Education Loan for MBA in 2021

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Education Loan for MBA

Pursuing a professional master’s program such as an MBA is no less than an expensive affair. It requires heavy investment upfront in order to reap the benefits afterward. Further, the top B-schools and reputed universities which offer highly-ranked MBA programs operate with an extremely high fee structure. Therefore, funding is one of the major concerns that should be thought over and dealt with before moving forward towards your MBA dream. Several banks and institutions offer education loans for MBA and other professional courses to help individuals pursue their higher education with a minimum of financial constraints. If you are looking to pursue an MBA and searching for suitable education loan options to fund your MBA, here is an insightful blog that will walk you through various aspects of education loans for MBA in India and Abroad.

MBA Fees at Top B-Schools in India 

Almost 80% of MBA students in India apply for MBA education loans to fulfill their ambition of obtaining an MBA. As a result, preparing and acquiring your Education Loan for MBA/PGDM in India is just as crucial as getting accepted! Before we look at MBA education loan possibilities, we need to know the tuition for top MBA institutions and B-schools. Given their costly tuition fee and overall cost of study, it is obvious that without an education loan for MBA, it would be challenging to pursue your MBA program at the best universities and B-schools in India or overseas.

Top Colleges  Average Cost of Study in INR
Institute of Public Enterprise, Hyderabad  8.5 lakhs 
Jaipuria Institute of Management, Lucknow 10.5 lakhs 
Jagdish Sheth School of Management, Bangalore 12 lakhs 
K J Somaiya, Mumbai 16.4 lakhs 
Institute of Management Technology, Ghaziabad 19.5 lakhs 
International Management Institute, Delhi 18.5 lakhs 
S. P. Jain Institute of Management and Research, Mumbai 17-18 lakhs 
Symbiosis Institute of Business Management Pune 20.8 lakhs 
IIFT, Delhi 17.8 lakhs 
Management Development Institute, Gurgaon  21.5 lakhs 
XLRI – Xavier School of Management, Jamshedpur 23.7 lakhs 
IIM Lucknow 19.5 lakhs 
IIM Bangalore 23.5 lakhs 
IIM Calcutta 22.8 lakhs 
IIM Ahmedabad 23 lakhs 

List of National Banks Offering Education Loan for MBA

There are various national banking institutions offering education loan for MBA at exciting interest rates. We have listed down some of the key education loan schemes from different financial institutions which can help you fund your MBA programs:

Bank Amount of Loan  Rate of Interest
State Bank of India 15-30 lakhs 9.35-10.70
Canara Bank 20-36 lakhs 8.65-10.65
Dena Bank 15 lakhs 10-11.08
Punjab National Bank No limit 8.35-10.95
Punjab and Sind Bank 10 lakhs 9.75-10.75
Union Bank of India 30 lakhs 8.65 onwards
Central Bank of India 20 lakhs 8.90-10.4

List of Private Banks and NBFCs Offering Education Loan for MBA

Besides the above public institutions, one must take a look at the offerings of private banks and NBFCs as well. These have been mentioned below:

Bank Amount of Loan Rate of Interest
Avanse Financial Service No limit 11.5
CREDILA  25-30 lakhs 12.5
IDBI Bank Ltd 15-20 lakhs 8.5-10.5
ICICI Bank 50 lakhs 11.5
Axis Bank 75 lakhs 8.8 onwards
Kotak Mahindra Bank 1o lakhs 11.5-24

State Bank of India (SBI Education Loan)

The State Bank of India (SBI) is one of the most reputable banks in the nation which strives to fund the education of the aspirants willing to pursue overseas education. Listed below are some of the features you need for an education loan for MBA- 

  • SBI Global ED-VANTAGE Scheme: It is exclusively for those who want to pursue a course in universities outside India
  • SBI Scholar Loan Scheme: Candidates can apply for admission for the listed 120 institutions (SBI)
  • SBI Student Loan Scheme: Only those who have secured admission to the universities in India and abroad can apply

Oriental Bank of Commerce (OBC)

The OBC bank has officially merged with the Punjab National Bank and even operates under the same name. It has a bunch of education loans with unique features that you can seek to pursue your dream course. Here are some features of this loan-

  • The maximum duration for the loan is 15 years 
  • You can seek a loan of INR 25,00,000 for category A and INR 10,00,00 for category B 
  • There will be no processing fee for charged
  • Bank will not require any sort of collateral security 

HDFC Bank 

The reputable, HDFC bank, offers two separate education loans for MBA which you can apply for. There is a separate loan if you want to pursue an education in India and a separate for abroad. Mentioned below are some of the essential features of the loans available by HDFC bank.

