Things to note for students who plan to study abroad by taking loans

Education is a part of Indian speaking itself. In recent years there has been a significant increase in the number of Indian students seeking higher education abroad. This trend is driven by the desire to join prestigious foreign universities, better job opportunities and better lifestyle. Availability of educational funding has also played an important role in realizing these dreams.

Hence, the demand for education loans is increasing. Education-focused non-banking financial companies (NBFCs) are therefore on the rise. They offer customized financing solutions to suit individual needs. Such financial lenders not only facilitate access to quality education but also help students protect family savings while independently achieving their goals. However, it is essential to carefully consider some critical aspects before applying for an education loan to ensure a better financial outcome.

Before applying for an education loan it is important to understand the total cost of studying abroad –
As students begin planning their trip abroad, it is essential to understand all the financial commitments involved in such an endeavor. In addition to tuition, accommodation, living expenses, travel, insurance and other unexpected expenses need to be taken into account. This will enable the student to understand the exact financial requirements and apply for the required amount. It is never advisable to apply more than necessary. Tools like Education Loan EMI Calculator and College Course Cost Calculator can help students calculate these costs accurately.

Thorough research is critical to understanding the financing solution – Once the student has a clear understanding of the overall cost of education, the next step is to explore the available education loan options. Students need to analyze the options provided by different lenders and their eligibility criteria, interest rates, disbursement processes, repayment terms, co-borrower requirements, collateral requirements and processing fees. A thorough research on all the above parameters will enable the student to identify a loan that suits not only their overall expenses but also their financial situation and educational goals.

Financing solution should cover comprehensive cost of education – New age NBFCs offer comprehensive education loans that provide comprehensive coverage not only for various educational expenses but also for the entire student journey. These loans cover a wide range of financial needs beyond just tuition fees, including travel expenses, accommodation expenses, purchase of study materials, living expenses and other education-related expenses.

This holistic approach ensures that students have the financial support they need to cover all aspects of their educational journey, enabling them to focus on their studies and career development without worrying about finances.

Proper documentation is an important step in the overall application process – making a checklist of all required documents is recommended. Students should ensure that all necessary documents are properly prepared and submitted to avoid delays. Complete and accurate documentation helps to streamline the application, increase the chances of timely loan approval, and reduce the risk of delays in the process.

Understanding the Loan Evaluation Process – Education loans are specifically designed to meet the academic aspirations of students. Hence, new age NBFCs have implemented a student-centric approach to assess loan profiles. They evaluate the student not only depending on the financial background of the co-borrower. They evaluate the students' past academic performance, entrance exam scores, chosen course and university, future career prospects and many other parameters.

Apply in advance – Students should apply for education loans in advance as lenders need time to complete pre-approval procedures, verify documents and finalize the loan. The approval process can vary depending on the financial institution, so starting early helps avoid last-minute rush. By applying ahead of time, students can ensure that their loan is approved on schedule, allowing them to focus on their studies with peace of mind.

Plan a better repayment plan at the start: Although student loans have a grace period, education-focused lenders encourage students to make small contributions in the form of simple interest/partial interest. Therefore, students are encouraged to start their loan repayment journey early and choose a repayment plan that suits their financial needs. This approach enables students to proactively manage their loans and develop financially prudent habits.