Every year thousands of students plan to go abroad for higher studies from India. According to the latest data from the Ministry of External Affairs, the number of students going abroad increased even after the pandemic broke out. More than 1.1 million Indian students were studying abroad in 2021, it said. A report by management consulting firm RedSeer estimates that around 1.8 million students are likely to opt for higher education abroad in 2024 and their spending may reach an average of $80 billion annually.
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Many such students look for education loans, but getting one is often not as simple as it sounds. Usually, the road to getting an education loan is not that easy or short as lenders consider everything from where you are going to study to the loan amount. Here’s what can make things easier:
Institute’s Reputation: Often, students make the mistake of choosing a country or institute that costs less but is not very well-known. This decision is usually based on the student’s budget. However, one must note that depending on the renown and success rate of the alumni of a university, many lenders may sanction a loan with no or low-value collateral. Public sector banks usually have a list of universities and courses for which students get certain benefits such as lower rate of interest or need to put up only low-value collateral.
Lenders Apart From Banks: The choice of lenders widens when it comes to education abroad compared to studying in India. Apart from banks and non-banking finance companies (NBFCs), there are international organisations such as Prodigy Finance and MPower Financing that give education loans. Various universities also help international students get loans in the respective countries. Look at the repayment period, rate of interest and reading other terms and conditions before selecting a lender.
Good Credit Score: Like any other loan, a good credit score means higher chances of approval. So, make sure you pay all loans, including small ones such as the buy now pay later (BNPL) ones, on time.
Documents Are Important: Apart from having know your customer (KYC) documents in place, keep paperwork related to salary, income tax return (ITR) and collateral ready. Before applying for the loan, both the applicant (if working before) and the person providing the collateral should have the ITR papers for the last few years. Keep the confirmation letter from the institute apart from other documents received from there.
Explore Scholarships: Various academic bodies and institutions give partial scholarships. Look out for scholarships before or during the application process too because there are various schemes and opportunities of availing a scholarship along with a loan. There are also a few zero per cent loan products and grants available from organizations such as the Tata Foundation, the Aga Khan Foundation and others. Organisations such as Gyandhan and We Make Scholars help students with loan plus scholarship schemes.