September 20, 2018
With the cost of education rising rapidly, most students are opting for an educational
loan for MBA as well as other courses, for study both in India and abroad. While
the traditional means to fund education was by liquidating assets such as jewellery
or property, the same doesn’t apply today. With a number of financial institutions
including new-age NBFCs that focus on executive education loan, it is now easier
to get an education loan for MBA than earlier.
While you may evaluate several lenders for your executive education loan, here are
some tips that will help you get the best education loan for MBA:
Planning is key
When you’re planning to study further you tend to begin preparations months in advance.
It’s only wise to start planning for your executive education loan at the same
time so that you can determine the amount you require. Further, some universities
require proof of funds prior to admission, and having an approved educational
loan for MBA in place at an early stage is helpful.
Deciding on the loan amount
While a lender may offer up to 100 percent of the loan amount you have applied for,
it is best to exercise prudence and avail of only as much as you need. Do check
ahead with the university what your chances of obtaining funding by way of a
scholarship or assistantship are, and up to what extent. Accordingly, you could
avail of the remaining amount from the lender. Ultimately, remember that a larger
amount will mean a larger outgoing in terms of EMI once you start loan repayment.
Opting for the right programme
When you apply for an education loan for MBA, remember that a lender is more willing
to extend a loan to an applicant who has the best career prospects at the end
of course completion. You need to keep in mind that once the moratorium period
ends, you would need to begin loan repayment, which is possible once you have
good job opportunities.
Choosing the right university
Choosing the right university is as important as opting for the right programme.
While some universities may be ranked favourably they may not have a good placement
record, which is crucial when it comes to landing a job post course completion.
Also, make sure you do your research thoroughly and do not choose a university
solely for ease of admission. There have been harrowing instances wherein universities
have been blacklisted, and consequently students have paid a heavy price both
in terms of time and money.
Budgeting is important
While you may avail of an education loan for MBA, remember that you will have an
EMI outgoing once you start earning. The sooner you begin repayment, lesser will
be the interest amount payable on the loan. This brings down the overall cost
of your loan in the long run. Plus, it is prudent to plan your monthly budget,
keeping in mind this outgoing. The ideal way, since this is likely to be your
first loan, would be to cut corners on unnecessary spends and focus on repaying
the loan as quickly as you can.
Choosing the right lender
While there are more lenders than ever before to provide an education loan for MBA,
remember that no two students have the same loan requirement. Choose the lender
who is willing to work with you at every step of the education loan for MBA process
and beyond. Your interaction with the education loan provider lasts until the
loan is live, which means that you should be able to reach out to them at any
point during this period, and vice versa. Your loan provider should also be able
to guide and point you towards the loan that best suits your requirement.
Understanding your loan
When you opt for an education loan for MBA, remember that you should understand the
loan and all it entails in depth. Ask the lender about the rate of interest,
whether you would be required to furnish collateral and what the other terms
and conditions of the loan are. In other words, don’t forget to read the fine
print! It is also good to obtain a copy of the amortisation schedule to familiarise
yourself with the loan repayment terms.
Availing of the loan in tranches
Instead of opting for the entire amount in one go for your education loan for MBA,
it is wiser to request for loan disbursal in tranches, or as and when the money
is required. Typically, you would be required to pay tuition fees at the start
of each semester, which is when you could request for disbursal of the subsequent
tranche. This helps reduce the interest burden, and make the loan cost less once
you begin repayment.
Understanding the tax benefits
When you avail of an education loan for MBA from a lender that is certified by the
regulatory authorities to offer you tax relief, you can claim the benefit under
Section 80E of the Income Tax Act. These benefits can be availed on the interest
you pay on the loan for up to eight years, or until you pay off the interest,
whichever is earlier. This helps bring down the cost of your loan.
Working out a repayment strategy
Put together a repayment strategy before your EMIs begin. Any extra cash in hand,
a bonus or increment from your salary could go towards loan repayment so that
you can pay off the loan comfortably. Plan well, so that you are also able to
set aside some amount, however small, each month for the long term.
Doing your homework prior to availing an education loan for MBA is crucial, so that
you can get yourself the best executive education loan out there. Once your educational
loan for MBA has been approved, be sure to get your paperwork in place so that
maintaining documentation for your records is easy, as is tax filing.
With an executive education loan, make your dreams of quality higher education come