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Get detailed information about MBA education loan and where you can get a loan in a low interest and how to proceed to an MBA education loan. Nowadays, MBA has to turn out to be the hottest career option among students as it promises a bright career for students in terms of salary, job satisfaction, and work-life balance. However, the journey from getting admission to an MBA college to pursuing the degree is not that easy. Even if a student gets admission to a top MBA college, the MBA course fee is a thing of concern. The average fee structure of a 2-year full-time MBA Program is Rs. 10 lakhs. In such a situation, what should a candidate do to pay the fee? The better option is to go for an education loan! Yet, it is a long, hectic and tiring process to get education loan sanctioned. The fees of the institutes are a lot and it becomes difficult for the students to arrange for that much amount at one go. But thanks to the education loan providers in India, their efficient loan providing services and hustle free document processing has helped many students to live their dreams with ease.
Introduction to Education Loan Providers: The article discusses the availability of multiple education loan providers in India and aims to provide insights into the top service providers in the sector.
Focus on MBA Education Loans: The emphasis is on MBA education loans, acknowledging the high cost associated with pursuing an MBA program. It suggests that once admission offers are received from prestigious institutions like the 13 IIMs or other renowned B-schools such as MDI, IMT, XLRI, SPJIMR, JBIMS, IMI, NITIE, financial constraints should not hinder students from pursuing their education goals.
Need for Financial Planning: It emphasizes the importance of being smart in assessing financial requirements and finding the best deals from banks or financial institutions to fund the MBA program. This involves understanding one's needs and selecting the most suitable option at a low cost.
A loan helps make you independent. You'll help your parents by financing your MBA by yourself. You'll be able to finance unforeseen expenses related to additional exams to be taken, travel arrangements, laptop computers, and books. For example, suppose your living expenses are higher now since other low-cost campus arrangements might not be working out, or suppose your travel expenses have gone up due to the rate increase, taxes, etc. And yet another reason for availing an education loan is the Tax Benefit. The borrower or co-borrower can avail a benefit under Section 80(E) of Income Tax Act of India.
Different banks and financial institutions have different criteria to fund MBA education in different institutes according to their own ranking. Banks have published their lists of premier B schools and other B schools. Accordingly, loan for MBA education may be available from Rs. 4 lakhs to Rs.20 lakhs depending upon the classification of the institute by the Bank’s own standard. Apart from this, a bank situated in the premises of the particular MBA College may also provide some special funding schemes to pursue MBA from that particular institute.
Loan Amount Discrepancies: The example provided compares education loan offerings at different institutions. For instance, State Bank of India (SBI) may offer a higher loan amount at one institution, such as IIM Ahmedabad (up to Rs. 20 lakhs), compared to another institution like MDI Gurgaon (up to Rs. 15 lakhs). This discrepancy in loan amounts reflects variations in the cost of education and other factors.
Interest Rate Differences: The passage also highlights differences in interest rates for education loans offered by the same bank at different institutions. For example, the interest rate at IIM Ahmedabad may be 10.20%, while at MDI Gurgaon, it may be 10.70%. These differences may be influenced by factors such as the institution's reputation, course duration, and perceived risk.
Easy Loan Access at Prestigious Colleges: Getting an education loan is reportedly easier for students admitted to prestigious colleges such as IIMs, IITs, FMS, XLRI, NITIE, SP Jain Institute of Management, IIFT, among others. These institutions are well-recognized and often have tie-ups with banks or financial institutions to facilitate the loan process for students.
Brochure Inclusions: Colleges typically provide brochures to admitted students, which contain information about the institution's fees and lists of banks willing to provide education loans. This simplifies the loan application process for students by directing them to reliable lending sources.
Even you may get the call from various private banks and Education loan providers (Credila, Avanse). Your contact details are many times share by the institute with the banks they have collaboration with). If you thinking to do MBA from Outside India, then it might be a little difficult and long process. But to get the loan for doing MBA from India, getting the loan is the easy and simple process. So, how to make the process of getting an MBA education loan quickly and without any type of annoyance?
Let’s find out everything about it in this article: In government banks - They have the name of all private and government PG institutes to whom they grant loan at one go, but for rest of Colleges, it gets little difficult to sanction the loan.
Features and Benefits of Education Loans
Listed below are some of the key features and benefits of any education loan offered in India:
Credit approval- Usually, banks take around 15 days to approve an education loan. The time is calculated from the official receipt date of the application as the receipt confirms proper completion of the application in every aspect.
Processing fees: Most banks do not charge any processing fee when a student avails an education loan. Though some lenders might levy a processing fee of 1% or an upfront fee, depending on the type of loan availed.
Moratorium Period: Generally, all lending institutions give a moratorium or holiday period ranging from 6 months to 1-1/2 years after the completion of the course. Repayment of the principal amount for the availed education loan can start after this period or after the borrower has secured a job.
