Education is an important aspect of social construct, and studying overseas is often considered a separate qualification from the actual degree. In the Indian scenario, many students cannot get into the premier educational institutes like IITs, and many aspiring candidates choose to study in foreign institutes. According to stats, almost 47% of rich Indian people invest in overseas education for their children.
Moreover, in many fields like music, business, and others – the student’s homeland may not have the proper infrastructure, faculty, syllabus, and sometimes even the course.
Naturally, people who can afford it or take the risk of borrowing money are going for education loans for abroad studies. In 2022, Indian education loans for abroad applications experienced a 400% increase compared to the previous year. People who are thinking about it in the future will benefit from this article.
A student considering a student loan for study abroad has to understand that it can change their life but will cost money. They will have to arrange money for admissions, applications, relocation, and high student living expenses, which will change according to your country of choice. So, they must avail loans from leading banks and lending companies offering the best possible rates.
There are multiple channels from where you can get international student loans – from a government to a private bank of your homeland or a foreign bank in the country you wish to study. The money is mostly huge, and students don’t have the credit history needed for that loan, so private student loan providers opt for co–signing (with parents or guardians).
Generally, student loans are of two types – secured loans (the bank will demand collateral) or unsecured loans (the financial institutions don’t require a guarantee). The differences are given in the table below:
| Points of differences | Secured educational loan | Unsecured educational loan |
|---|---|---|
| Presence of collateral | The borrower needs to offer collateral, like an FD or immovable property, against which the loan is given. | The lender doesn’t need any collateral to get this loan. |
| Rate of interest | Lower rate of interest. | Usually 1.5% – 4% higher than secured loans |
| Chance of approval | Higher than unsecured. | Lower, as banks prefer to have collateral. |
| Repayment period | Longer | Comparatively shorter |
| Repayment during study period | Not applicable | Some banks require some repayment during the study period. |
| Parental income for approval | Not required | Required |
The higher interest rate, lengthy process, and several other factors can dishearten the students to apply for a study loan for abroad education. Still, going for a study loan is better if you are determined about overseas education. The reasons are mentioned in short below:
The amount of money you require to study abroad is substantial, and it borders on impossible to earn in time for lower or middle–income group students. Taking a loan makes it possible for them to realise their dreams and clear the different entry requirement tests where the presence of funds is a determining factor.
Many banks offer discounts on student loan interest rates, reducing the amount of money they owe. The student will have to maintain a good academic record or set up auto-payment of loans. You won’t get this advantage if you want to earn money before studying abroad.
Many lending institutions offer 100% of course fees in their loan conditions and transfer it every semester to the foreign educational institute itself upon approval. In the case of personal handling of money, situations arise where you will be compelled to spend it elsewhere. The compartmentalisation of educational loans ensures the continuation of your education.
The foreign money exchange rate, or forex, can significantly change the money you need there. Using your own money will put you under tremendous pressure with less chance of getting help from families and relatives. Choosing a loan from a well–trusted bank will solve this problem.
Although a student education loan is a credit, it has some significant benefits over other financial channels. Here are the advantages explained in short:
The total procedure for acquiring an education loan in India for study abroad, from approval to disbursement, is time–consuming. Therefore, applying for the loan as quickly as possible is prudent. The nuances of those procedures are different in each financial institution, but generally follow the below–mentioned procedure:
It is better to opt for the services of a well-known agency specialising in student education loans to apply for student loans with the highest success probability
Some of the common factors important for judging the education loan eligibility of the student are mentioned below:
The students can also discuss with professional agencies to get current information on student loan requirements.
The study loan documents for banks and financial agencies will vary with the institution. However, the usual list of documents required for education loan by these institutions are mentioned below:
Here are some of the things you can do to ensure your government education loan for study abroad will have the highest chance of occurring:
Banks decide to approve the loan on the applicant’s or co-applicant credit score. It also plays a factor in the decision about the interest rate. So, a good credit score will be beneficial for the loan application.
As said earlier, banks or financial institutions prefer job–oriented courses as they ensure the scope of repayment. Therefore, choosing a well-known institution and recognised courses will help secure the overseas study loan.
The banks are there to do business first and always look after their interests. Therefore, they may reject your loan application based on your financial education. In India, students usually aren’t solvent enough to qualify for a high–dollar education loan. So, it would help if you present a financially strong co-applicant or guarantor in your loan application document.
Many procedures and deciding factors for overseas education loans may need to be clarified. An experienced study abroad agencies in India like Ritam Global knows the past and recent developments in the rules and regulations of international student loans – enabling them to offer effective suggestions and practical ways to their clients.
You can hire us to assist you in the document arrangement, procedures, and submission of your student loan application.
