How To Get An MBA Education Loan For Abroad?
It is common knowledge that pursuing an MBA course abroad is a costly affair. One of the biggest concerns of most candidates is whether they would be able to find the right funding source for the same. Hence, many of them choose to fund their courses with the help of an MBA education loan. The main aim of this blog is to help guide you along the entire process of getting an MBA education loan to fund your higher studies abroad.
There are various lenders who readily agree to provide an MBA education loan and there are many sources on the internet that give you a clear idea about their terms and conditions for education loans. The central idea of this article is to give you a broader look into the process of getting an education loan for MBA abroad.
Watch the latest episode of Loanflix to understand the MBA education loan process in an easier manner.
What Are The Different Types of Lenders Providing an MBA Education Loan?
Before you begin with the application process for an MBA education loan, it is essential to understand the basic details. Due to their lack of information on the topic, many candidates feel that collateral is an integral part of every education loan. However, this is not the case. Education loans are divided into two categories, based on the need of collateral security. The first type is called Secured education loans. These loans are mostly provided by all government banks and some private banks. In order to borrow such loans, candidates are required to pledge certain types of assets as collateral security.
The second type of education loans, of which many candidates are unaware, is unsecured education loan or education loan without collateral. A lot of candidates have this misconception that if they do not own assets that are eligible to be pledged as collateral, their dream of studying abroad with the help of abroad education loans can never happen. Non collateral education loans do not require any collateral, unlike secured loans. Unsecured education loans are mainly provided by private financial institutions called NBFCs (Non Banking Finance Companies). Although private banks, as well as, government banks, do provide non collateral education loans, the top limit of the loan amount offered by NBFCs is higher. Now that you have become somewhat familiar with the basic categories of education loans, let us take a look at the policies of lenders regarding MBA education loans. If you are looking to fund your MBA course with the help of an education loan and require guidance regarding the same, do get in touch with our team today!
MBA Education Loan: Secured/Education Loan With Collateral
Secured education loans or collateral education loans involve collateral security in the form of land/property of a certain category, liquid assets and if the situation demands it, third-party collateral as well. Government banks are the biggest lenders of such loans. Here are a few pros and cons of this type of education loans.
What Are The Challenges Faced By Students When They Apply For Secured Education Loans?
The education loan policies of government banks have made secured loans one of the primary choices of the many candidates who wish to study abroad. Terms like rate of interest, processing fees, the education loan repayment policies, etc., are some of the factors that attract candidates towards these loans. However, what stops many of them from opting for secured education loans for their higher education is:
- The requirement of collateral: As discussed in the previous paragraphs, secured loans are mainly lent on the basis of collateral. Now, there are three different types of assets that can be pledged as collateral against secured loans.
Immovable properties: A house, flat, non-agricultural land, non-commercial properties can be pledged as collateral against education loan.
Liquid security: Liquid assets such as an FD account, Govt. Bonds, life insurance policies purchased from government-approved lenders, etc.
Third-party collateral: This is a lesser-known option offered to candidates who cannot afford to pledge their own assets as collateral. In such a scenario, where candidates do not possess any assets that can be pledged as collateral against abroad education loans, they may choose to pledge a third-party’s (a person other than your family members), as collateral security.
- Delay in the sanction process: One of the biggest reasons why most candidates dread borrowing an education loan from government banks is the super slow speed with which things are implemented there. Due to their ignorance about many of the policy changes made within the bank, a lot of employees feign ignorance about education loan schemes and turn the candidates away. This has been the experience of a lot of students who had directly approached banks for MBA education loan.
This is where availing assistance from WeMakeScholars helps you. Our loan officers are well updated about the various practices of the current education loan market and hence, will be able to provide you with the required guidance during your abroad education loan process.
What Makes an MBA Education Loan From Government Banks The Best Option Of Funding?
If you take a look at the education loan policies that most government banks have in place, you may come to realise that borrowing a secured education loan is perhaps one of the best ways of funding MBA courses abroad. Before you click on the next tab to google these terms and conditions, take a look at the below list.
- Education loan amount: The maximum loan amount that government banks provide greatly depends on the value of the asset being pledged as collateral security.
Government banks lend secured education loans of up to Rs.2 Cr. for MBA programs abroad. This amount can easily cover the funding requirements of students who wish to attend pursue their MBA degrees from Ivy League universities as well.
- Interest rates: The interest rates of secured education loans is what makes it one of the most cost-effective ways of funding your studies abroad. Government banks like the SBI and BoB offer interest rates that vary between 8% and 10% to students who wish to avail an education loan for MBA courses.
