Studies suggest that the cost of education is increasing by 15 percent a year. Education, whether it be in India or abroad, has become costly. Though good education in India will cost you about a handful, international education may cost you a tonne. Let’s look at this educational loan guide that gives some of the reasons why loan is a better way to fund overseas higher education.
Why are student loans better than self-financing?
Keep your savings secure- If you are a decent investor, this guide to educational loan says that you can spend your money and gain higher returns and give the lender a portion of it as interest. In the event that the service is shortened due to unexpected circumstances, your money will even be used to protect your tuition in the future.
Improve The Credit Score– Timely repayment and compliance with the repayment terms will help the student create a good credit profile that can be used to their advantage.
Get the Moratorium Period Advantage- The repayment of guaranteed loans starts after the moratorium period, which may be six months or a year after the completion of the program, which allows students to completely reflect on their studies.
Simple issuance of visas – Most visa officials ensure that the influx of funds stays stable and that the source of financing is secure. Student loans, specially from public sector banks, help a student secure simple visa approval at such a stage as the daily flow of funds is guaranteed, and government banks are stable.
Provides a buffer against unnecessary costs- In situations where they are struck by unexpected expenses, students who self-fund their education have to face the added expenses and plan for extra funds. Students taking a student loan overseas do not have to think about unforeseen costs since they will convince the bank to cover the extra cost.
Educational Loan Guide to Types of Student Loans
There are two kinds of student loans:
Unsecured student loan- Which is a student loan on which no insurance (collateral) needs to be promised by the creditor. For students who do not have any equity to offer, this loan is safest. However, an unsecured loan for education has a higher interest rate. They also have a shortened duration of redemption and mandate that such repayments also be made within the research period.
Secured Student Loan- One where the creditor needs to provide real or intangible protection is a secured college loan. In the form of immovable property, FDs, LIC protection, land, etc. the defense can be As the bank needs to check all the paperwork relating to the protection being pledged, this form of loan takes longer to be accepted. It does, however, have lower interest rates on student loans, a longer maturity period, and no repayment during the study period. This loan, therefore, provides larger acceptance prospects, and when it comes to approval, parental wealth is not a determining factor.
- Repayment Tenure- Citizens who apply for unsecured student loans from private banks for learning abroad get 20 years to repay their loans. NBFCs grant creditors ten years to repay the loan.
- Processing Time- Private banks need to handle unsecured student loans for 5-7 days.
- Expense compensation- You can get 100% of your expenses covered if you apply for an unsecured loan from an NBFC, while you can get 85% of your expenses covered in the case of private banks.
- Co-applicant’s Income Condition- Student loans without private and public bank collateral require that the co-applicant has a decent amount of income every month. The exact income criterion may vary according to the size of the loan.
Things to keep in mind while applying for a Student Loan
Students should read the terms and conditions set down by the provider with great caution before taking up a student loan abroad. The numerous loan programs should also be compared, and the final decision made then. The following are a few things that should be kept in mind:
- Price of Interest
- Duration of Moratorium
- For Margin Money
- Penalty on Prepayment
- Payment benefits
- Covered Costs
- Duration of Debt Repayment
How to apply for student loans?
Follow these steps to ease out the process of application.
- For the multiple loan schemes provided by different lenders, students first need to verify their eligibility.
- The student now has the lender to finalize.
- The student now needs to fill in the application for the student loan as well as related papers.
- The bank will review the loan application and approve the loan after the paperwork and documentation have been submitted if the application satisfies all the conditions.
- The bank will disburse the loan after the loan agreement has been signed by both parties.
Planning to go overseas for higher education, but thinking about the high-sky tuition fees? In this situation, student loans for studying overseas will be the right choice for you. Take inspiration from this educational loan guide.