Educational Loan Options for MBA in Canada

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    According to CBIE, 2015 witnessed a whopping 92% rise in the number of international students since 2008 - the number totaling 353,570. And, the number has continued to grow significantly over the past five years. For the thousands of Indian students who are desirous of studying abroad in popular countries such as the U.S., Canada, etc., the tuition fee is a major deciding factor. If you too are an Indian student who is thinking of doing an MBA degree from Canada, then read this blog to know not only the approximate amount you would have to pay for it but also the different education loan options available to fund the high tuition fees and lighten your financial burden. 

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    Cost of Studying MBA in Canada 

    Universities in Canada decide their tuition fee on the basis of a multitude of factors such as the program, level of study, residential status of the student, etc. Moreover, the tuition fee varies from university to university. Rotman School of Management, the top-ranked business school in Canada, has an academic fee of CAD 129,190 for 2 years, while McGill University charges a tuition fee of CAD 46,937.79 annually for a two-year MBA program. Ivey Business School, another top-ranked business school in the country, has a tuition fee of CAD 137,450 for a one-year MBA program. Smith School of Business, that also ranks among the top five business schools in Canada, has a tuition fee of CAD 95,000 for an MBA. Another top business school, Schulich School of Business, has a tuition fee of CAD 26,020 per term (4 months). It should be noted that a full-time MBA program at Schulich lasts for four terms. The Council of Ministers of Education in Canada have also introduced an online tool with the help of which students can find out the cost of studying at different universities in Canada.

    Apart from tuition fee, the cost of living is another major expense for international students in Canada. International students applying for a Canadian visa need to have at least CAD 10,000 (or CAD 11,000 if studying in Quebec) towards living cost. The cost of living, however, would vary and depend on the individual lifestyle of the student, city, and type of accommodation. The average rent for private or shared off-campus accommodation is approximately CAD 8400, while on-campus accommodation typically costs between CAD 3,000 and 7,500 a year. International students should also consider other charges such as compulsory health insurance (CAD 600-800), travel costs in the case of off-campus accommodation, etc. 

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    What are the Education Loan Options for MBA in Canada? 

    As can be inferred from the aforementioned breakdown of the costs involved in studying MBA in Canada, higher education from the country is indeed a costly affair. A sizeable chunk of Indian students headed to Canada for an MBA finds it difficult to finance their education. This necessitates a financial aid, and at this stage, an education loan comes to a student’s rescue. An education loan for MBA in Canada with collateral from a public sector bank is one of the most cost-effective options for all those students who are looking for financial help to pursue an MBA in Canada.

    However, there are many other choices. Education loans for MBA Course in Canada can be broadly divided into two kinds. They have secured education loans and unsecured education loans. Public sector banks, private banks, as well as NBFCs, offer study loans for studying in Canada at varying interest rates. Let us understand a little about these two kinds of education loans and also look at a few education loan schemes that are available to students for studying an MBA in Canada. 

    1. Secured Education Loan or Education Loan with Collateral

    A secured education loan is an education loan where the applicant has to attach an asset with the loan application. The asset can be property such as a house or land, or FDs, insurance policies, etc. This kind of loan has a lower rate of interest, as well as a long repayment period and higher loan amounts can be easily sanctioned. Getting such loans is relatively easier as the lender views the asset as a security that can be used in the case of a default in repayment. Now that we know about this kind of loan, let us take a look at some lenders who offer this kind of loan and also the various features of their loan schemes.

    Typically, there are 3 types of lenders -

    • PSBs or Public Sector Banks that offer the lowest rates of interest
    • Private Banks that have longer repayment periods but slightly high rates of interest
    • NBFCs or Non-banking Financial Companies with very high rates of interest and the shortest repayment tenure (only 10 years)

    Features

    Public Banks

    Private Banks

    NBFCs

    Example Lenders

    SBI, BOB

    Axis BankICICI Bank

    Avanse, Incred

    Loan Amount (INR)

    Upto INR 1.5 Crore

    Upto INR 80 Lakhs

    Upto INR 80 Lakhs

    Interest Rate Range*

    8.85%-10.5%

    11.5%-13.5%

    12%-14%

    Processing Fees (INR)

    INR 11,800

    No fee if the loan amount is less than INR 20 Lakhs. If it is more, INR 750 is applicable on each Lakh above 20 Lakhs.

    1-2% of the loan amount

    Payment During Study Period

    None

    Simple Interest

    Simple / Partial Interest

    * As of 28-11-2019

    Get Education Loan Apply Here

    Evidently enough, NBFCs shouldn’t be on the list of students who are seeking a loan and have security to offer. It will not be a wise thing to do! So, we will stick to banks and draw a comparison between the two - public and private.
     
    Some other important features like processing time, repayment period, expenses covered, and reasons for the declining of an education loan vary as per the type of bank. A detailed insight into the features for each type is given below.

