What is financial aid?

It is the financial support that a student is offered to pay his tuition fees and other necessary expenses. These include scholarships, loans, grants, work-study programs, government aided loans, private scholarships etc. The type of financial aid given to a student depends on their financial needs, merit, available funds and classifications. Financial aid can be offered by government agencies, individual schools and other sources.

What are the types of financial aid?

There are basically two types of financial aids need based and non need based

 Need based: When the students do not have sufficient funds to carry on with their studies beyond high school, they are considered for need based financial aid. For this, the students must meet other criteria as well. The financial aid is decided after checking the financial status of your family. Here the primary requirement is the need for finance to support your further studies.

 Non need based: This is also known as merit based financial aid. A student receives this type of financial aid in recognition of his or her academic abilities, special skills and talents.


How to apply for financial aid?

There are certain situations when you cannot afford for an expensive education. Through financial aid, you can get into the institution of your choice. There are many students who apply for financial aid every year by filling financial aid forms. You will have the do the following to apply for financial aid:

 Firstly check for the financial aid forms between the months of 1st January to 30th June.

 Then fill out the Free Application For Federal Student Aid Form which is also known as (FAFSA). This can be obtained from the office of Post- Secondary Education. This financial aid form also includes student aid report which is used to determine your expected family contribution.

How to fill financial aid forms?

 In most of the financial aid forms, you will asked to fill in your personal details like your name, address, social security number, marital status, citizenship status and the type of degree you earned in high school.

 You will also be asked to give details of family’s financial history like total family income, number of dependant members and their educational background.

 Most of the financial aid forms give you the option to select about six schools in which you would like to apply. You can make the changes if the schools do not provide any financial aid.

 Before submitting the application forms sign it and remember to photocopy every sheet for future reference.

Once you fill the financial aid forms, you will have to wait till your application gets approved. Some private institutions will ask you to fill more than one financial aid forms. Before you begin to fill the financial aid forms, you should look for the important deadlines and gather all necessary documents which are required to submit the form. Once your application gets approved you will receive financial aid award letters from different institutions stating the amount and the type of financial aid given to you.

Banks to increase profits plan to expand savings accounts biz

Commercial banks with of view to increase their profits and bottom lines have started moving towards CASA (current account saving account). Earlier the banks were only interested in big ticket high cost deposits.

The Indian bank has this year cut down in its high cost deposit portfolio significantly. MS Sundara Rajan, CMD, Indian Bank informed, "We have shed close to Rs 2,200 crore high cost deposits this fiscal and we would not be renewing high cost deposits that come up this month".

Out of the total deposits organized by bank for the last fiscal year (2007-08) the high cost deposits stood at 11%. However bank is trying to bring this down to less than 7% by the end of the current fiscal. Rajan explained, "The need of the hour is to bring down the cost of deposits. We have to reduce costs and improve yields".

Likewise, Indian Overseas Bank is also concentrating on CASA. YL Madan, ED pointed out, "When it comes to quoting rates on high cost deposits, banks are not that aggressive now". On high deposits 7.5%-8%, interest rate is offered while on saving accounts only3.5% interest is given. But bankers are of view that ultimately borrowers are going to be the achievers as lending rates are falling.

In metro cities people prefer terms deposit as compared to CASA. Therefore banks are seeing towards semi-urban and rural branches for attaining growth in CASA. For instance, Vijaya Bank has got approval for 89 new branches to be opened this year besides have 11 old licenses thus is expecting higher CASA contribution from new branches especially those in semi urban and rural areas.

Moreover the smaller banks whose big source of income comes from term deposits are also looking at CASA. VS Reddy, MD, Lakshmi Vilas Bank told, "While in case of term deposits, the asset liability management becomes easier on account of time period involved, CASA provides greater profitability even though it’s a violently fluctuating portfolio".

At present about 15% of the bank's total deposits is obtained by CASA and it is believed that this figure may move up to 18% by end of next fiscal (2009-10). With a view to strengthen its CASA base, Lakshmi Vilas Bank has launched two new savings bank and current account products.

