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Read this before Applying for a Loan to Study Abroad

Useful information that a student must read before applying for a loan to study abroad.

Mahesh Ramani

Always double-check with the bank about eligibility criteria and then apply for a loan. Typically vocational study and English language training courses are not covered under student loans.

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Well dear student are you all set to secure a bank loan and sponsor your higher education abroad? Then read this article before you finalise your plans and sign on the dotted line with a bank!

Compare Banks:

Most leading banks offer study abroad loans to students at varying rates of interest. State-run banks offer loans at a lower rate of interest when compared to privately-owned banks. 
Read the article on top Indian banks offering an education loan for studying abroad to have a fair idea of the ‘numbers’ for some of India’s leading banks.
Note that once you start earning and begin repaying your loan, you can save income-tax on the loan repayments that you make. Focus on tenure, pre-payment charges (if any), varying interest-rates before you make your final decision. 
Always remember to apply to multiple banks so that you have a back-up in case one bank rejects your loan application.

Loan Eligibility:

Most long-term courses are covered by student-loans - always double check with the bank about eligibility criteria and then apply for a loan. Typically vocational study and English language training courses are not covered under student-loans.

Repay on Time:

Please be very prompt in your loan repayments. When you apply for a loan - make a conservative estimate of what your pay-package would be once you secure a job. Structure your loan requirements appropriately. Non-repayment of loans on time leads to your credit-ratings being affected; and at a later stage when you apply for some other loan this is sure to come back to haunt you. 

Loan Guarantor:

Usually for a loan amount greater than Rs 5 lakhs; the bank may ask for a guarantor; usually your parents would sign on as a guarantor for the loan. Think very carefully about this and factor the burden that you impose on the earnings and savings of your parents.

Understand the clauses in your loan:

As mentioned earlier - take time to go through the fine-print in your loan agreement. Check for information on pre-payment, possibilities of an extension on the repayment schedule in-case you do not secure a job immediately after completing your studies, the interest-structure, etc. Please speak to your bank advisor to clarify any doubts that you may have.

Scholarships Matter:

Irrespective of you receiving a student loan or not - remember that applying for scholarships, which you are eligible is always a good thing to do. Any bit of financial help that you receive will help you ease your monetary burden.
This is a great time for students to consider studying abroad. What was once the sole luxury of the super-rich is now within grasp of the regular working-class. If you have a good academic score to back-up your loan request; banks are ready to offer student-loans. Additionally special schemes are on offer for students from economically challenged families. Contact your nearest bank for more details. All the very best for your study abroad aspirations!
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