While you might have everything planned out, you might still be at a crossroads in deciding the exact way you want to finance your education abroad. There are a lot of ways in which you can opt for a loan through banks, scholarships/ fellowship programmes, etc. This article entails the top 7 ways you can finance your international MBA and involves various options to guide you.

A loan from an Indian bank against existing collateral 

In India, several banks provide loans to students for education abroad against collateral. The following is a list of banks in India, along with their loan details –

1. HDFC Credila 

For reputable universities, HDFC Credila provides education loans with favourable interest rates. As a result, there is no upper restriction on the loan amount. HDFC Credila delivers loans with amounts more significant than Rs 25 lakhs, however, the applicant must meet their eligibility requirements and adhere to additional commitments.

HDFC Credila uses a variable interest rate tied to its benchmark lending rate (CBLR), and it calculates the interest using the simple interest rate. Processing charges may not exceed 1.5% of the loan amount.

HDFC education loans may be applied for before the student has applied for admission. Flexible security collateral is a benefit to borrowers. Only the borrower’s relatives may be co-borrowers, even if they reside in a different city than the borrower.

2. State Bank of India

SBI provides funding for post-graduate and graduate professional and technical degree programmes focused on the workforce.

The SBI loan programme covers costs such as tuition, books and equipment costs, exam fees, lab fees, library fees, caution deposits, and travel expenditures.

• Loan amount: 20 lakhs to 1.5 crore rupees
• For loans over Rs. 7.5 lakhs, collateral security is required. Collateral is not necessary for student loans under Rs. 7.5 lakh.
• Borrowers of SBI education loans are subject to a lending margin of 15%. 8.65 per cent is the interest rate.
• Duration of repayment: 1 to 15 years (after completion of course)
• Processing fee: Each application is paid a fixed processing fee of Rs 10,000.
• Six months following the conclusion of the course, SBI gives a moratorium period, sometimes known as a repayment holiday. The borrower must provide the bank with a signed loan application form, a completed college admittance letter, course fees, information about any co-applicants, and other KYC papers.

3. Axis Bank 

Obtaining an education loan with Axis Bank is a simple process. Hostel, tuition, book, and other fees are all covered by the loan. Seventy-five lakhs rupees is the maximum loan amount. Loans start at Rs. 50,000.

Rate of interest:

• 15.2% for amounts up to 4 lakhs
• 7.5 lakhs and up: 14.7%
• More than 7.5 lakhs: 13.7%
• Axis Bank’s interest rate is correlated with the repo rate.
• A lending margin is not necessary for loans under Rs. 4 lakhs. For loans beyond Rs. 4 lakh, the borrower is required to contribute 15%.
• No processing fee is involved. A parent or legal guardian must co-apply for student loans and, if necessary, provide a third-party guarantee or collateral security. Axis Bank may also consider a LIC policy for the total loan amount, although it would depend on the circumstances.

4. Punjab National Bank

For Indian students wishing to pursue their studies overseas, PNB Udaan is a unique education loan programme. Students admitted to graduate or post-graduate programmes, including diploma programmes, career-focused professional or technical courses, CIMA/CPA courses, etc., are eligible for the loan. The university price, travel costs, test fees, lab fees, library fees, book/equipment fees, and other related expenses are all covered by the PNB loan.

Maximum loan amount: PNB grants loans in accordance with the borrower’s needs; for loans over Rs 4 lakhs, the loan margin is 15%. Loan margin is not necessary for loans under Rs. 4 lakhs. Scholarships and assistantships may be included in the loan margin.

Moratorium period: One year after the end of the course.

Processing charges: 1%. PNB education loan clients have tenure options that range from five to fifteen years.

Rate of interest:

• 7.5 lakhs and under: 11.25 per cent
• 11.85 per cent for amounts over 7.5 lakhs
• 9.85 per cent for prestigious international universities

5. Bank Of Baroda

Under the Baroda Scholar programme, education loans are approved for students admitted to reputable overseas colleges for professional and technical programmes.

