan has been made even easier. Now, one can apply for an education loan online. The loan will be sanctioned only in principal and the applicant will have to contact the bank for actual approval and disbursement of the education loan.

Eligibility conditions: To be eligible for an education loan, the borrower should be an Indian within the age group of 16 to 26 years. The applicants’ parents or guardian should have a regular source of income so that they are able to repay the loan if the need arises. The applicant should have secured admission in any of the graduate or post-graduate courses offered by an institute which is recognized by UGC or AICTE.

Subsidy on education loans: Government subsidy on education loan is in force with effect from the financial year 2009-2010. Interest subsidy offered by central government on education loans for students from Economically Weaker Sections (EWS) with annual gross parental or family income up to Rs. 4.50 lakh per annum for studies in India. Full interest subsidy will be provided to such students during the moratorium period of the educational loans. The subsidy is applicable for loan taken after April 1, 2009. The certification for the parental income will have to be done by a competent authority at the local level. Most states still have to notify such authority so this scheme is still awaiting proper activation.

Points that a student should keep in mind: The points which student applicants should keep in mind while applying for education loan are eligibility, qualification of the course, expenses covered by the loan and whether you would have to provide collateral or guarantor.

How to choose a bank: While choosing the bank for taking education loan, you should choose the bank on the basis of the factors like low Interest Rate, no prepayment penalty, minimum or no collateral required and flexible repayment options.

courtesy: MBA Universe

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