Published on August 21st, 2018
Master’s in Business Administration (MBA) is one of the most sought-after professional degree courses by the graduate students. Everybody dreams of studying in the much-coveted B-schools of the nation namely the IIMs.
Students study religiously for the entrance examination and leave no stone unturned to get admit in the business school of their dream.
However, clearing CAT is a cumbersome task. But a bigger worry awaits after the entrance exam gets cleared. MBA is an expensive degree, especially for the middle-class people.
Funding the course is a really difficult job. Along with the admit letter one also needs proper resources for funding the MBA program in order to study in the college of their dreams.
The fee of most of the B-schools is always skyrocketing with an increment in each successive year. For investing in such an expensive education, one needs proper funding and resources.
In such scenarios, education loans seem as the most viable option. Most of the banks and financial institutions lend education loans to students at slashed rates of interest. Some banks also have tie-ups with premier B-schools like the IIMs, XLRI etc.
Before applying for the loan, one must know everything about it so that the huge sum does not seem like a burden later on. Taking a loan might look like a cumbersome process which is why we have prepared a complete guide for loan application below:
Who Can Apply For The Loan?
To apply for an education loan, a candidate must be the citizen of India and should be between 16-35 years of age. For the candidates getting admission in premium B-schools of the country, banks even call the students themselves.
The contact and account details of the candidate are shared by the institutions with the banks that they collaborate with.
Expenses Covered Under the Loan
Before applying for the loan, it is very important to choose the right bank that includes most or all of the major expenditures during the course. The expenditures that need to be covered include the following:
- Tuition Fee
- Hostel/ Accommodation Fee
- Library and Laboratory expenses
- Examination fee
- Laptop and stationery
- Travel expenses, Passage money for overseas studies
- Security Deposits
- Project work expenses
- Study tour expenses
In some leading banks such as SBI, 90% of these expenses are taken care of while the remaining 10% are expected to be borne by the candidate.
Rate of Interest
The interest rates levied on candidates for education loans are significantly lower than the ongoing market rates. The rates range between 8.5%- 10% for most of the leading banks and financial institutions. Most of the banks provide concession in the rates of interest for the female applicants.
There are a few documents that need to be kept handy while applying for the loan:
- Proof of admission by the B-school
- Mark sheet of highest qualification
- Loan application in bank’s format
- Asset and liability statement
- Estimate of expenses and fee payment schedule at the institute
- Passport size photographs
- Income tax assessment records (not earlier than 2 years)
- Identity proof
- Bank statement of last 6 months
Guarantee or Collateral Requirement
Usually, banks do not provide 100% funding for MBA solely on the basis of CAT results. For most of the banks, there is no requirement of collateral for a loan amount less than INR 4 lakhs.
For loans between INR 4-7 lakhs, a third party guarantee is required. If the loan amount exceeds INR 7.5 lakhs, banks ask for collateral.
However, some leading banks like SBI do not ask for collateral for the candidates getting admission in the premium business school.
The repayment process begins after six months of job or one year of course completion whichever is earlier. The average duration ranges from 1-9 years for the repayment.
The repayment period can be extended beyond the above-said range depending on bank’s terms and conditions.
Steps To Be Followed To Apply for the Loan
- Visit the official website of the bank and fill the online application form by providing all the valid details.
- After the form is filled, bank will follow up with the student and the parents/guardians to answer some questions.
- In a week’s time, a representative from the bank will visit the candidate’s house and collect a signed copy of the application form along with all the supporting documents.
- After all the formalities are completed, bank will send a loan agreement to the student.
- Once the student’s signatures are obtained on the agreement, all the formalities of disbursement will be completed.
- The education loan amount will be transferred to the required bank account electronically.
Funding your MBA education is no more hectic. With the education loans in place, making progress in your professional career will be fostered.