Indian Overseas Bank has planned to expand its CASA base by making use of mobile and net banking and ATM facilities. Currently Indian Bank is increasing new accounts through a current and saving account campaign. Rajan informed, "We can't depend on walk-in customers anymore". From last month bank has introduced a HNI (high net worth account campaign) and has plans to mobilize one lakh new accounts soon. Though in the last quarter people when banks were offering 10% interest rate on FDs rates people had move their funds from savings account to FDs.

Tata Capital to get into private equity biz by end of Q1 FY’10

Tata Capital financial services firm has a proposal of introducing its private equity business by the end of first quarter of the next financial year.

Tata Capital Managing Director and CEO Praveen P Kadle informed reporters, "We will be launching our private equity business by the end of first quarter of the next financial year".

The funds for PE business will be provided by Tata Capital's own and third-party investments.

Kadle notified that the company is having talks with domestic and international players for third-party investments in the PE business.

Tata Capital Head Investment Banking J Niranjan told, "The first round of funding by the PE firm will be around 350-500 million dollar ....the fund will invest across all sectors".

Tata Capital, is a wholly-owned subsidiary of Tata Sons, had previously selected Shailendra Bhandari as head of its private equity business.

Bhandari, earlier had held the position of Managing Director and CEO of Centurion Bank of Punjab, and has also held leadership positions in Citibank, HDFC Bank and in ICICI Prudential Asset Management Company, he was the CEO.

Kadle added the PE business in the beginning would look at the non-listed companies in the Tata ecosystem and divestment opportunities after that.

Currently, Tata Capital has launched public issue of secured non-convertible debentures (NCDs) through which it is likely to raise at least Rs 500 crore.

In the issue there is an option to retain over-subscription of up to Rs 1,000 crore and the closing date of the issue will be February 24 or the date might be decided at the discretion of the Committee of Directors of Tata Capital.

Get a personal loan through ATM

When you go to withdraw cash from ATM of private bank you might see a message “You are eligible for a pre-approved personal loan of Rs 5 lakh. Press yes if you are interested.” Some to the leading private banks are now leveraging technology to ensure quality due diligence and low-cost marketing.

Now banks have started replacing the traditional agency or franchisee-based marketing of retail loans, with enterprise resource planning solutions and ATMs.

In an interview to Business Line Mr Sanjeev Patel, Executive Vice-President & Head, Direct Banking Channels, HDFC Bank told, “Marketing retail products through ATMs is non-intrusive and customer-friendly. As we have a data-base of customer transactions, we make an estimate of his needs and offer a retail product. If there is a confirmation from the customer, we go ahead with other procedures”.

“In ATM-based marketing, the cost of contacting the customer through out-bound mechanism is lesser. However, it cannot fully replace physical verification prior to loan sanctions.”

The trend is being followed due to recent dip in the direct marketing expenses of the banks. In the second quarter the direct marketing expenses of ICICI bank have decreased by more than half. For the three month period ending September 30, 2008, its expenses were at Rs 144.50 crore as compared with Rs 385 crore in the year-ago period.

According to experts discretely from being customer-friendly, the new marketing tools will also make certain quality assets for the banks. A senior ICICI bank official said, “Due to current economic conditions, retail advances (especially personal loans) to the non-customers of the bank have come to a negligible level. We first ensure that there are no defaults and check-bounces in a customer’s account before offering a loan.”

He further added this will also help in tackling the issue of growing non-performing assets.

Last week, Reserve Bank of India has warned banks to make sure credit quality as the bad loans in new generation private banks and foreign banks are “more noticeable”.

Some customers are satisfied with the tech-marketing. “When I applied through an ATM of ICICI Bank, I got a follow-up call within a day and loan was sanctioned in three days. As checking the account transaction is vital in loan-approval, it is good that they are at it before offering the loan,” said Mr H.M. Murthy, a senior official in the Railways.