Everything You Need to Know About Education Loan for MBA in India
Education is the most valuable treasure that a person can keep without giving any interest and collateral security. And over the years this knowledge becomes a powerful tool to success and prosperity. Today, availing the educational service is not free of cost, based on the course one chooses to pursue the fee can vary a lot. When it comes to MBA/PGDM programs the fee structure varies based on the college. The courses structure, the infrastructure facilities, the faculty experience, and the college reputation etc contribute significantly to the fee structure of the program.
It was found in the recent surveys that as the students clear through the GD/PI rounds and the results get announced many MBA aspirants back out when they find out about the rising fees of the program every year. The MBA admission in India starts from 2 lakh and can go up to 20 lakhs. This amount is not feasible for many aspirants and they need to start thinking about planning their finances. One can not drop their dream for money and stop getting into a B-school for chasing their dream career. This is the time when education loan can be beneficial to make one’s wish come true. In this post, we are discussing the education loan for MBA.
Every bank provides an educational loan to the needy based on the fees structure of the institution the student chooses. They are many banks who collaborate with many premier institutes to help students to easily avail the loan from the bank. They offer special interest rate to the students which will be normally less than the market rate of interest. There are many students who fear that if they can repay the amount or about the interest rate of the loan. This article proposes to provide all details about educational loan and procedure for availing them and all the major banks providing the loan.
Eligibility to Avail MBA Education Loan
The most basic level criteria for availing education loan is to be an Indian citizen should have documentary proof of secured admission in the B-school. The banks will give loan to individuals in the 16- 35 years age group. It is easy to get a loan if you had secured an admission loan in top management schools like IIM (Indian Institute of Management) and other reputed colleges. In such cases there are many banks especially private banks themselves will contact the students to provide a loan with very attractive offers. The institute themselves may share the contact details of the students they have admitted with banks. So, it is easy to decide when there many banks reaching us to the doorstep to carry out the loan formalities for the aspirants.
Top Education Loan Provider in India for MBA Admission
|Bank Name||Max loan amt||Interest Rate||Payback Period|
|1.||State bank of India||Up to 30 lakh for top institutes||9.35% – 10.70%
Girls concessions 0.50%
|7 to 12 Years|
|2.||Oriental Bank of Commerce||Up to 25 Lakhs for category A Institutes,
Up to 10 Lakhs for Category B Institutes
|10.25% – 10.75%
Concession of 0.50% for Girls and Reservation Category
|Up to 15 Years|
|3||Allahabad Bank||Up to 25 Lakhs for category A Institutes||For IIMs: 8 %
|4||Bank of Baroda||10 Lakhs, up to 20 Lakhs for top Institutes||10.5%-11.5%
Girls have concession up to 0.50% and 1.00% for students of top B-schools
|5||Canara Bank||Up to 20 Lakhs||10.65%||10-15Years|
|6||Axis Bank||Up to 10 Lakhs||15%
Concession of 0.50% for Girls
|7||Punjab National Bank||Up to 20 Lakh
|8.15%- 8.75%||10 to 15 Years|
|8||IDBI Bank||Up to 10 Lakhs||9.7%||10 to 15 Years|
|9||ICICI Bank||Up to 10 Lakhs||Decided by the bank upon amount usage.
Girls will have 0.50% concession
|5 to 7 Years|
|10||Avanse DHFL||Up to 10 Lakhs||11.5%||10 Years|
|11||Central Bank of India||30 Lakhs||9%
Girls and SC/ST candidates will have 0.50% concession
|12||HDFC Bank||Up to 10 Lakhs||14.50%||15 Years|
Expenses Covered under Education Loan for MBA
The students inquire a lot of expenses while pursuing their MBA program along with the tuition fees. The banks providing the loan to the students covers 100 per cent of the basic course fee. These expenses will be paid by the bank once the expense is receipt of the payment is submitted to the bank office. The below listed are the expenses covered under the loan amount, they are:
- The fee is payable to the institute like the tuition fees.
- Expenses incurred for the accommodation I, e. hostel fee.
- The exam fee, Library and Laboratory fee.
- Travel expenses/passage money for studies abroad.
- Purchase of books/ equipment’s/instruments/uniforms/ computer at a reasonable cost and other study material.
- Caution deposit, building fund, refundable deposits supported by receipts or bills.
- All the expenses required to complete the course like study tours, project work, thesis etc.
- Cost of two-wheelers is also covered under the part of education loan by leading banks like SBI.
The SBI Global Ed-Vantage Loan Scheme is a loan scheme provided by State Bank of India gives loan to students ranging from Rs. 20 Lakhs to Rs.1.5 crore with an interest rate of 9.5% to 10%. Under this scheme, the applicant may get 90% coverage for the expenses such as tuition fee and the remaining 10% will have to be paid by themselves.
Documents required to apply for education loan for MBA
- Application for the loan in bank’s format
- Proof of admission into the courses
- Passport size photos
- Address and age proof if you are not an existing customer of the bank.
- Copies of mark sheet in the qualifying exams.
- Schedule of expenses for the courses like the document providing details about course fee.
- Statement of bank accounts for the last six months of borrower/co-borrower.
- Income tax assessment order, not more than two-years-old.
- A brief statement of assets and liabilities of the borrower.
Things to be remembered before taking an educational loan
- Make a clear picture of all the expected expenses.
- Look for all the options where you can get the maximum benefit.
- Compare the different scheme provided by the banks.
- It is better to choose schemes with a shorter repayment period.
- Try to pay interest during the course period.
Steps to Apply for the Education Loan
The procedure for applying to the educational loan has evolved significantly after the advent of technology. The steps are much easier compared to the manual works and are conveniently available at the finger tip of the applicant. The steps to apply for the loan is almost same for every bank and they are as follows:
- The applicant had to submit an online education loan application form.
- The bank official will get in touch with the students and parents to answer questions.
An official from the bank may visit the applicant’s home and get the application form signed along with the supporting proofs.
The applicant must submit the completed education loan application with all the required documents.
- The bank’s credit team will review the application form and underwrite the application form.
Once these procedures are finished the bank will approve the loan if not ask for further details or document from the applicant.
The agreement is made with the applicant signature on it and all the loan disbursement procedures will be finished.
The loan amount will be deposited in the bank account electronically either with students or the institutes as required.
Education Loan repayment
The student has to repay the loan after one year of the course completion or six months after securing a job whichever is earlier. The period in between is called a moratorium. The probable repayment period of an education loan is five to seven years which may vary according to the bank’s terms and policies.
Benefits Income-Tax Act:
Under the section80(E) of the Income Tax Act of India, the education loan borrower gets a benefit out of it.
Central Sector Interest Subsidy Scheme,2009 on Model Education Loan Scheme (MELS) of IBA
Under this scheme, the Economically Weaker Section who has annual income up to 4.5 Lakhs from all sources is eligible to avail the interest subsidy. This subsidy is available during the moratorium and it is available only once.
Vidya Lakshmi Portal
The Vidya Lakshmi Portal is the online educational loan portal handled by NSDL e-Governance Infrastructure Limited, Mumbai. This portal is linked with the scheduled banks and students from every corner can apply easily through the portal. The applicant can get in touch with every bank and it is the gateway to the banks as the students can follow-up the application process. They can easily track from the inception stage of loan application to the sanction of the loan. The applicant will get information about the procedures, and information documents required from the portal itself. So these are the things you need to know about education loan for MBA in India.