    • Repayment Period - As we said before, NBFCs only offer 10 years for full repayment. For private banks, the repayment period for educational loans with collateral is 20 years, while for public banks, the tenure is 15 years. We would still recommend choosing a PSBs as their rates of interest are fairly low, which makes them highly cost-effective in the long run. To find out yourself, use our EMI calculator and learn the difference. Also, if you want to extend the repayment tenure of the education loan, you can let us know. GyanDhan makes your requests known to the lender and tries to offer you a customized loan as per your needs. Yes, we can do it for our students as we have direct corporate tie-ups with leading banks. Request a call back to know-how!
    • Processing Time - In the case of private banks, it takes 8-10 days to process education loans for Canada with collateral, whereas in the case of public banks, it takes 12-15 days, using the GyanDhan portal. These days can extend up to 50 if you approach the banks directly. Upon any delay from the lender’s side, GyanDhan immediately gets in touch with the upper management of the lending institution and tries to get the loans sanctioned on time.
    • Expenses Covered - Public banks offer loans up to 90-100% of the overall expenses. Private banks cover 85% of the total expenses.
    • Common Decline Reasons - The common reasons why both private and public banks decline loan applications are incomplete collateral documents or poor CIBIL score
    • Documents Required for Applying for a Secured Loan - Though the list of documents required for applying for a secured education loan differs from lender to lender, some of the common ones generally required by the lenders are KYC documents of the applicant and co-applicants, applicable mark sheets, documents of the collateral that is being pledged, admission letter from the university, the tuition fee breakup, etc. Since the list of documents varies from lender to lender and from scheme to scheme, students find it cumbersome to provide all the required documents at one go while submitting their application. This leads to a delay in their loan sanction, or sometimes even rejection of the loan application altogether. Well, students can take the help of GyanDhan if they want to avoid such pitfalls. We provide our students with a customized list of documents that would be needed with their MBA program loan application for Canada so that they face no roadblocks in getting their loan approved on time. 

    2. Unsecured Education Loans or Education Loans Without Collateral 

    In the case of an unsecured education loan, the applicant does not have to attach any collateral (security) while applying for the education loan. Unsecured education loans generally have a shorter repayment tenure and a higher rate of interest, owing to the higher risk of recovery involved for the lender. 

    Typically, there are 4 types of lenders -

    • PSBs or Public Sector Banks that offer the lowest loan amount, only up to INR 7.5 Lakhs
    • Private Banks that have the longest repayment periods but slightly high rates of interest, and for select colleges
    • NBFCs or Non-banking Financial Companies with very high rates of interest and the shortest repayment tenure (only 10 years), and for select colleges
    • International Lenders with the highest rates of interest
       

    Features

    Public Banks

    Private Banks

    NBFCs

    International Lenders

    Example Lenders

    SBI, BOB

    Axis BankICICI Bank

    Avanse, Incred

    MPower

    Loan Amount (INR)

    Up to 7.5 Lakhs only, which is not sufficient for MBA in Canada

    Upto INR 40 Lakhs

    Upto INR 50 Lakhs

    INR 35 lakhs (or $50,000)

    Interest Rate Range*

    8.85%-10.5%

    12%-14%

    12% in USD which can be equivalent to 13%-15%** (In INR)

    Processing Fees (INR)

    No fee if the loan amount is less than INR 20 Lakhs. If it is more, INR 750 is applicable on each Lakh above 20 Lakhs.

    1%-2% of the total loan amount

    5%

    Number of Colleges Supported

    More than 10

    More than 20

    More than 50

    * As of 25-11-2019
    ** International players like MPower offer rates in USD, which is not comparable to INR rates directly. For more information refer to this video

    Get Unsecured Education Loan Apply Here

    An important fact to note here is that public banks like SBI and BOB do not approve unsecured education loans of more than INR 7.5 Lakhs for studying in Canada, which is certainly not sufficient to fund the course. Another fact is that International players charge exorbitant rates of interest that might seem low at first (watch this). This is because these loans are offered in other currency and not INR, and the currency rates fluctuates a lot, especially INR as compared to USD or CAD. In 2012, 1 USD was approx. 45 INR; today it is more than 70.

    Thus, our further comparisons are based solely on private banks and NBFCs.

    Some other important features like processing time, repayment period, expenses covered, and reasons for the declining of an education loan vary as per the types of lenders. A detailed insight into the features for each lender is given below.

