Can I Use an Education Loan To Study Abroad
Can I Use an Education Loan To Study Abroad.Acquiring education from an international institution can be very advantageous in today’s competitive world of employment. Not only does study in foreign countries create better education systems but it also opens a window to samples different culture, perceptions and experiences. But, education abroad is expensive and many students find it difficult to afford education loans for their studies.
If you have been toying with the idea on whether you can apply for an education loan to take your studies overseas the answer to that is yes. There are education loans available with many of the banks and financial institutions for students who plan to study abroad for their higher studies. In this article, you will get information about how to get an education loan for studying abroad and the things you need to know about it such as types of loans, eligibility criteria, and benefits of the loan.
Education loans for foreign education: education loan schemes
There are generally two main types of education loans available to students looking to study abroad:
Secured Education Loans:
These loans are also known as assets-backed loans and they work in a way that you use an asset to secure the loan and that could be a property, fixed deposits or any other physical or even non-physical qualities. The collateral guarantees the lender the repayment even if the student struggles financially upon the completion of the studies. The two main types of car financing you’ll come across include, secured loans which allow more significant sums and lower interest rates.
Unsecured Education Loans:
These loans do not have any form of security hence can be readily accessed by students who do not have any valuable security to offer. Nonetheless, these types of loans feature higher interest rates and lower maximum loan figures. The main criteria for the approval of unsecured loans are the academic performance, course and institution to which the student wishes to be transferred, and the ability to repay the loan by the co-applicant, mostly a parent or guardian.
Education loans are offered by most banks to students who fulfill certain conditions below:
However, there are some rig with regulations that one has to meet before they can access education loan for abroad studies. While the exact requirements vary across different banks and financial institutions, here are some general guidelines:
Nationality:
The applicant must be a citizen of the country where he or she is applying for the loan. Most banks also expect the student to have a co-signer usually in the form of the parent, guardian or spouse.
Age:
This is usually youths between the ages of 18 to 35 years. This criterion may not be rigid for all the institutions depending on the type of course and its duration.
Admission Confirmation:
Some lenders may demand the student must have secured a place at an accredited university abroad before applying for the loan. Some banks also consider pre-admission loan applications but most of them have the tendency to request for evidence of admission in school.
Academic Background:
Having a good credit is likely to enhance approval for the credit, particularly for the cases of the unsecured credit. Banks may also consider the nature of the course as well as employability of the course afterwards.
Recognized Course:
The loan is normally taken for full time courses such as under graduate or post graduate degree courses, professional courses like medical, engineering, management, law etc or any other recognized foreign course of repute.
Co-Applicant’s Financial Status:
In the case of unsecured loans, the income and the stability of the co-applicant is considered while evaluating the borrowing capacity and the ability to pay back the loan amount.
Can I Use an Education Loan To Study Abroad
Can I Use an Education Loan To Study Abroad
Coverage of Education Loans
Another important benefit of going for education loans especially for foreign studies is that education loans do not limit their repayment to tuition fees only. Here’s a breakdown of typical expenses that are covered:
Tuition Fees:
The only cost borne here is the fees charged by the educational institution in question.
Travel Expenses:
They also include travel expenses which include airfare to and from the country of study in most loan offers.
Accommodation and Living Expenses:
Such steps are important since learners studying in other countries may need financial support to pay for their accommodation, feeding or other necessaries for daily life, which are normally part of what is considered in the loan.
Books and Study Materials:
Educational loans can also incorporate tuition fees, cost of books, computer and other educational requirements.
Insurance and Visa Fees:
Administrative costs, health insurance, travel insurance, and visa application also fall under the fee that can be offered through the loan.
Interest rates and other terms of repayment
While choosing and education loan to study overseas, one of the most important things to take into consideration is the interest rate charged on the loan. Usually, the interest rates of secured loans are lower than the unsecured loans since the assets act as securities. Some of the concessions that banks offer include; interested rate rebates for female students as well as those who intent to pursue STEM related courses.
Repayment options differ but begin after half a year to a year after course completion or after the student gets employment. It is abbreviated as ‘moratorium period.’ At this time, it is possible to agree on some banks to pay simple interest or a part of it on the loan. If there is any moratorium on the EMIs after receiving the loan, then full repayments are expected based on the contract terms.
Advantages of Accepting an Education Loan for Foreign Studies
Easy Access to Quality Education:
Education loans enable learners to receive quality education at various institutions of their choice without the stress of how to get an immediate source of finance.
Low-Interest Rates for Secured Loans:
Interest rates on secured loans are favorable and thus the repayment is easier once it has been agreed on.
Repayment Flexibility:
Comfortable deferment and holiday periods allow students to get a job and smoothly start working to repay the loan.
Tax Benefits:
In many nations across the globe including India, interest paid on education loan is allowed as a deduction under section 80E of the Income-tax act. This in turn leads to lower interest costs during the period of repayment of loans which is very beneficial.
Build Credit History:
Being disciplined in payment of the education loan will enable one have a strong credit standing in the future during other credit transactions such as home loans, car loans, and business loans.
Points to Consider Before Approaching for Education Loan
While an education loan can help realize your dreams of studying abroad, it’s essential to keep a few critical points in mind before applying:
Interest Rates:
Exercise caution when selecting secured or unsecured loans in order to identify which type of loan has the best value for money in terms of amount and interest.
Loan Tenure:
This is for the reason that it is good to select the repayment plan that will be flexible and will take you ample time to pay the amount owed in the loan before you get stressed or strained financially.
Job Prospects:
Find out when the course employer rate is and where you want to work after the course. Ensure that you take courses that are embraced in the global market so that after defaulting the loan you will be in a position to repay.
Co-Applicant’s Financial Situation:
Unfortunately, it is especially true for unsecured loans the co-applicant income and credit score can hugely influence the loan approval rates.
Conclusion
An education loan is a great financial tool that can enable any student to achieve their dream of studying overseas without having to deal with the daunting costs at first. Since different institutions offer a variety of accounts to the customers, one must adequately research, weigh the interest rate, and read all the requirements before choosing an account. When properly utilized, an education loan can be a stairway to success in foreign studies and an exciting career.
FAQs
Is it possible for me to take a loan before the admission process in a university in a foreign country?
Yes, some banks provide pre- admission loans but most of them need the evidence of probable admission to an established institution.
What if I am among the many who cannot secure a job after the completion of the course/training?
In case you fail to find a job during the moratorium period, the good news is that you can appeal to your lender to offer you a grace period to repay the loan. Nevertheless, it is possible for interest to continue to be accumulated.
Another important concern is, how much can I borrow?
The loan quantum differs; for studying abroad, secured loans are allowed up to INR 1.5 crore in comparison to unsecured loans up to INR 40 lakhs.