Higher education demands a heavy pocket, and it’s true if you consider pursuing higher education from abroad or even getting a recognised Master’s degree from an IIT/IIM or even a top Universities in India. But, is it worth availing for a student loan for your further studies? Is it really a calculated risk?
The answer to this,depends on many factors – the career you’re opting for ahead, the job opportunities and growth you’re going to experience in the coming years, the amount of loan and whether and when you’ll be able to repay it, etc. All of these situations must be taken into proper consideration before opting for a loan and staying under a certain amount of debt for a specific period of time that makes you fully responsible for your further decisions in life, career and of course expenses that tag along with it.
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If you are making up your mind for Study Abroad, then shifting yourself to a new country and starting a new life is a whole new experience and is not at all easy. You need to take care of yourself, your expenses, your studies, your on/off campus job, everything! Some students are privileged enough to have wealthy parents but most have to avail of an education loan in order to achieve their dreams of completing their higher education from a foreign country / top Indian Institutions,they’ve always dreamt of.
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For a student to apply for a loan, he/she must have certain requirement criterias in order to be eligible. Let’s take a quick look at them and see if you tick the boxes to start achieving your dream.
- Should be an Indian citizen
- Should be an adult(18+ years) or else the parents have to avail the loan under their names.
- Should have a good academic record.
- Should have an approved application from a certain foreign college/institute/university.
- Should have applied to a job-oriented course or college.
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If you as an aspiring student have the above mentioned criteria ticked, then let’s also take a look at what is the most ideal process of availing and selecting the right student education loan for you!
- Check the Course
If you’re availing the student loan from a bank, they should be able to recognise the course, the college/institute from which you have selected the particular course and they should officially accept your application for the same.
- Money Matters!
You must calculate the amount of loan that you’d require for the course. The bank officials will definitely provide a certain breakdown of the amount of loan that they’re ready to provide you, but you should also be responsible for the amount that you can provide from your end.
- Comparison is a Must
Students and parents must compare the options that are available in the market. There are many banks that offer a decent amount of loan and an interest percent, but getting to know all the offers on the table and then choosing the right match for you is a must!
- Loan Application Form
Say you have selected the right bank, now you must fill up the required Loan Application form and approach the bank with your proposal.
- Loan Elements
Once your proposal for a student loan is approved, the next step is to provide all the relevant information and documents pertaining to the loan application. It covers the various elements of the loan. At times, you either need to show all related property documents or the power to repay the loan amount just in case.
- Disbursements and Instalments
Once all loan and bank related formalities are completed and approved, you’ll get a certain amount disbursed in your bank account as instalments or as asked by the dedicated course/college/institute/university.
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Banks do not provide a 100% amount of the money required by the student for the course. You will only receive 90% of the amount that is required. The remaining 10% has to be arranged by you or your family.
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Moratorium period is the time where the student or the loan issuer does not need to make any loan repayments to the bank. Keep in mind that you need to check the moratorium period as it varies from one bank to another.
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The exchange rates play an important role when you’re about to receive the said amount of money in your account. The exchange rate always affects the actual amount that you receive.
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           A brief look at what banks offer as perks for student education loans for you!
Most banks have an authority of offering a maximum amount of Rs 30 lakhs as education loan with a loan margin of about 15%. Their interest rate on the loan amount is up 2% on the base rate. And the loan repayment period can vary between 1 to 15 years. Student Loan schemes can be applied by students going for a full-time course abroad. eg) If the loan amount is more than Rs 8 lakhs, then you need to show and furnish collateral as a security deposit. And the loan amount repayment commences after 1 year from the date of completion of your course.
 Some large private banks offer education loans to students going abroad with around       Rs 20 lakhs being the maximum loan amount and the best part is that you can get the loan approved even before getting an admission response from the college/institute. eg) Credila, a non-banking financial organisation, and a part of HDFC, offers student loans at competitive rates and you can repay it within 10 years.
Banks offer student education loans with a margin of about 15% that has to be arranged by the borrowing party if the amount exceeds Rs 4-5 lakhs. The loan amount can be divided as the student’s tuition fees, accommodation, etc.
The bottom line is, think before you leap. Step back, look at all the pros and cons, check the options, your earning potential post the course and your repaying capacity and repayment term. If you tick the boxes positively …Go for it. Go to achieve all your dreams ahead in the new life that awaits you!
This article is written by Mr Anand Bhushan, CEO EduCrack