- Moratorium period/repayment holiday: This is one of the highlights of secured MBA education loans from government banks. A moratorium period basically refers to a loan holiday. This loan holiday consists of a candidate’s entire course duration, plus six months post that. Due to this feature, most candidates get sufficient time to arrange for funds to repay their education loan. Most banks charge simple interest for this duration.
How To Apply For An MBA Education Loan?
The ease of any abroad education loan procedure greatly depends on the terms and conditions of the lending institution. There are many lenders who lend education loan for MBA in India. So, how do you pick the right one whose policies cater to the financial requirements of your university/college? For example, if the country in which you intend to study is not present on your respective banks’ list of countries eligible for abroad education loans, then chances are, that bank officials may refuse to even process your application. This is one of the most common problems faced by candidates who wish to avail an MBA education loan from government banks.
This is where WeMakeScholars comes into the picture. The financial team of WeMakeScholars has sufficient experience of tackling even the most difficult cases. Our financial officers analyse all aspects of a student’s profile minutely and accordingly suggest a suitable lender. Should you choose to apply with us, we will ensure that the entire loan process becomes a cakewalk for you. The general process of applying for abroad education loans is pretty simple. However, getting the respective bank/NBFC to process your loan application is a bigger task. And when you apply individually, there are higher chances of you not getting your education loan at the right time. WeMakeScholars, being a government-funded organization has no hidden clauses when it comes to the process.
If you are looking to apply for an MBA education loan through a specific lender, or for a specific country, do explore the other articles on this blog.
When is it the Right Time To Apply For an Abroad Education Loan?
A lot of students commit the mistake of submitting their applications way before they have decided to even study abroad. This leads to a lot of confusion and miscommunication between the lender and the student.
If you plan to fund your MBA abroad with the help of an education loan, the ideal time to apply would be at least 1.5 months before you begin your visa process. The correct method would be to apply immediately after you have secured admission into a university/college abroad.
1.5 months is an ideal time because it takes close to two weeks or more for government banks to process secured education loans for abroad. This timeline caters for any delay in the process, thus making it possible for students to get their abroad education loan on time. When you approach WeMakeScholars, the financial team understands your need of getting the education loan sanctioned within a stipulated period of time and hence, ensures that the amount is sanctioned accordingly. Till now, 3000+ students have been able to get financial support with the help of education loans through WeMakeScholars. So, if you plan to fund your MBA course abroad with the help of an education loan, do request a callback and the assigned financial officer will get in touch with you at the earliest possible date.
What Are The Repayment Terms of a Typical Abroad Education Loan?
The repayment policies of both types of education loan lenders are different. Some of the basic parameters that all candidates need to consider regarding the repayment methods of both types of lenders are elaborated below.
Loan tenure: All government banks grant a loan tenure of up to 15 years for secured education loans. This time period does not include the moratorium period. NBFCs grant a total tenure of 10 years for unsecured education loans. This includes the course period as well.
Moratorium Period: All education loan applicants are granted a loan holiday. In the case of secured loans, government banks grant a moratorium period which covers a candidate’s entire course period, plus six months post their course. Candidates are not expected to make any contributions towards their loan repayment during this time. In the case of unsecured education loans, NBFCs do not grant a loan holiday. Candidates are required to begin their interest payment from the next month of their disbursement.
Loan repayment: In case of secured loans, the repayment doesn’t necessarily have to start before the moratorium period ends. However, if students possess sufficient funds to repay their MBA education loan, then they may repay their secured education loan within a year’s time. Government banks do not charge anything for prepayment of education loans.
In case of unsecured education loans, the interest payment has to begin from the very next month of loan disbursement. The EMI payment period commences once students complete their MBA course abroad. A lot of private banks and NBFCs do not accept prepayment of abroad education loans. In that case, students are advised to read their loan agreement carefully before signing it. In order to know all about the disbursement process of financial institutions, do watch the 28th episode of Loanflix. If you are looking for reduced interest rates for your unsecured education loan needs, do get in touch with the WeMakeScholars team at the earliest and get to enjoy all the benefits without any added costs.
Note: WeMakeScholars is an organization funded and supported by the Government of India that focuses on International Education finance. We are associated with 10+ public/Pvt banks/ NBFCs in India and help you get the best abroad education loan matching your profile. As this initiative is under the Digital India campaign, it is free of cost. The organization has vast experience dealing with students going to various abroad education destinations like the US, Canada, UK, Australia, Germany, Sweden, Italy, China, France among others.