How to get the best education loan for MBA
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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 true.