How to Take Education Loan for MBA in India?

Masters in Business Administration (MBA) is of the top programmes in the world that is pursued by millions of students every year. The attractive jobs, high packages, corporate exposure makes the MBA a top-notch choice for the post graduation. Though it is not at all easy to take admission in the top-reputed college of management. After hard work and struggle when you finally get the offer letter for admission, the one thing strikes the students is “How to Finance My MBA?“. No doubt, there are very few colleges who offer quality education in low budget. The majority of colleges has an average fee of Rs 16-18 Lakh. Which is usually not possible to self-finance it. So, it is necessary to make plans to finance the MBA as soon as possible. Let’s look at the various options available to fund your MBA.

How to Finance Your MBA/PGDM?

Even going for the interview, candidates must have clear a picture, “how they will fund their studies?“. Many b-schools ask such questions to the aspirant. So, knowing the various funding options available, you can plan your upcoming study years accordingly.

  1. Self Finance – Candidates can also self-finance their MBA. If you can fund MBA using resources available, then you do need to worry at all. Taking informal loans from friends or family will be counted in this category only.
  2. Education Loan – The best option available in the market today is the education loan. There are many public/ private sector banks that are willing to give loans for the higher studies. The loans come with attractive offers like no collaterals, low-interest rate, security etc.
  3. Scholarship – Many educational institutes offer scholarships to students on the basis of various parameters. It is usually Need-Based or Merit Based. Though scholarships do not cover 100% expenses.

What is the most viable option to fund management studies?

After looking at various options available, education loans are the best choice available to students. Whether you are economically stable or not, loans give you security to pursue higher studies without any hindrance. Moreover, it makes you independent and frees your family from the financial burden.

Benefits of taking an Education Loan

Generally, candidates fear that taking an education loan will burden themselves in the later stages of life. Well, that’s just a myth, today education loans provide great benefits. Some of them include:

  • All Expenses Covered – Loans generally cover 100% expenses like laptops, library fees, living expenses and so on.
  • Very low-interest rate – The interest rate is even low for women candidates.
  • Security – You can complete your studies without taking care of paying monthly or yearly fees.
  • Long Repayment Years – The EMI starts from minimum 06 months after the graduation. It goes up to maximum 12-15 years. The plans vary from banks to banks.
  • Tax Benefit – Students get tax benefit under Section 80(E) of the Income Tax Act of India.

How to Apply for Loan?

When you have decided to take a loan for MBA, the process followed by banks is very quick and smooth.

  • First, apply for the loan by filling an online education loan application form.
  • Then, the bank will contact you and take some necessary information. Following that, you will be asked to show a few documents to initiate the process of education loan.
  • Third, fill and submit the completed form with the required documents.
  • Credit team will review the application and will approve the loan.
  • Complete the rest of formalities and the education expenses will be credited to your account.

What are the Best Banks to Take Education Loan?

There are a plethora of banks that are ready to assist you to finance your MBA. Either you can apply at your referred banks or can take loans easily from a bank associated with the college. Whereas you can also visit digital Portals like Vidhya Lakshmi. Therein, you just need to fill the form and the banks will call you themselves.

Here are some banks to compare the benefits provided by them.

Generally, public sector banks offer more attractive offers as compared to private banks. The following interest rate may change from time to time.

Bank Name Interest Rate Repayment Period Maximum Loan Amount
Allahabad Bank 8%-10% 7 Years 20 Lakhs
Axis Bank 15% 7 Years 10 Lakh
Bank of Baroda 10.5% to 11.5% 5 Years 10-20 Lakhs
Canara Bank 10-15 years 10.65% 20 Lakh
ICICI Bank Not fixed 5-7 Years 10 Lakh
SBI 9.35%-10.70% 7-12 Years 30 Lakh
HDFC Bank 14.50% 15 Years 10 Lakh

Do I Have an Advantage of Taking Educational Loan for a Premier B – School?

Lending an amount for education loan becomes easy if a student is taking admission in premier educational institutes. This not only reduces the interest years but also increases the maximum loan amount. The rates changed as moved to tier-1 colleges to tier-2 colleges and so on.

List of colleges in India for which you can easily take a loan.

  • Indian Institute of Management, Ahmedabad (IIM-A)
  • Indian Institute of Management, Bangalore (IIM-B)
  • Department of Management Studies, Indian Institute of Technology, Delhi
  • Indian Institute of Management, Calcutta (IIM-C)
  • Indian Institute of Management, Lucknow (IIM-L)
  • Faculty of Management Studies, Delhi
  • Indian Institute of Management, Kozhikode (IIM-K)
  • Indian Institute of Management, Indore (IIM-I)
  • Department of Management Studies, Indian Institute of Technology, Madras
  • Indian Institute of Technology, Roorkee
  • Faculty of Management Studies, Delhi
  • XLRI – Xavier School of Management, Jamshedpur

Am I eligible to take an Education Loan?

Banks look at various factors before giving loans to credible creditors. Some of the important factors are:

  • Candidate must be a citizen of India.
  • Appointment Letter from a College.
  • Good Academic background.

Expenses Covered in Education Loan

  • Tuition and Hostel Fee
  • Fees like Library, Mess, Laboratory etc.
  • Study Material, Travel Expenses
  • Laptops or any other essentials necessary for a course.

What are the Collateral Requirements for taking a Loan?

Collateral is defined as the security of the repayment of the loan. Generally, up to Rs 4.00 Lakh, there is no collateral required. After that, you need a third party guarantee. If you are taking admission top premier b-school, then you will not need collateral at all.

How to Repay Loan after the completion of MBA Programme?

The repayment of loan depends on the interest rate, loan amount, and the period of repayment. For example, if you have taken a loan of 25 Lakhs with an interest of 10.00% then you will be paying EMI of Rs 33,037 for 10 Years.

For any doubts, please write us in comments below. 

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