student loan: 5 things to consider before getting a student loan to finance your international studies

Education loans to study at an educational institution abroad usually cover the full tuition fee and a predefined proportion of the cost of living and other miscellaneous expenses.

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The amount disbursed varies based on co-borrowers’ credit history, existing EMI burden, institution’s credibility, ability to provide fixed assets as collateral (if requested by lender), and receipt of confirmed admission from the respective University College.

Given the dynamic structure of student loans from different lenders and the varying expenses associated with different institutions, there are several things you should consider that can help optimize the process and reduce the effective debt obligation.

1. Compare the overall cost of education

This should be the first differential to consider before applying for a student loan to finance your studies abroad. In addition to considering tuition, a student must also consider expenses such as cost of living, travel, and other miscellaneous expenses. There are several institutes offering similar courses with broadly common pedagogies, but there can be huge differences in tuition and cost of living.

2. Explore all possible scholarship opportunities

This has been the most lucrative way to cut down on overall spending abroad, as a number of private and government-backed organizations offer significant sums through various scholarship opportunities that can potentially help lower your collective costs. .

This is a step that requires rigorous exercise as most scholarship programs are not well advertised. Hence, you need to dig deeper to explore the direct grants/scholarships offered by the respective state governments to international students.

3. Selecting the financial institution for your loan

Pre-screening the lender that meets your student loan needs can be tricky, as most student loan financiers will only grant a student loan if the student has been selected from a foreground.

The applicant should check if the course and college for which they are applying for a loan are eligible for funding. They should also check if it is an unsecured loan or if it is backed by collateral.

4. Loan conditions

Once the eligibility check is completed, the applicant should check the available loan amount, applicable interest rate, moratorium period before IMEs start, total loan term, availability of option to co-payment, margin requirement and eligibility for income tax deduction.

The applicant must also take the loan in installments i.e. the disbursement is made at the time of payment of the semester fee as the interest is charged after the amount is disbursed.

5. Servicing the loan

The applicant should also consider the serviceability of the loan. They should clarify things like the partial payment option and the pre-closing of the loan. Also, if the lender has digital channels to manage the loan or if they require physical visits to the branch. This is of great importance as the loan seeker could very easily end up working abroad.

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