  • Applicants can seek 100% educational assistance from the bank if they apply through the Foreign Education scheme 
  • If you wish to apply for Indian Education Scheme, you can avail up to INR 10,00,000 
  • 15 years is the maximum tenure period for the Indian Education Scheme  

Allahabad Bank 

All the meritious students who intend to seek financial help can apply for the loans available by the Allahabad Bank. following are the important details regarding this loan-

  • For pursuing studies in India, you can seek help worth INR 20 Lakh and for abroad INR 50 Lakh 
  • The loan will cover tuition fee, hostel fee along with expenses to be paid to the college 
  • 0.15% is the processing fee for a loan over INR 10 Lakh for studying in India whereas over INR 20 Lakh is 0.10% 

Bank of Baroda 

There are a plethora of education loans for MBAs at which are offered by the Bank of Baroda. You may refer to the important pointers mentioned above-

  • Baroda Gyan for those willing to seek higher education in India 
  • Broad Education Loan to students of Premier Institution is available for those who are ready to attend university or college mentioned in the List a or List B
  • Baroda Scholar is an exclusive scheme for the study abroad aspirants

Expenses Covered under Education Loan

Always double-check your loan program to see what additional expenditures, outside tuition, are covered. You must also take care of a number of additional issues. There are now a variety of loan programs available that cover a variety of expenditures other than tuition. Among the expenditures covered by the loan are:

  • Fee payable to college and hostel
  • Examination fee
  • Library fee
  • Laboratory fee
  • Travel expenses (if pursuing MBA abroad)
  • Insurance premium for the student, if applicable
  • Purchase of laptop (if required for the course)
  • Other expenses like study tours, project work, or thesis
  • Purchase of books, equipment, instruments
  • Caution deposit, building fund, refundable deposit

Documents Required to Avail Education Loan for MBA 

  • Address and age proof if you are not an existing bank customer
  • Copies of mark sheets in the qualifying exams (CAT/GMAT/IELTS/TOEFL, and more)
  • Schedule of expenses for the course (course prospectus where the course fee is mentioned)
  • Statement of Bank account for the last six months of borrower/co-borrower
  • Income tax assessment order not more than two years old (students’ or parents’)
  • A brief statement of assets and liabilities of the borrower
  • Passport copy
  • Loan application in bank’s format
  • Proof of admission to the course (in India or abroad)
  • Passport size photographs 

NOTE: Document requirements might change depending on the bank’s own laws and regulations, therefore it’s always a good idea to double-check the list of papers needed with the specific bank.

Also Read: Documents Required for Education Loan

Similar Education Loan Options

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Apart from the above-mentioned loan schemes, the following are a few more options one should explore for general as well as specific educational needs:

Education Loan for MBA in USA 

One of the most difficult aspects of pursuing an MBA abroad is raising the necessary funds. Students must be financially robust and secure to pursue an MBA in the United States, especially if the nation is the United States. The cost of living and studying in a nation such as the United States may be expensive, and not everyone can afford it. However, the desire to study abroad and succeed in life will always motivate you to overcome these obstacles. Organizing finances is one of the most important aspects of the entire process. Various banks have recognized this scenario and solved the challenge of funding higher education by providing education and student loans to students wishing to study in the United States. Let’s identify some of these banks and NBFCs that are providing education loans to students so that they can pursue an MBA or any other course abroad. 

Loan schemes  Descriptions 
Oriental Bank of Commerce Education Loan for Study in India and Abroad This loan program is available to students who want to pursue their education in India or abroad. If the student chooses to continue his studies in the United States, the loan amount will be determined by the fee structure of the institute to which he has applied. The feature of this plan is that it does not impose a prepayment penalty on borrowers and also provides insurance coverage. On loans taken for studying abroad, the margin is 15% if the loan amount exceeds INR 4 lakhs.
SBI Global ED-VANTAGE Scheme This loan is available to Indian students who want to study full-time in another country. Students can borrow up to INR 1.5 crore and must return it over a 15-year period. Borrowers must submit collateral to secure this loan, which must be repaid within 6 months after completion of the course.
HDFC Bank Education Loan for Foreign Education This financing plan is available to Indian students who want to study abroad. At a modest rate of interest, the maximum amount accessible under this program is INR 20 lakhs. It also provides tax benefits to the borrower and can be sanctioned prior to admission.
International Student Loan Program (ISLP) This program is created specifically for international students who desire to study in the United States. Students can borrow as little as $1500 with this program and prolong the payback duration up to 25 years. The money provided via this program covers tuition and other expenditures.
CREDILA Credila is a subsidiary of the well-known HDFC bank that offers loans to Indian students who want to study abroad. The loans are offered at a competitive variable rate of interest and maybe repaid over a 10-year period.
Avanse It is one of India’s most popular non-banking financial organizations and is part of the DHFL group. Avanse student loans pay up to 100% of tuition and other expenses. Aside from that, the interest rates are variable, and the processing charge might range from 1% to 2% of the loan amount.
Global Student Loan Corporation  The GSLC provides loans to overseas students to pursue higher education in the United States without the need for a co-signer.

Tips to Keep in Mind While Securing Education Loan for MBA

While applying for an education loan for MBA, there are certain things that you should keep in mind. These have been summarised below.

1. Calculate your Estimated Expense 

Start by calculating your MBA requirements. General MBA funding estimation is based on several major factors, namely, 2 years of fund requirement covering the course, living and travel expenses, repayment in terms of EMI, and the interest rates, amongst others. Apart from these basic areas of outlay, expenses of books, stationery, travel, and conveyance, utilities, etc. must also be accounted for.