Margin: For loan amounts below Rs.4 lakhs, borrowers do not have to put in any amount and the lender will mostly sanction the entire amount. But for loan amounts higher than that, the applicant will be required to bring in a loan margin amount ranging between 5% and 15% depending on the location of the course study.
Quantum of Loan: The maximum loan amount sanctioned by banks is generally Rs.10 lakhs for education within India and up to Rs.20 lakhs for studies abroad. The minimum loan amount varies across different lending institutions.
Security Collateral: Most banks do not request any security collateral to be provided for education loans taken for an amount below Rs.4 lakhs. Third party guarantee or any other form of security has to be provided by the borrower only for amounts higher than that.
Repayment Tenure: The repayment tenure starts after the moratorium period and can usually go up to 10 years, depending on the bank from where the education loan has been availed.
Type of educational course: The sanctioning of the education loan also depends on the type of course and the institution opted by the student. Education loans given out by most banks cover specific institution types, course types and also countries. Most banks sanctions loans only for approved courses from recognized Indian and foreign institutions.
Tax Benefits: Education loan borrowers can also enjoy tax rebates for the interest they would be paying under Section 80-E of the Income Tax Act, 1961. As per this section, the tax is exempted on the education loan interest rate for eight years since the time when the loan bearer has taken the amount or since when he/she has started repaying the interest, whichever is more.
Insurance: Some banks also offer life insurance cover to the student availing the education loan. This facility, however, might not be available with all banks and might vary from lender to lender. Applicants can inquire with their lending banks to check if the insurance benefit is available when they procure the education loan.
Pre-payment charges: The prepayment charges vary for education loans across different lending institutions. Some banks do not charge any pre-closure fees, while some might impose a prepayment penalty of up to 4%, depending on the time period during which the loan is being closed.
Other fees and charges: Banks might also levy other charges like administration fees and documentation costs, while the education loan application is being made.
Assess Your Financial Needs The first step that you must take in the process of funding your MBA Education in India is to assess your financial needs. Every student would have different needs when it comes to funding their education, while some might have some support from family or savings from their previous job to support them, some college freshers might need complete financial support for MBA education.
The key expenses that you might incur after joining MBA course from top MBA colleges in India are listed below:
| Expense Head | Amount |
| College Fees | Rs 8 to 21 lakhs |
| Boarding & Lodging | Rs 2 to 4 lakhs |
| Study material, laptop, books, and stationery | Rs 1.5 to 2 lakhs |
| Study Tours / Foreign Exchange Programmes | Rs 2 to 3 lakhs |
| Misc. (Clothing, travel, entertainment) | Rs 2 to 3 lakhs |
MBA Education Loan – Eligibility The first and foremost thing is to check whether you are eligible to apply for an education loan or not. The second thing you must check while planning to apply for an education loan for MBA education is to check your eligibility for it. Although loans for MBA courses with reputed B-schools are often very well-funded, it is important that candidates check their eligibility for the loan as given below:
- Citizenship: Loan applicant must be a citizen of India
- Academic: Loan applicant must have documentary proof of securing admission in MBA programme
- Age: The age of loan applicant must be between 16 to 35 years. (preferred, not compulsory)
As far top MBA colleges in India such as IIM Ahmedabad, XLRI or JBIMS are concerned, these colleges also share the details of the candidates who have secured admission in MBA programmes with banks and loan granting agencies. These banks or agencies get in tough the MBA aspirants directly to facilitate the process of education loan. Becoming a guarantor for a loan is a huge responsibility as the guarantor will have a legal obligation to pay in case the borrower defaults on his payment. If the loan amount exceeds INR 4 lacs, then the bank may ask for a guarantee by a third party. If the borrower is not able to repay the loan amount irrespective of the circumstances, in that case, the guarantor holds the liability to repay the complete amount to banks.
This is one of the most important aspects to look after while taking the loan. We always suggest you go through the terms and conditions of the loan carefully and then move ahead with it. This is one factor we really stress upon, as you should always be clear with all the conditions mentioned in the loan agreement. If you have any doubt regarding anything then always consult the experts apart from the bank representative.
Why should I apply for an education loan?
MBA Education loan is the perfect tool to fund your MBA education in India. And knowing all the aspects about education loans, processing details and documentation process will help students approach banks for the loans in a systemic manner. It will also save time and effort on the part of the students as they would be prepared with all the necessary details and documents in advance.
- A loan helps make you independent and helps your parents by financing your MBA by yourself.
- You'll be able to finance unforeseen expenses related to your education, such as travel, a laptop computer, and books.
- You get a tax benefit under Section 80(E) of the Income Tax Act of India.
- Education loans for MBA degree programs often feature low-interest rates and deferred repayment while you are in school.
