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calenderFeb 8, 2024

Everything you need to know about Education Loans for MBA

Master of Business Administration (MBA) is a popular choice among students and working professionals who plan to make a career in the business and corporate world. It offers manager-level career options and leads to higher management positions. An Education Loan for MBA helps students meet this programme's high cost of education.

Indian students have a wide range of choices of institutions offering MBA or equivalent courses such as Post Graduate Diploma in Business Management (PGDBM). We all know about the Indian Institute of Management (IIM) and its sought-after programmes! Besides, there are several other prestigious management colleges across the country. MBA student loans allow fresh graduates with management career aspirations to pursue these courses and achieve their dreams.

Many students opt for an international MBA programme, which can be even more expensive. Banks and financial institutions such as Axis Bank offer easy study loans for MBAs that help students pursue this programme without worrying about the costs.

Education Loan for MBA: Eligibility

Understanding the eligibility requirements for MBA student loans can help you know if the Education Loan is an option for you or not. It helps you plan to meet the financial requirements of your management education. What are the eligibility requirements for an Education Loan for an MBA?

We will discuss the documents required for study loan for MBA without collateral later in this article. Here is a list of general eligibility requirements for an MBA loan.

  • You should be a citizen of India
  • You have secured admission to an MBA/PGDBM college
  • Your co-applicant should be able to produce income-proof
  • Your Cibil score should be healthy – typically, above 600
  • Most banks and financial institutions would place a cap on the maximum as for MBA student loans

Expenses covered under Education Loan

An Education Loan for MBA would cover most of the expenses you will incur during the two-year academic programme. However, it might not cover sundry expenses such as buying books, field visits, library subscriptions, etc. But it depends on the lenders, and you can always ask for clarity on these issues before you apply for the loan. Let's have a look at what MBA student loans would cover in most cases:

Tuition fees: The cost of an MBA programme, which includes admission fees, tuition fees, and other fees, can be overwhelming. So, Education Loans for MBA from most lenders would cover these college fees.

Living expenses: After college fees, living costs can be another big head of expenditure for an MBA student. MBA student loans cover accommodation rental, food, and other day-to-day expenses.

Travel expenses: Travel expenses can be significant if you are doing your MBA from abroad. In all cases, the student loan would cover travel expenses. However, you can discuss and negotiate this with the lender.

Health insurance: In the case of overseas education, health insurance would be mandatory. And it's always good to have health insurance to cover sudden and emergency health incidents. The Education Loan would cover the cost of buying health insurance.

Documents required for Education Loan for MBA without collateral

Knowing the documents required for Education Loan for MBA can push you to start preparing well in time. It saves you from the last-minute rush for these documents when you have little time to deposit the fees and secure your admission.

KYC documents: These are identity and address proof documents. A passport, Aadhar Card, and Voter ID card should work as identity proof, while a utility bill can be a suitable document to prove your address.

Bank statement: Bank passbook or bank statement of the last six months.

Admission letter: You should be able to produce a copy of the admission letter from the institute, fee structure and payment schedules.

Education certificates: The bank wants to see your academic performance and continuity. So, be ready to produce copies of mark sheets and certificates of SSC, HSC, and degree programmes.

MBA Education Loan financing and collateral requirement

Most banks and financial institutions offering MBA Education Loans process these applications swiftly. They will also tell you about collateral requirements, if any. Generally, above a maximum threshold of the loan amount, you will require collaterals to secure your loan. The exact loan amount may vary from one lender to another. For example, some lenders would give you an Education Loan for an MBA without collateral up to ₹4 lakh. However, you can find out from the lender full details about the study loan for an MBA without collateral.

How to get an Education Loan for MBA

You can apply for an MBA Education Loan online and offline. With lenders having various Education Loan plans, getting an Education Loan for MBA in India should be easy.

An essential requirement here will be securing admission to a premier MBA college. Keeping an eye on repayments, lenders would like to finance your study loan for an MBA in India from an institute that enjoys a high reputation in the job market.

Lenders will use the same parameters for an Education Loan for MBA abroad. However, lenders, such as Axis Bank, offer Education Loans for MBA without collateral security loans up to ₹75 lakh from domestic and international top institutions.

Let's have a detailed look at various Axis Bank Education Loan plans. Prime Abroad offers Education Loans for full-time premier courses abroad with an unsecured loan limit of up to ₹75 lakhs and a loan tenure of up to 15 years. Similarly, Prime Domestic provides Education Loans for selected leading full-time courses in India, offering an unsecured loan of up to ₹75 lakhs and a loan tenure of up to 15 years.

For those seeking GRE-based Funding, an unsecured loan is available for studying abroad based on the GRE score, with a limit of up to ₹50 lakhs. Income-based Funding offers an unsecured loan of up to ₹50 lakhs, determined by the co-applicant's income. Loan for Higher Study offers collateral-free Education Loans for up to ₹7.5 lakhs.

Additionally, there is a provision for a Loan for Working Professionals, providing an unsecured loan of up to ₹40 lakhs to working professionals. Please note that specific terms and conditions apply to these loans, and you should check with Axis Bank's loan executives for a final word about these loans.

Repayment of MBA Education Loan

When it comes to repayment, Education Loans come with a moratorium period during which you are not required to repay the loan. But if you can, it's always good to start paying back your Education Loan as early as possible. It saves you additional interests that accrue on the principal amount.

The EMI will depend on the loan amount, tenure and the Education Loan for MBA interest rate. Generally, when you choose a shorter tenure, the EMI will be relatively high, but the interest rate will be less. You can use an Education Loan for MBA calculator to see all available options regarding loan amount, tenure, interest rate, and EMIs. It will help you identify the best study loan for you.

Why should you take an Education Loan for an MBA?

Taking a study loan for MBA in India or abroad is a good option. As a student, you may not have the financial strength to meet the cost of pursuing an MBA from a reputed institute. However, after completing an MBA and starting a career two years later, you can be in a position to pay back the loan in easy instalments.

Banks and financial institutions understand the opportunity that lies here. They are more than willing to provide MBA student loans to eligible candidates who have secured admission to prestigious management colleges. It lets deserving students pursue their career dreams in business management.

Final Thoughts

An MBA from a premier institute can help you find a great career in business management. However, pursuing an MBA can require a significant amount of money. As a student, you have an option to go for an Education Loan for MBA. However, if you choose this option, finding all the necessary details about Education Loans, including eligibility and document requirements, is essential. Besides, you should learn about interest rates, collateral requirements, and EMIs. With complete preparation, taking an MBA student loan is easy and valuable.

Also Read: Education Loan essentials: What you need to know

FAQs

How much funding can I apply for?

Your funding requirement will depend on the various costs you will incur during your MBA programme. Consider admission and tuition fees and living, travel, and insurance expenses to work out the final MBA loan amount.

Can I apply for an Education Loan before admission to an MBA programme?

Your bank will give you an Education Loan for MBA for a specific programme at an institute where you have secured admission. As admission depends on paying the fees, you can apply for an Education Loan as soon as your institute approves your admission. You will require a copy of the admission letter sent by your institute.

What kind of collaterals are accepted for Education Loan?

Banks accept immovable and liquid assets as collateral security. A house, flat, bungalow, and non-agricultural land qualify for immovable collateral security. Fixed deposits, insurance policies, mutual funds, and government bonds qualify for liquid collateral security. You can use any or a combination of them for your loan collateral.

What is the tenure of Education Loan?

Usually, the tenure of an Education Loan varies between 10 years and 15 years. It also depends on the loan amount and your negotiation with the bank.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.