2. Look for the Cheapest MBA Loan

There are various national and private banks offering general education loans which fulfill funding requirements for almost all master’s courses. Furthermore, a few other banks operate course-based educational loan schemes as well. While education loans to study abroad are typically costlier than the regular ones offered for studying in Indian colleges, banks offer lucrative benefits in terms of margin, interest rates, early payments, and so forth to attract students. 

3. Compare Different Funding Schemes

Education loan for MBA is offered by banks and financial institutions working in both public and private sectors including Avanse, Central Bank of India, SBI, HDFC, IDBI Bank, Punjab National Bank, and a host of other organizations. One should compare and contrast the offered loan schemes with their respective terms and conditions such as maximum amount granted, concessionary rate of interest, clubbing of co-borrower, need of margin, and security, amongst other things. A few banks may offer interested individuals the provision of an education loan without collateral.

4. Choose a Shorter Repayment Period

Consider decreasing the payback duration of your college loan. Banks have subtly altered and expanded on the same. The burden of interest will be greater over a longer period of time. For example, if you return a loan in 10 years for which the accrued interest is INR 6.4 lakh, the same amount repaid in 7 years would have a total interest of about INR 4.35 lakhs since the interest rate is lower owing to the shorter payback term.

5. Pay Interest During the Course Duration

Try to repay the amount of simple interest that has been charged to your study loan. It would lower the interest burden when interest compounding begins after one year of course completion.

How to Reduce MBA Study Expenses?

While you’re thinking about how to pay for your MBA, it’s a good idea to also think and figure out how you may cut your study costs. Here are some pointers:

Save Money on an International Trip

Many business schools have begun overseas study tours to various foreign colleges or have begun international exchange programs. The cost of an overseas tour or an international exchange program is measured in lakhs. If you can persuade the B-school that you do not want to pursue it, you will almost certainly be excused from it. Furthermore, the value of the foreign trip may not be as high as the B-school claims.

Get a Scholarship and “Negotiate” your Tuition Costs

There are B-schools that will give you a discount, scholarships, fee concessions, and waivers. Check to see how much you can receive. This will minimize your financial load even further while obtaining an MBA.

Work out the Economics

Assuming that the MBA program’s price structure requires a minimum amount of INR 10-15 lakhs to complete the two-year program, you have to analyze and cross-check what amount is realistic in various potential income scenarios.

Loan Repayment Plan Example 

Here’s how you may repay your EMIs of education loan for MBA using your wage or family income:

Let us assume the expected annual gross salary to be: INR 7.5 Lakhs 

Net in hand salary would be INR 5.76 Lakhs (after allowing 20% for various components like Medical Insurance, HRA, etc)

Hence, the net per month salary would be INR 48,000

Maximum recommended education loan for MBA: INR 10 lakhs @11% per annum. 

Maximum recommended EMI: 30% of the net in hand salary

EMI of INR 10 lakhs for 10 years INR 13,700
Total repayment in 10 years INR 16,44,000
Total interest paid on the loan INR (16,44,000 – 10,00,000) = 6,44,000

FAQs

Can I get a student loan for MBA?

Yes, you can! Depending on the amount of MBA admission Education Loan and the category of the school, banks can finance up to 100 percent of the loan. Most banks do not need any margin money for an MBA education loan up to Rs. 4 lakh. A third-party guarantee is necessary for loans of more than Rs 4 lakh and up to Rs 7.5 lakh.

Is it good to take a loan for MBA?

Given the ever-increasing MBA tuition at leading business schools, it is apparent that taking out loans to complete this program requires cautious preparation. For example, suppose you take a loan of Rs. 10 lakh for your MBA, and the average CTC provided in a b-school at the time of placements is somewhere between Rs. 8 lakhs and Rs. 10 lakhs.

Which bank is best for an education loan?

Bank of India, State Bank of India, Kotak Mahindra Bank, HDFC, ICICI, Federal Bank, etc are some of the best banks to avail for education loans to study in India or abroad.

Can I get a 20 lakhs education loan?

Yes! You can get an INR 20 lakhs education loan to pursue your higher studies. The Credit Guarantee Fund for Education Loans (CGFEL) Scheme offers a guarantee for education loans disbursed by banks under the Indian Banks’ Association (IBA) Model Education Loan Scheme. The CGFEL plan allows you to borrow up to Rs 10 lakh for in-country studies and up to Rs 20 lakh for out-of-country studies.

Can I get 1 crore education loan?

ICICI Bank, a private sector lender, today announced ‘Insta Education Loan,’ which allows clients to receive an immediate approval for education loans of up to one crore rupees. This first-of-its-kind service will allow thousands of clients to acquire education loans against their bank’s fixed deposits in a totally digital procedure.

We hope that this blog on education loans for MBA helped you with all the details. There are plenty of other education loans to choose from. If you’re looking to pursue higher education abroad with the help of loans and other scholarship programs, get in touch with us at Leverage Edu and take an informed step towards a rewarding career.

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