Higher education abroad is a dream for many students. However, finances are crucial for this dream to take off. Many Indian students dream of studying abroad at a top global institution. However, lack of funds stifles such aspirations.
Recognizing the financial hardships students face today, several public and private lenders have created education loan programs to meet the needs of students wishing to study abroad. Different banks offer various student loans, so it can be difficult to choose the right one.
Funding Options for Undergraduate Programs
Students wishing to study at foreign universities can explore several options for financing their studies abroad. Here’s what you can look for:
Scholarships: Getting a scholarship is one of the most popular ways to fund higher education abroad. There are different types of scholarships available for students, and all you have to do is find the right one for you after reviewing the eligibility criteria. This exercise is essential because different exchanges target different demographics.
Some of the scholarships available are:
- Merit scholarships
- Sports scholarships
- Specific scholarships
- Scholarships from international and independent organizations
Loans for studies: Student loans are a great financial respite for students from low to middle income families who dream of studying abroad. Bank loans are a popular mode of financing overseas education around the world. Many public and private banks in India offer study loans to overseas applicants.
Bank student loans are of two types: secured loans and unsecured loans.
Collateral loans are secured loans that require the borrower to use some form of collateral as collateral. This can be real estate, an insurance policy or a fixed deposit used to secure the loan. Secured loans offer a lower interest rate and longer repayment term than unsecured loans. Students applying for secured loans do not have to worry about their parents’ income, as it is not required for loan approval. It is only after graduation that the return on investment begins.
Borrowers who contract unsecured loans are not required to provide security. These loans have a higher interest rate and require parental income approval. Because unsecured loans are risky for banks, the repayment period is shorter and part of the loan must be repaid during the study period.
When applying for a loan, a student should consider the type of loan that will best meet their purpose and repayment capabilities. All components of repayment, interest rate and other factors should be carefully considered. When applying for a school loan, make an intentional decision to opt for a flexible interest rate. The RBI rate adjustment, which is directly linked to inflation and other factors, will benefit a floating rate loan.
Once you have decided on the type, you need to follow specific steps to apply for it:
- Check if you are eligible for the loan.
- Compare the available alternatives and decide which one suits your needs and repayment capacity.
- Select the lender of your choice and apply for the education loan online
- Once your loan is approved, the bank will issue loan documents detailing the various elements of the loan.
- After signing the loan document, your bank will disburse the loan amount either in installments or as per your university requirements.
Remember that getting a study abroad loan is a time-consuming process. Be sure to apply well ahead of time to stay on track for your study abroad trip.
Part-time jobs: Another option is to work part-time while studying abroad to help pay for your education. Although the income earned may not be enough to cover your tuition, it will help cover some of your living expenses. The conditions of your visa determine your ability to work. Check your visa to see what kind of work you can do.
Although study grants and loans are the most popular modes of funding higher education abroad, there are a few more alternatives available to students wishing to study abroad. One can also explore the possibility of exchange and sponsorship programs (corporate sponsorship, corporate scholarships, etc.) to finance their higher education abroad. Although there are many options available, it is a good idea to choose a mode or a combination of methods that can cover your educational needs during your college years.
(Ashish Fernando is founder and CEO of iSchoolConnect, an AI-based Edtech company)