Things you should know before taking an education loan for pursuing an MBA abroad.

An MBA is a degree that boosts a student’s chances of better job opportunities. A lot of graduates look to pursue an MBA from an abroad university to give a boost to their career.

But pursuing an MBA also requires sound finances to take care of all your academic expenses. The most common way of taking care of this is to apply for an education loan that will provide the financial support that you need.

But there are certain things that you need to keep in mind before taking an education loan for pursuing an MBA abroad:

Borrow only how much you need

A lot of borrowers apply for a bigger education loan amount which is more than they need. This is because they think that applying for a bigger loan amount is safer in case there are faced with some additional expenses. However, clearing a bigger loan amount gets difficult for them, and the loan becomes a burden. This is why you should always calculate your expenses and only borrow the amount you need. You would be better off paying the overheads yourself rather than repay a big education loan for abroad studies.

Compare different financial institutions

There are numerous financial institutions that you can choose from. This is great for you as a borrower, as it increases your chances. Also, please know that banks are not the only financial institutions that you borrow education loans from. A lot of students borrow an education loan for abroad studies from Non-Banking Financial Companies (NBFCs) as they provide great loan plans, at much relaxed terms and conditions as compared to banks.

Check about the collateral requirements

This is something that you should check with your lender. Most public sector banks will not provide you with an education loan for abroad studies unless you agree to give some kind of collateral as security for anything above the loan amount of Rs.7.5 lakhs. NBFCs are much better in this case, as they do not require any kind of collateral from their borrowers, and they also agree to cover the entire expenses of your education.

Make sure to select a convenient repayment plan

Many borrowers think that they do not have to worry about this until after the moratorium period ends. But you should always start thinking of a repayment plan even before you apply for the loan. Use an education loan EMI calculator for knowing how much the monthly installments would cost and choose a suitable repayment plan based on these calculations.

Take advantage of the tax benefits of the education loan

When you apply for an education loan for abroad studies, you are eligible to apply for certain tax deductions. Section 80E of the Income Tax Act states that people who have taken education loans from any Indian financial institution can claim tax deductions on the interest amount which they pay for the education loan.

We hope that this article has been useful to you, all the best!