Education Loan: Perspective from 2 years post MBA
One of the major questions people have about MBA is whether it is a good idea to get an education loan and how it effects your life post MBA. Here's my perspective after doing my MBA from XLRI Jamshedpur BM in 2023.
- Is it worth it?
My math for joining XL was simple. I was earning 10LPA (9L fixed) at that time. MBA Fees was 25L (assumed 27L with living expenses of 2 years). Plus, I wouldn't be earning for 2 years, so add another 20L to that. Total cost - 47L. At that time, the average CTC was ~27L. Let's assume that average would be 22L fixed. Worst case, I was confident of getting maybe 25L total with 20L fixed. Compared to 9L, I'll get 11L extra. Remove 3L tax & 2L loan interest approx. Now delta is 6L. So worst case scenario, after 7-8 years I'll break even (considering the increment, maybe 5-6 years). 30 years of career ahead of me. So in the long run, it is totally worth it.
- The psychological aspects.
The major issue here is the psychological impact this 27L loan has on you. You need a larger emergency corpus. Everytime there is an economic downturn, you're worried about losing your job. How will I pay my loan then? Entrepreneurship is out of question. Taking a career break is out of question. So you need to be prepared to keep doing your job for 7-8 years even if you don't like it.
But here's the thing. You'll also be taking a car loan, maybe even a huge home loan in the future. This anxiety is now a part of your life. You can't build assets without leverage.
If you're fine with living a decent life but don't want this psychological strain for a decade, either don't do an MBA, or try getting into FMS, JBIMS.
If youbask me, I have enough corpus now to sustain a year of unemployment and have also built a decent equity portfolio of ~10L in 2 years. In my opinion, it looks like I made the right choice for now. Hope it helps!