Now-a-days, MBA has become the hottest career option among undergraduates 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 education loan! Nevertheless, it is a long, hectic and tiring process to get education loan sanctioned.
So, how to make the process of getting MBA education loan quickly and without any type of hassle? Let’s find out everything about it in this article:
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:
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 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.
Know the Loan Amount available for your MBA programme
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 interests rates and 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.
Know the Expenses covered under MBA Education Loan
After evaluating the amount of education loan you can get for your MBA education, the second thing you must check are 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
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, concessionary rate of interest, clubbing of co borrower, need of margin and security. This will help them in making an informed choice.
Documents required for MBA education loan
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 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 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 marksheets
- 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.
Steps to Apply for MBA Education Loan
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, candidate needs to visit the website of their respective bank and apply online. For 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.
While majority of the terms and conditions related to the education loan are already pre-decided as part of the loan scheme agreement, there are a few aspects that can be negotiated with the bank. Some of the important factors that you must negotiate or discuss with your bank for MBA education loan are listed below:
- No repayment of loan during the MBA course period
- Relief in loan interest, if repayment is done before course completion
- Reduction in loan interest rate, if parents become co-borrowers
- No loan processing fees
- Rate of Interest
- Negotiate the margin amount, if applicable
MBA education loan – Collateral
As per the general trend, an MBA course from tier-1 or the top 50 B-schools in India, might cost anywhere between Rs 12 to 25 lakhs. However, not every MBA course is entitled for 100% funding through education loans from banks or financial institutions. MBA education loans upto amount Rs 10 lakhs are easily processed and sanctioned.
Banks can even fund 100% of the MBA education, depending upon the loan amount and the B-school from where the student is planning to pursue MBA. The majority of banks do not require any margin money for an education loan up to Rs 4 lakhs. For loans ranging from Rs 4 lakhs to 8 lakhs, a third party guarantee is required for the processing of the education loan. For loans exceeding Rs 8 lakhs, banks generally ask for collateral.
However, students must keep in mind that, margin money, guarantee and collateral are an option and have to be provided only if specifically described in the loan scheme. Many banks also offer MBA education loans which do not require any of these three components.
MBA Education loan is the prefect 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. To know more about MBA funding and education loans, please log on to www.jagranjosh.com/mba.
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