After evaluating the amount of education loan, you can get for your MBA education, the second thing you must check is the expenses that are covered under the loan. Generally, MBA programmes are residential programmes and therefore students also have other expenses which need to be covered in addition to the tuition fees. Therefore, banks or lending agencies have also started offering additional loan amount to cover non-academic costs or expenses beyond the basic course fee. The different types of expenses covered under MBA education loan include:
- Tuition Fee
- Hostel / Accommodation
- Library & Laboratory Fees
- Examination Fee
- Study Material Cost (Books, equipment, instruments, etc.)
- Security Deposit for institution bills/receipts
- Travel expenses
- Study tour expenses
- Project Work / Thesis expense
Courses Covered under Education Loan
- Diploma/Degree/Graduation/Post-graduation/Degree/Diploma courses from recognised colleges or universities affiliated under UGC/ AICTE/IMC/Govt. etc.
- Regular Diploma or Degree courses offered by top autonomous educational institutes in India like IIM, IIT etc.
- Pure Science, Fine Arts, Engineering, Medicine, Management, Computer science, Agriculture, Architecture, Hotels and hospitality, Design and several other educational disciplines.
- Vocational and other technical training courses such as teacher training, nursing, aviation, shipping, air-hostess etc.
Steps to Apply for an Education Loan for Your MBA Today, most of the banks and NBFCs employ online technology in order to process the loan applications, especially when it comes to MBA education loans. Therefore, in order to successfully apply for the MBA education loan, the candidate needs to visit the website of their respective bank and apply online. For a more detailed explanation, you can read the points given below:
- Step 1: Visit the official website of your bank
- Step 2: Find the education loan section on the website
- Step 3: Find details related to education loan for MBA students
- Step 4: Fill the online application form by providing the necessary information
- Step 5: Submit the form after cross-checking all the details
After submission of the form, the bank will follow up on your loan application with either the students/parents to get additional information which might be needed to process the education loan. The bank will also send their representative to the house of the applicant to collect all the necessary documents that are required for the process. Post this, the bank will process the education loan and send the detailed loan agreement to the student/applicant.
Students need to study this document in detail, as it would contain all the necessary terms and conditions about the MBA education loan. Once satisfied, the student has to sign the loan agreement post which the bank will initiate the disbursement formalities for the loan amount. Today, technology has made it very simple to apply for an education loan. You can apply from anywhere in India. You can even apply before your confirmed admission. It’s just a click away. Most banks provide an online application and support. The process is simple, as illustrated below:
- Student: Complete an online education loan application form
- Bank: Follow up with the student and parents to answer questions
- Bank: A representative visits your house and collects a signed application form with the supporting documents
- Student: Provides a completed education loan application form with all the required supporting documents
- Bank: A credit team will review and underwrite the education loan application
- Bank: Approves the education loan or asks for any additional information required
- Student: Completes the education loan disbursement formalities by signing the education loan agreement
- Bank: Deposits the education loan amount in the required bank account electronically
How do I choose the right loan for me?
Another important aspect that one must consider while picking an MBA programme is the knowing the loan amount available for the MBA programmes in which they have secured admission. Different B-schools and different MBA programmes have different thresholds on the basis of MBA education loan amount is sanctioned for the candidate. For instance, education loan for MBA courses with premium MBA colleges are offered at lower interest’s rates and the comparatively higher loan amount is sanctioned for them, as compared to tier 2 or tier 3 level B-schools.
The list of ranking of top MBA colleges in India and the MBA programmes are published by different banks on their websites from where candidates can come to know the maximum amount of education loan that they can expect to be sanctioned. Depending upon this, they can do the financial planning and arrange the margin or gap amount if required. You can get a lower interest rate on education loan by opting for the following ways:
- Discuss with your college or university whether there is any specific lender who will negotiate on the loan terms. In case they don’t have any lender, enquire about pre-approved loan process to get flexible loan terms and low-interest rates.
- If you plan to pursue studies in any educational institute abroad, you will get better interest rates on the loan as the basic rates of interest in UK and US is currently low compared to India. Moreover, you can also apply to get a loan on campus from your institution after registering for the course.
- In case you or any of your family members have good terms with the bank’s branch manager you can expect to get better loan terms. You can ask for loans at lower interest rates in such cases.
- Some of the financial organizations charge high-interest rate in case of unsecured educational loan above Rs.4 lakh. In such cases, you can lower the rate of the interest rate by offering a security against the loan amount.
Look for banks that offer:
- The full loan amounts
- A low-interest rates
- Security flexibility
- Quick and door-step service
Most banks offer loan approval before your confirmed admission. This helps you show proof of funding for your admission or for a visa. You can get a loan up to 100% of your cost of education. EMI typically starts six months after graduation. You get a tax benefit under Section 80(E) of the Income Tax Act of India.
