How to Finance high expenses of MBA with ease
The biggest hurdle in opting for a good MBA/PGDM programme from a top rated B-school is its high fee structure. In general, you need INR 10 to 20 lakhs to complete your 2 year MBA/PGDM course whether from IIMs or non-IIMs. Apart from tuition and other fee, you need to meet other expenses on lodging & boarding and petty expenses to maintain yourself during your stay. It is not easy to get an offer of admission in MBA programme from a top rated B school like an IIM, SPJIMR, IIFT, MDI, IMT, IMI,
XLRI or any other top rated preferred B-school. It is heartening if you lose the chance of doing MBA from a coveted B school because of its high fee structure due to paucity of funds.

But, if we go with a planned and well thought of process, we may not only get the required money to pursue our dream MBA but will also save a lot of money during the course of study.

Identify the required amount
Calculation is must to know the actual need of funds to pursue MBA. If you borrow more you repay more. There are Banks and other financial institutions which offer 100% study loan and ask for interest rates in the range of 10 to 12%. Almost all the good B schools have banks in their campus. They have tailor made study loan schemes at affordable rates to pursue MBA from your dream B school. You should cross check with it before exercising other options to cater to your need.

How to decide
We may split the situation on the basis of following 4 factors-
- 2 years funds requirement
- Prospective job market after 2 years
- EMI on repayment based on interest rate and period of repayment
- Amount needed to live a non luxurious life during the course

Other Expenses:
Apart from seeking funding for tuition Fee you have to think of Lodging & Boarding expenses, Computer, stationery, books, clothing among others. Taken together all these expenses may be very high. But you would incur them it is for sure.

Study different loan schemes Research team has worked out the economics on how you can save at least Rs.2 lakhs on your admission fee, if you opt for study loan from the right financial institution after negotiating a little.

All the banks have their own study loan schemes to fund the MBA study in India and abroad. These study-loan schemes are divided in two segments – one is the regular study loan for the students of normal professional colleges and the other is meant for premium institutes like IITs, IIMs, XLRI, MDI, SPJIMR, IMI, IMT, IIFT.

The difference in both types of schemes is that the study loan schemes for premium institutes offer you higher amount with less interest rate. Corporate/Head offices of these banks publish updated list of such premium B schools.

If your institute falls under the category of premium B-schools, you will get MBA study loan at low interest rate and during the repayment tenure of 7 years or so, you will be able to save a huge amount as in the initial years even a 0.25% hike rate in interest rate can make a cumulative effect coming in lakhs at the end.

Save on International tour
Many B-schools have started foreign study tour to various foreign institutes or have engaged in international exchange programme. The fee for foreign tour or international exchange programme runs in lakhs. If you are able to convince the B-school that you wouldn’t like to go for it, it is very much likely that you are exempted from it. Moreover, the value of the international tour may not be so much as it is claimed by the B-school.

Fee negotiation: Good idea
There are highly ranked B-schools who can offer you discount, scholarships, fee concessions and waivers. Cross check how much of it you can get. This will further reduce your financial burden while pursuing MBA.

Calculate well the repayment
The options to avail the study loan are plenty and can be exercised with private or public sector banks depending upon their prevailing schemes. Taking a loan is probably less difficult than repaying it regularly for a long time. In fact longer the repayment period, more will be the amount you would be paying to the bank.

On the top of it, when the loan amount is more, higher EMI is to be paid and when the income is low it becomes very difficult to find out the ways and means how to make regular repayment without causing financial crunch. In case you choose not to pay the amount regularly, the tiny concession of 0.5 to 1 % that could have otherwise been available to you on regular repayment no longer exists.

Work out the economics
Assuming that the fee structure of the MBA programme requires an amount of Rs.10 lacs to complete the 2 years’ programme, let us discuss what amount would be feasible in different prospective income scenarios.

Example-1- Expected Annual Gross Salary: Rs.7.20 lacs.

Net (in hand) salary: Rs.5.76 lacs
(After allowing 20% for various components like Medical Insurance, HRA, PF,)

Maximum recommended education loan amount: Rs 10 lacs @ 11% pa Maximum recommended EMI: 30% of net in hand salary -Net per month salary: Rs 48,000/- -EMI of Rs.10 lacs for 10 years: Rs 13700/- -Total repayment in 10 years: Rs. 16,44,000/- -Total interest paid on loan: Rs.6,44,000/- Example-2- Expected Annual Gross Salary: 4.8 lacs.
Net (in hand) salary: Rs.3.84 lacs
(After allowing 20% for various components like Medical Insurance, HRA, PF,)

Maximum recommended education loan amount: Rs 7 lacs @ 11% pa
Maximum recommended EMI: 30% of net in hand salary
- Net per month salary: Rs 32,000/-
- EMI of Rs.7 lacs for 10 years: Rs 9600/-
- Total repayment in 10 years: Rs. 11,52,000/-
- Proportion of repayment to net salary: 30%
- Total interest paid on loan: Rs.4,52,000/-

Example 3- Expected annual Gross salary: Rs. 3.6 lacs.
Net (In hand) salary: Rs.3 lacs

(After allowing 20% for various components like Medical Insurance, HRA, PF,)

Maximum recommended education loan amount: Rs 5 lacs @ 11% pa
Maximum recommended EMI: 30% of net in hand salary
- Net per month salary: Rs 25,000/-
- EMI of 5 lacs for 10 years: Rs 6900/-
- Total repayment in 10 years: Rs. 828,000/-
- Proportion of repayment to net salary: 28%
- Total interest paid on loan: Rs.328,000
If you wish to pursue your MBA with Bank loan and expect this much of salary after 2 years. You are advised not to go beyond this amount of education loan. It will be better to arrange from other sources, instead of going to borrow from Banks. Understand the repayment schedule and avoid financial crunch.

Opt for shorter repayment period
Think on reducing the repayment period. Banks have tactfully revised and extended the same. The burden of interest in a longer period will be more. For example on the above cited loan amount at the given interest rate if you repay in 10 years, you will end up paying the interest amount of more than Rs.6.4 lacs. On the other hand if you repay in 7 years, the amount of total interest would be around Rs.4.35 lacs.

Pay interest during course period
Try to repay the amount of simple interest applied on your study loan amount. It would reduce the interest burden when compounding of interest begins after 1 year of completion of course.

Top B schools with different fee structure: Choose the best
Fee structure of top rated B-schools can vary not marginally but there could be a huge gap in the fee structure of 2 top rated B-schools.

Now there are 20 IIMs and other top rated B schools like IIFT, SPJIMR, MDI, NITIE, IMT, IMI and all have different fee structures. Even the new IIMs have different fee structure in a range of Rs. 11 lakhs to Rs.13 lakhs while the USPs are more or less remain the same. The fee structure of older IIMs and top B schools go upto Rs.20 lakhs.

If you can get a learning experience and RoI more or less at the B-school offering MBA/PGDM at lower fee structure, there may not be any need to pursue your MBA from an institute asking for high fee and other expenses.

Since the fee structure alongwith other parameters like faculty, infrastructure, programme structure and placement could be stated as the base to choose the B school, take the decision as per the past USPs of the institute instead of paying more.