Studying abroad is a life-changing opportunity that every student aspires to. With the
rapidly rising cost of education, however, it is not always easy to fulfil your dreams
of studying abroad. Let’s take a quick example – an international student would need
to pay upwards of USD 60,000 per year for an MBA at a top-tier university such as
the Colombia School of Business. Add to that, the cost of living, travel and other
incidental expenses, and it is a fairly intimidating number that gets added up. While
the fees for an MS programme may be cheaper in comparison, they will still set back
a student by upwards of USD 21,000. This is where an education loan for abroad comes
in.
Why avail of an education loan for abroad
Simply put, the cost of education is only set to rise year on year, making it an
expensive proposition for parents to fund an overseas education. At the same
time, every parent strives to provide the best they can for their children, since
ensuring they get a sound education is priority. The reason students opt for
a study loan overseas is so that their education continues unhampered, and at
the same time, it is not a financial burden for the family. Traditionally, parents
would fund their child’s studies by liquidating an asset such property or jewellery.
While these may have been erstwhile viable options, the fact remains that selling
an asset which has been bought after tremendous hard work, is a tough decision
to take, with saving for the future also being important.
An overseas education loan on the other hand, is a great option whether you have
the funds to study abroad, or not. The reasons are multi-fold – not only do you
secure your assets, but there are financial benefits too. An education loan for
abroad is a stepping stone for a student to enter their financial life, since
loan repayment starts only once the study period is complete. By this time, it
is likely that the student would have secured a job, and this loan would be their
first foray into repaying EMIs. When you repay a loan in full and in a timely
manner you build a robust credit score, which is essential for your financial
life.
A study loan overseas also provides tax benefits under Section 80E of the Income
Tax Act. An individual who has availed of an education loan for abroad can claim
a tax deduction for the interest paid on the loan EMI in a financial year. This
monetary relief in addition to the ease of obtaining funds that a student loan
provides, is ample reason for it to be a popular funding choice amongst parents
today.
Essential things you should know about your loan
Applying for an education loan for abroad is one thing; it is equally crucial to
have detailed information about your loan before you sign along the dotted line.
Here are some things to keep in mind when availing of an education loan for abroad:
- Understand the loan technicalities
- Determine the loan amount
- Set up an auto-debit option
- Choose your lender wisely
- Keep track of loan repayment
When you are planning to apply for an overseas education loan, make sure you
read the fine print carefully. Understand every aspect of the loan, and go
through the terms and conditions with a fine-tooth comb. When it comes to
an overseas education loan it is critical to pay careful attention to the
rate of interest, the tenure of the loan and any other terms you have agreed
to. Do check the loan amortisation schedule so that you have a clear understanding
of the EMI. This will help you stay on top of things, and make your experience
with an education loan for abroad a pleasant one.
It is easy to get swayed by a larger loan amount, when applying for an education
loan for abroad. However, remember that while the additional money be a comfort,
the EMI also increases proportionately. Therefore, it is a good idea to get
a grip on your finances before you apply for the loan and understand precisely
the overseas education loan amount you require. The right financer will have
the expertise to guide you when it comes to availing of an overseas education
loan.
When you avail of an education loan for abroad, it can get difficult to keep
track of your EMI, especially if you are working overseas on completion of
your programme. It may happen that you slip up on repayment, which will negatively
impact your credit history. Hence, it is prudent to set up an auto-debit
option so that the EMI outgoing is taken care of seamlessly, without requiring
any intervention.
Remember that when you avail of an education loan for abroad, the relationship
with your lender is long-term, and this makes it important for you to establish
a rapport with them. Do not be afraid or hesitant to ask your lender to clarify
any queries or doubts you may have because a study loan overseas is a big
decision for anyone to take. In turn, a responsible lender, be it a bank
or NBFC, will be more than glad to accommodate any concerns you may have
and will address them to your satisfaction.
While the grace period or loan moratorium can indeed prove to be a boon for students,
remember that the longer you wait before starting off on loan repayment,
the more you wind up paying by way of interest. The interest on your loan
amountbegins to accrue as soon as you graduate, and making payments at the
earliest will help bring down the interest burden, often significantly.
The bottom line
With the above tips in mind, you can look forward to a stress-free time when it comes
to looking for an education loan for studies abroad, and rest assured that the
decision to get an overseas education is the best one you could have ever taken.