Compare different Loan Offers
With both, the government and private banks as well as non-banking financial institutes offering education loan for MBA courses at top B-schools in India, students are spoilt for choice when it comes to making the right decision. However, taking an MBA education loan is very similar to buying a product, and therefore, students must assess all the options available to them before signing the dotted line.
Comparing different education loan options available will help students evaluate the different aspects related to the loan offer and understand the financial as well as other implications of the same on their future. Therefore, students must compare the different MBA education options available to them and evaluate them on factors like terms and conditions, maximum amount, the concessionary rate of interest, clubbing of co-borrower, need of margin and security.
This will help them in making an informed choice. Education loan for MBA is available from almost all the banks including Central Bank of India, Dena Bank, Punjab National Bank, State bank of India, Punjab & Sind Bank, Avanse Financial Services, IDBI Bank, HDFC. These loan schemes are known by different names to ascertain the various terms and conditions, maximum amount, the concessionary rate of interest, clubbing of co-borrower, need of margin and security.
SBI has named it as SBI Scholar and SBI student loan; PNB has named it as PNB Pratibha and PNB Saraswati. But our prime objective is not to go for the name but to know where we can get maximum at the minimum interest rate. Let us compare among the prominent loan providers
Procedure
Like any other loan offering, the processing of education loans also involves a detailed documentation process, which can get quite cumbersome at times. In the absence of a proper understanding of the MBA education loan documentation process, students often have to run from pillar to post in order to complete the documentation process. To avoid this, students can follow the simple list of documents that are required for the processing of an MBA education loan which is provided below:
- Loan Application Form in the required format
- Letter of Admission / Proof of Admission to MBA course
- Passport size photographs
- Address proof (both current and permanent)
- Age Proof (birth certificate / LC)
- Academic Documents (Class 10, Class 12, Graduation and Post-Graduation mark sheets
- Bank Account Statement of last 6 months
In addition to these, the bank may ask the candidates to furnish the Income Tax assessment order of the last two years or a brief statement of one’s assets and liabilities as part of the documentation process. Contact the B school campus branch of the bank first. Banks situated in the B school campus have all the relevant details and are more expert in the job. They can issue in-principle sanction letter for the loan amount with all the terms and conditions written therein. You may approach the nearest branch to your residence to get the loan disbursed. Most of the banks have centralized processing centers to sanction the loans.
They then direct the concerned branch to release the funds. Most banks provide an online application with support. After you complete the application form, a bank representative visits your house and collects the application and required supporting documents. A credit team reviews and approves the loan or asks for additional information. Once you sign the education loan agreement, the bank deposits the loan amount in the required bank account. Go to the bank in your city where you or your family member have an account. Apply for education loan. Every bank has their own loan terms, repayment duration, and Interest rates. Interest rate can be floating or fixed.
Floating means Interest rate keeps changing according to the rate cut by RBI. Fixed means your Interest will not change for the entire duration of amortization. Prefer Fixed. Today normal MBA college fee in India is 12–18 Lakh. It’s easy to get a loan of amount 10lakh or less. So, apply for loan 10lakh or less for quick and easy sanction. The one that gives you the maximum loan at minimum fixed interest shall be preferred. Repayment duration totally depends upon your paying capacity in the future.
Normally for 10 Lakh loan, you will end up paying around 16Lakh at 10% interest rate. This means you will pay 17,000 Rs every month for 8 years, once you get postgraduate. The duration of this loan is 10 years. First 2 years, one has to pay only interest and after that, you have to pay EMI + INTEREST for the next 8 years. Once you finalize this basic thing, other Bank documentation instructions will be given by bank officials. And after completing all the formalities, you will get check for your 1st college Instalments.
Conclusion
Education loan is making the dream of the young guns of the country to fulfill their educational aspirations come true. To help the students further, the banks and financial organizations from time to time roll out several exciting offers on the existing loan interest rate. To avail the offers you just need to apply for an education loan directly on the Bank Bazaar portal by following a few simple steps. Once you are found to be eligible for the loan, you will be provided with all the available offers from the websites banking partners from which you can choose the most beneficial one.
MBA education fee in India could be anywhere between Rupees 5 to 20 Lakhs – an amount high enough to get students thinking and plan their finances. But money isn’t something that should stop anyone from getting into their dream B-school, and that’s why it’s time to turn that dream into a reality through an education loan. Thanks to education loans offered by banks and financial schemes of the government, those bright students even from low-income families who can achieve the desired independence and fund their education.
Today, loans for MBA courses are available with almost all major banks. Some banks even have tie-ups with some of the premier institutes. These banks offer the students a special rate of interest which is normally lower than the market rate of interest. You might feel a little apprehensive that education loans are complicated monsters. But worry not. During your ‘free-time’ after you’re done with MBA applications and are awaiting your offer letter anxiously, make use of this in-between time to research thoroughly about education loan options.
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