    • Repayment Period - For private banks, the tenure is up to 20 years and for NBFCs and International lenders, it is up to 10 years.
    • Processing Time - It takes private banks to take 5-7 days. The processing time is 4-5 days in the case of NBFCs, using the GyanDhan portal. If approached directly, lenders may take up to 30 days for an unsecured loan. 
    • Expenses Covered - Private banks cover 85%, whereas NBFCs cover 100% of the expenses. 
    • Co-applicant Income Requirement - In the case of education loans without collateral, private banks generally require co-applicants to have a monthly income of more than INR 35,000. NBFCs generally require the co-applicant’s monthly income to be more than INR 20,000. But the exact income requirement may vary as per the loan amount. Quoting from our experience, for such educational loans from NBFCs, 50% of the income should be greater than the interest per month. On the other hand, for banks, this number is 65%.
    • Common Decline Reasons - Both Private banks and NBFCs generally decline education loan without collateral applications for MBA in Canada for the following two reasons - a) if the income of the co-applicant is not sufficient to pay the interest during the study period, b) if the applicant has a poor CIBIL score or extremely poor academic record. However, you may stop worrying if you have a poor CIBIL score. Let GyanDhan’s counsellor know in advance your CIBIL score, and we will try to come up with solutions which will help you get your loan sanctioned.  

    Moreover, we have observed that those who apply for education loans with our help have 50% more chances of getting their loan sanctioned than those who directly approach the bank for education loans. Our expert loan counsellor diligently analyzes your profile to find out the most suitable education loan option for you and suggests the lender which is most likely to accept your loan application.

    • Documents Required for Applying for an Unsecured Loan - The list of documents required for an unsecured loan application again varies from lender to lender. However, some common documents that are needed are KYC documents of the applicant and co-applicants, applicable mark sheets, admission letter from the university, the structure of the tuition fee, income proof of co-applicant, etc. GyanDhan can offer a customized list of documents required for your case to ensure that your loan application gets sanctioned at the earliest. Check eligibility today!

    From the above discussion, we can conclude that a secured education loan from a public bank is the most viable option for pursuing an MBA in Canada, owing to the lowest interest rates. This is also because most public banks do not offer unsecured education loan of more than 7.5 lakhs and the cost of studying an MBA from Canada is certainly higher than this. However, if you do not have security to pledge, apply for an unsecured education loan for an MBA in Canada from a private bank or NBFC with GyanDhan.

    Check Your Education Loan Eligibility Apply Here

    How to Choose which Option is the Best For You?

    Now that you know the various educational loan options available for an MBA in Canada, GyanDhan has some tips that will help you select the best educational loan which perfectly suits your needs and also assures you the least financial burden in the future. Since the terms and conditions differ from lender to lender and scheme to scheme, it will be prudent for the students to compare the following before finalizing a lender. 
    Things to be compared are:

    • Interest Rate
    • Processing fee & Time 
    • Margin Money
    • Moratorium Period
    • Tax Benefits (only with banks) 
    • Loan Duration 
    • Expenses Covered
    • Prepayment terms and conditions

    If students want to know the EMI they would have to pay for the loan, they can take the help of GyanDhan’s EMI calculator. This tool will help them understand the approximate EMI they would have to pay, and thus, compare the different loan options and select the most feasible one. They can also take the help of GyanDhan’s loan counselor who will comprehensively analyse their profile and then recommend the best education loan for their profile. 

    What is the Application Procedure for Loans for MBA in Canada?

    The entire process of getting an education loan sanctioned - right from application to sanction to disbursement - takes a lot of time, and thus we suggest students to start applying for a loan as early as they can, ideally immediately after they get their admission letter from the university. 

    We list down the steps that they need to follow when applying for an education loan through GyanDhan:

    1. Students can check their eligibility to know how much education loan they can get for studying abroad or even request a call back to kick start the loan application process. 
    2. GyanDhan’s education loan counselor will call them back and have a detailed discussion with them to understand their profile and their requirements. They will then suggest the best possible education loan options for their profile.
    3. Once the lender is finalized, they will suggest the subsequent steps.
    4. The documents need to be submitted at this step. The loan counselor will give the student a customized list of documents that need to be submitted with their loan application. If the applicant lives in a metropolitan city and is taking a loan from a public bank, GyanDhan’s relationship officer will pick up the documents from the student’s home. This service is free of cost. For other cities, GyanDhan will fix an appointment with the bank’s branch manager and coordinate. In the case of private banks, respective banking partners will collect the documents from the student’s home. In case the student is taking an education loan from an NBFC, they have to simply upload the documents on GyanDhan’s website. 
    5. After the documents are submitted completely, the lender will review the loan application and will approve it if it is found viable. The lender may also call the student or his/her parents for additional documents.
    6. If the lender approves the loan, the student will have to accept the offer by signing the loan sanction letter. In the case of NBFCs, they take the processing fees if the loan is approved, whereas the public and private banks take the processing fees cheque at the time of document submission. 
    7. After the agreement has been signed, the students can request for the disbursement before the expiry of the loan sanction letter, which is 2 months in case of private banks and 6 months in case of public banks and NBFCs. 

    GyanDhan has helped hundreds of students make their study in Canada dream a reality. Get in touch with us as we will be of great help to you too.

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