Gone are the days when acquiring a higher educational degree from outside the country used to be for the wealthy only. Today, taking such loans has become more affordable and accessible. This facility has enabled even middle-class parents to fulfil their dreams of providing higher education for their children from outside the country.
The loans will include tuition fees, maintenance costs, travel, and even insurance for the individual. It is clearly understood that even with the facility being more accessible for the masses, the ways to acquire such a loan are not understood by many.
Step 1: Understanding the Cost Structure of Overseas Education
To better understand the ways to secure an education loan in India, you must first have an idea of the main cost components in foreign education. These include:
- Tuition and other linked academic fees, which vary from institution to institution, as well as the duration of the degree
- Accommodation costs, which are dependent on the region you reside in a foreign country
- Travel and visa expenses, which include the cost of flight tickets, visa processing charges, and even the premiums for personal health and travel insurance.
Once you have a clear understanding of these cost heads, you can begin looking for eligibility criteria for such loans. Be sure to check out loan offers from well-known institutions like IDFC First Bank for competitive student loan interest rates and collateral free loans of up to ₹1 Crore*.
Step 2: Eligibility and Admission Prerequisites
Eligibility for a loan to secure foreign education is often dependent on the admission criteria of individual institutions as well as the student’s academic performance.
In terms of the institutional factors, you need to ensure the following to understand how to get an education loan:
- Confirmed admission letter into the foreign university of your choice
- Proof of full-time course enrolment at the same university
- Relevance of the undergraduate or postgraduate course to your current academic history.
On the other hand, the student’s personal academic performance factors include:
- Academic performance history of the applicant
- Proof of income stability of the applicant’s legal guardian (or parent)
- Favourable credit history of the applicant’s legal guardian.
With these documents at your disposal, you can now begin looking at the interest rates, moratorium period, and repayment structures offered by financial institutions in India.
Step 3: Interest Rates, Moratorium, and Repayment Structure
You should opt for education loans with low interest rates, such as simple interest accruing during your period of study abroad. You can also opt for deferred interest servicing, which helps with cash flow flexibility.
The loan should cover, in regard to the moratorium period (the period of non-repayment of the loan), the whole of your course duration. The best scenario would be a loan extending about two months beyond your course duration to enable you to find employment and subsequently start paying the loan.
Last but not least, the repayment tenure is very important. You should select this (ranging from 10 years up to 15 years) based on your future career path you will take after graduation.
Once these have been covered, you can now start looking into the disbursement process if you really wish to understand how to get education loan in India easily.
Step 4: Disbursement Process and Fund Utilisation
The disbursement of loans to study abroad follows a fixed structure. This structure is often developed to match your academic schedule. The mechanics of loan disbursal are usually as follows:
- Funds are allocated in your name and released either semester-wise or annually.
- The payments are made directly to your university’s bank account.
- The portion that covers travel and accommodations gets credited to your account directly.
By opting for renowned financial institutions like IDFC First Bank, you can rest easy that your loan disbursal process will be hassle-free via a seamless application process.
Step 5: Risk Mitigation and Insurance Considerations
Once you take up a loan for overseas higher education, you inherently accept a huge risk. Although the benefits greatly outweigh such risks, there are several ways mitigate them. Here are some things you can do.
- You can apply for education loan insurance
- You can opt for health and travel coverage
- You can plan ahead for fluctuations in foreign currency exchange rates.
The Takeaway
Securing a loan for overseas education in India has become a streamlined process these days. If you attempt to go about it arbitrarily, you may end up experiencing several obstacles. However, by following this step-by-step process, you have much better chances of success.
