For many Indian students, gaining an international academic degree has become an important goal. Studying abroad offers several advantages, from broadening mindsets to boosting job prospects after graduation. However, making the dream of studying abroad a reality is often challenging due to money matters.
This is where education loans can make a big difference. By funding a large portion of the fees and living costs related to your course and stay abroad, these loans allow deserving students to access global education.
This detailed blog discusses the upside of funding your overseas university experience through loans.
Benefits of Abroad Education Loans
Access to top-notch international universities and invaluable global exposure are key benefits made possible through abroad education loan.
1. Live your study abroad dream
Many students dream of pursuing advanced studies in famous foreign universities. However, the high expenses often make top-notch international education seem impossible.
Furthermore, education loans help overcome this money crisis by financing most of your costs during the course. These loans can also cover key expenses, from university fees to accommodation and travel.
Banks and financial companies offer flexible loan amounts up to Rs 1.5 crore. So, money constraints need not force you to give up plans to gain global exposure and learning.
2. Customised repayment tenures
Education loans offer the key benefit of extended repayment periods to help ease cash flows after your return. There is usually a moratorium or grace period of 6 to 12 months after course completion before the EMI payments commence.
This provides international graduates with some cushion to find suitable employment and settle down in a job before beginning loan repayments. It takes away the worries of arranging funds immediately after your return home.
In addition, most lenders offer customised repayment schedules spanning 10 to 15 years. During your post-study period, you can structure your EMIs in alignment with your earnings, financial commitments, etc., which facilitates prudent repayment management.
3. Income tax benefits on interest paid
Opting for education loans also translates into annual tax savings under Section 80E of the Income Tax Act. The entire interest component paid on your education loan is exempt from tax without any upper limit.
The interest you pay on the loan is eligible for deduction from your taxable income. There is no cap on the deduction amount.
This tax break considerably reduces the effective interest cost on your loan. It enhances the affordability and economic viability of funding overseas education through loans.
4. Lower interest rates
Interest rates applicable on overseas education loans are desirable compared to other forms of credit. Rates start from 8.5% per annum onwards across most banks. Some lenders also offer loans at base lending rates and zero foreclosure charges.
Compare rates across 2-3 leading lenders before finalising your choice. Opting for a loan program with lower interest rates keeps your interest outflow in check, further improving the viability of funding studies abroad through loans.
5. Minimal collateral requirements
Overseas education loans require lower collateral requirements than other retail loans. Many loans in this category are collateral-free, requiring no student security or guarantee.
However, some form of third-party guarantee, fixed deposits, or property papers may be required, especially for higher loan values. Still, the requirements are lower than those of most other financing products, making education loans easier to access for achieving academic ambitions abroad.
6. Special incentives
Many banks and NBFCs offer special incentives on education loans for overseas studies to attract meritorious students.
For instance, high-scoring female applicants may enjoy relaxations in interest rates and processing fees. Similarly, students gaining admissions to globally top-ranked colleges may be offered incentives like discounted interest rates, faster approval, etc.
So, check with individual lenders about specific education loan schemes and benefits applicable to your profile or target universities abroad.
7. Funding wider expenses
In addition to direct academic expenses, overseas education loans extend to financing many indirect costs related to your stay and travel abroad.
The loan can cover most secondary expenses, from air tickets, visa charges, travel insurance, accommodation expenses, books, and laptops.
Some lenders even account for cost escalations during the course duration while determining loan eligibility. This further eases the financial burden on students and families.
Key Aspects to Consider
While education loans undeniably facilitate studying abroad, students need to exercise careful due diligence:
- Compare across lenders: Assess loan offerings from 2-3 leading banks on parameters like interest rates, repayment options and processing time before deciding. Opt for the lender best aligned to your needs.
- Apply well in advance: Allow 3-4 months for loan approval formalities to avoid last-minute hassles. Have all documents and collateral ready.
- Assess overall costs: Account for all direct and secondary expenses during your overseas stay to determine the loan amount needed. Budgeting all costs in advance is vital.
- Read terms carefully: Before signing, study loan agreement terms related to interest calculations, prepayments, penalties, etc., and clarify all doubts beforehand.
Conclusion
Education loans empower students to access high-quality international qualifications by funding the significant costs. Their merits, like longer repayment tenures, income tax rebates and lower collateral needs, make them prudent funding avenues.
Assess your expenses diligently, compare lender offerings, and apply in advance. With careful planning, education loans can help you realise your global education dreams.
