Why an education loan for an MBA is your smartest investment

An MBA has become more than just a prestigious degree - it is a gate pass with access to better leadership roles, higher earning potential, and improving your career prospects. That is why an MBA is a much sought-after degree for new-age students.

In 2023, registration for the Common Admission Test (CAT) saw a 30% increase, with more than 3.3 lakh aspirants. Similarly, admissions in the top 100 B-schools in India saw a 15% increase in the academic year 2023-24.

While an MBA is popular, the cost angle is another matter altogether. An MBA degree in India easily costs tens of lakhs; the costs multiply if you consider studying abroad. Meeting the costs from your savings alone can prove challenging, which is when MBA student loans come to your aid.

Let’s understand why an education loan for an MBA a smart choice for parents and students is alike.

What is an education loan?
 

An education loan is a financial solution offered to students or their parents to fund higher education in India or abroad. Education loans usually cover the tuition fee, examination fee, course fee, laboratory fee, and even accommodation expenses, making you worry less about the additional expenses.

Why is an education loan for an MBA a smart financial choice?
 

Here are some reasons that make student loans for MBA programs a good choice -

1. Easy funding
 

Education loans provide quick, hassle-free funds for higher education. They have simple eligibility parameters, making it easier for students to get the funds.

With an education loan, you don’t have to dip into your savings or put a dent in your corpus. The loan will easily finance your or your child’s education, providing you with financial relief.

2. The concept of good loans
 

When it comes to loans, there is a concept of good debt and bad debt. Bad debts are those taken for unnecessary expenses and incur high-interest costs with no tax benefits.

On the contrary, good loans are taken for fulfilling important financial goals, have low interest rates, and offer tax benefits.

MBA education loans fulfil all three criteria for a good loan. They are meant to fulfil an important financial goal of higher education, have competitive interest rates, and offer tax benefits.

3. Flexible repayments
 

When it comes to repayments, there are two reasons which add flexibility to the loan. First is the concept of the moratorium period. The moratorium period is the duration during which no repayment is needed. The period starts from the end of the course and is allowed for a specified duration, allowing you to find a good job for easy repayments.

Another flexibility is the repayment tenure. You can choose a suitable tenure for affordable EMIs and pay off the loan without strain.

4. Affordable interest rates
 

Education loans come at affordable interest rates, making it easier to repay. The interest rate on education loans is lower than on personal loans or credit cards. This gives lower EMIs and helps you save.

5. Tax benefits
 

Education loans offer tax benefits under Section 80E. The interest paid for the loan is deductible from your taxable income. There is no limit on the deduction amount, and you can claim the deduction for up to 8 years from the year you start repaying the loan.

These benefits work in favour of education loans, making them a viable choice for funding MBA education.

Education loans v/s self-funding - Which is the better choice?
 

Many people consider funding the MBA from their funds to avoid the interest rate associated with loans. But is it a wise choice? Let’s compare -

How to choose the right education loan?
 

There are different options available in the market, which is why researching and choosing the right loan is important. Here are some factors that can help you find the right education loan -

1. Loan amount
 

First, assess the eligible loan amount the lender offers and match it against your requirement. There is a concept of margin money in education loans. It is the money you pay while the lender funds the rest of the course fee. A high margin money means a higher upfront cost.

Compare the margin money requirement and find a lender whose margin requirement is affordable.

2. Interest rates
 

It is important to consider the student loan interest rate for an MBA. The lower the rate, the lower the loan EMI. So, look for lenders offering low interest rates.

3. Repayment tenure
 

Choosing a loan with a flexible repayment tenure is equally important. This keeps your EMIs affordable and ensures hassle-free payments.

4. Moratorium period
 

A long moratorium is desirable since it can offer you considerable time to find a good job before the repayment starts.

5. Loan application process
 

Make sure to choose an easy-to-apply education loan. Lenders with a simplified process help you avoid a lot of hassle and delays in getting your loan approved.

6. Type of loan
 

Education loans can be secured or unsecured. Unsecured loans do not require any collateral/security and are issued based on your eligibility. Secured loans, on the other hand, need collateral against which the loan is sanctioned.

Depending on whether you must pledge assets or not, choose a suitable loan option.

IDFC FIRST Bank Education Loans - The right choice for your MBA
 

IDFC FIRST Bank Education Loan ticks all the right boxes and offers easy funding for your MBA whether in India or abroad. You can get -

1. Competitive interest rates
2. Loan amount of up to ₹1.5 crore with collateral
3. Collateral-free loans of up to ₹75 lakhs
4. Funding for 35,000+ courses globally across 4500+ institutes
5. Seamless application and quick sanctions
6. Up to 100% financing
7. Flexible repayment tenure going up to 15 years

Scholarships and grants might not cover the full course fee. Get the IDFC FIRST Bank Education Loan for an MBA and fund your dream course with ease. Assess your eligibility, check how to get an education loan for an MBA, and apply online. Give your career the jump start it deserves without financial worries.