• Maximum loan amount: 80 lakhs rupees
• Interest rates range from 7.85 to 9.85 per cent.
• Processing costs: 1% of the loan amount up to Rs. 10,000
• 15% loan margin is necessary.
• Loan repayment terms: Loans up to 7.5 lakh rupees can be returned in 10 years; loans over 7.5 lakh rupees can be repaid in 15 years.

After starting a job, borrowers may be granted a break or moratorium period of six months to a year. For loans under Rs. 4 lakh, security is not necessary. For loans between Rs. 4 lakh and Rs. 7.5 lakhs, a third-party guarantee is necessary, and tangible collateral security is required for loans above 7.5 lakhs.

6. Canara Bank

The university price, travel expenses, exam fees, lab fees, library fees, book/equipment fees, and other relevant charges are all covered by the Canara Bank education loan. For loans beyond Rs. 7.5 lakhs, co-borrowers are required for education loans, and full collateral security is needed.

Maximum loan amount: 20 lakhs rupees.

• Loan margin: 15% for borrowings over Rs. 4 lakhs
• Repayment period: For loans under 7.5 lakh rupees, it can be up to 10 years; for loans beyond 7.5 lakhs, it can be up to 15 years. 
• Security: Not required for loans below Rs. 4 lakhs. A third-party guarantee has to be given for loans from Rs. 4 lakhs to Rs. 7.5 lakhs.  

Interest rate:

• Upto 4 lakhs- 11.15%
• Upto 7.5 lakhs- 11.65%
• Above 7.5 lakhs- 11.15%

7. IDBI Bank 

The IDBI education loan covers the university price, travel costs, exam costs, lab costs, library costs, computer costs, book and equipment costs, and other relevant costs. With no security for loans under Rs. 4 lakhs, IDBI Bank grants loans in amounts that the borrower requests.

• Maximum loan amount: 20 lakhs rupees
• Repayment terms: For loans under 7.5 lakh rupees, up to 10 years, and for loans over 7.5 lakh rupees, up to 15 years.

For loans between Rs. 4 lakh and Rs. 7.5 lakh, a third-party guarantee is necessary. A co-borrower must be included when applying for an education loan. Loans exceeding Rs. 7.5 lakhs must be secured by 100 per cent collateral.

Rate of interest:

• Up to 10 lakhs – 10.45%
• More than 10 lakhs — 11.45%

A non-collateral loan, either from banks or other financial institutions:

Non-collateral education loans are those you can apply for without having to pledge any property as security.

Most Indian banks would provide non-collateral loans, but the overall amount they could be ready to offer is relatively small.

In general, keep the following in mind when examining education loans offered by Indian banks:

• A loan of upto Rs 4 lakh can be easily availed from any government bank
• For higher amounts upto Rs 7.5 lakh, there will be a credit assessment to back up the repayment of loan in the future. 
• For a sum above Rs 7.5 lakhs, a collateral is required to be submitted to avail a loan. 

Companies that offer educational loans include financial service providers and loan providers like Avanse, Prodigy Finance, Stilt, Gyandhan, mPower, and Credila. Many of these “fintech” companies employ advanced algorithms to anticipate your ability to repay the loan, which enables them to operate without requiring any collateral. Typically, the following variables might affect your loan rate: 

1. The rank of the university you enrol in
2. Prospect of your field
3. Past work experience

Such algorithms “predict” the likelihood of success, but because it is an uncollateralized, higher value loan, there is risk involved. As a result, they have higher interest rates than the collateral loans you can acquire from banks. These loans might also require a co-signer for added credibility.

The amount borrowed varies with the institution and the cost of the programme.

Scholarship and Fellowship Programs

Many universities provide outright scholarships and fellowship programmes on various basis like merit. These scholarship programs are easy to apply to, and there are sites to guide you through them. The previous article provides an abridgement of these sites to help you decide which scholarship program will suit your needs the best.

When it comes to funding your education degree abroad, intensive research followed by thought-out decision-making must be done so that the prospects match your requirements exactly. It becomes crucial to have an action plan and keep analyzing and correcting so the deviations are as minimal as possible.

To know more about scholarship options for MBA abroad – Click here

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