Education Loan for Foreign Studies: It is not easy to fulfill the dream of studying abroad. To turn this dream into reality, it is necessary to prepare in advance. If financial planning is done properly, then arrangements for studies abroad can be made. Education loan is a way to cover not only the tuition fees but also all the important expenses including the cost of living abroad. With the step-by-step guide given below, you can easily get an education loan for studying abroad.
How many types of education loans are there?
There are mainly two types of education loans. The first is a secured loan, for which property, fixed deposits or other assets have to be kept as collateral. Its interest rate is low. The other type of education loan is unsecured, in which collateral is not required, but the interest rate is slightly higher. You will have to decide which type of education loan is right for you keeping in mind your financial situation.
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Find out about scholarships, grants and subsidies
Before applying for an education loan, find out whether any scholarship, grant or subsidy is available for the course you want to go abroad for. If you finance some part of your expenses through these, your loan requirement will be reduced. Under some government schemes, students from economically or socially weaker sections get grants or interest subsidies. If you fall in any such category, then you can take advantage of such schemes. Apart from this, some banks also offer special rates for educational loans or lower interest rates for premier courses. Get information about them also.
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Decide the loan amount
Before deciding the loan amount, estimate the budget for studies, accommodation and other expenses abroad. While doing this, also keep in mind that the exchange rate of foreign currency also affects the expenses incurred on foreign education. Keep this thing in mind while deciding the loan amount. Apart from this, while deciding the loan amount, also keep in mind your repayment capacity i.e. your ability to repay the loan.
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Check Eligibility Criteria
The eligibility criteria may vary in different banks or financial institutions providing education loans. Commonly considered factors include youracademic record And test scores (GRE, GMAT, IELTS/TOEFL) are important. Apart from this, confirmation of admission from a recognized foreign university, proof of income of the co-applicant (parent or guardian) is also required. Also, what is likely to be a change in your financial condition after completing the course for which you want to take a loan is also seen.
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Compare Lenders
Compare offers from different banks, financial institutions and NBFCs (Non-Banking Financial Companies) providing education loans. For this you can take help of online tools. Key points to consider when comparing loan options are:
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interest rateHow much is it and is it fixed or floating.
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Is there any moratorium period for loan repayment?
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Apart from tuition fees, is there a provision to cover other expenses including living expenses or not?
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How much time is the loan processing going to take?
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Prepare necessary documents
Prepare the documents that may be required for loan application. These documents are important:
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University admission letter.
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Educational records and test scores.
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Identity Proof (Aadhar Card, Passport).
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Address proof.
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Income proof, IT return, bank statement.
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Collateral documents (if taking secured loan).
Understand the moratorium period
Moratorium period is the time when you do not have to start repayment of the loan. This usually happens 6–12 months after completion of studies. Check whether the lender offers flexible repayment option during this period or not.
Keeping the above points in mind, do not delay in arranging for an education loan. It would be better if you start the process of applying for the loan as soon as you get the confirmation of admission. By applying early, you will have time to compare loan offers from different banks or financial institutions, so that you will be able to choose the best option.
