Funding International Education Dreams: The Modern Student Loan Approach

Studying abroad is the dream of many students in India. However, the average cost of studying abroad ranges from ₹ 17.3 Lakh to ₹ 52 Lakh, which cannot be covered by savings alone. Student loans have enabled students to realise their international education goals.

By understanding how these loans work, students can budget for their international education with confidence.

The Rising Cost of Studying Abroad

Before exploring financing solutions, it is important to understand why studying overseas requires careful financial planning.

Key Expenses Involved in International Education

Tuition fees are the most significant expense incurred while studying abroad. Tuition rates vary by country and course. In addition to tuition fees, the overall cost of education includes:

• Accommodation Charges
• Food and Mess Fees
• Local Transportation
• Airfare and Visa Fees
• Health Insurance
• Study materials such as books and laptops, as per the lender policy
• Miscellaneous Fees

Together, these account for a significant portion of total expenditure. These additional costs typically add to your overall expenses for the duration of the course.

Why Self-Funding Is Often Challenging

As tuition and living expenses begin, self-funding an international education will place a significant strain on your finances. It can be very difficult for you and your family to rely only on your bank account to finance an international education.

International education is also subject to exchange rates, which can lead to unexpected increases in expenses that affect your budget.

What is an Education Loan for Abroad Studies?

A student loan for studying abroad is a financial tool that provides the capital you need to study abroad. It covers your tuition fees, living expenses, housing, travel, healthcare, and any other study-abroad-related costs.

With a student loan, you will not be constrained by the pressure to pay tuition immediately. By consolidating the entire cost of your study abroad, you will be able to concentrate fully on the international education experience.

How Modern Student Loans are Different

The student loan landscape has evolved to match today’s global education needs.

Flexible Loan Structures and Repayment Options

Unlike traditional loans, today's student loans are structured with more flexible repayment terms, including a moratorium period. Most loans offer a moratorium period, during which repayment is deferred, typically covering the course duration and a short grace period.

For example, for a 4-year degree, your loan repayment period may start 4.5 years from today. Extended repayment terms allow you to reduce the burden of monthly payments during the early days of your career.

Competitive Education Loan Rates

The interest rate on your Education Loan is one of the most important factors determining how affordable your education will be. Today's student loans offer competitive interest rates starting at 11.25% p.a. and repayment flexibility aligned with expected future earnings.

By choosing an Education Loan with a reasonable interest rate, you will keep your overall repayment amount manageable over the long term.

Digital-First Application and Approval Process

The loan application process has become increasingly digital, making it easier to submit applications online, track your application, and complete required documents. Faster processing times and streamlined approvals will reduce uncertainty in the admissions process.

Steps to Apply for an Education Loan

An organised application process can help ensure your loan is approved promptly.

Step 1: Finalise Your Course and University
After you have made your final selection, you must obtain an official offer letter from the university to confirm your admission. The offer letter will help determine the amount of the loan you will need.

Step 2: Estimate The Total Cost of Education
You must include tuition, cost of living, travel, insurance and other education-related expenses in order to estimate your total education funding needs.

Step 3: Check Eligibility and Education Loan Rate
Before applying for a loan, you should review your loan eligibility requirements. The Education Loan rates and repayment terms that the lenders are offering will determine which lender is right for you.

Step 4: Gather Required Documents
To avoid processing delays, have your academic records, identity documents, letter of admission, and financial records ready.

Step 5: Submit The Loan Application
Submit either an online or paper form and all required accompanying documentation to apply for a loan.

Step 6: Complete Verification and Loan Approval
The lender will review your documents and determine if you qualify for a loan before issuing a loan approval.

Step 7: Loan Disbursal as Per Requirement
Once you receive approval for a loan, the lender will disburse the amount of your loan based on your school's fee schedule.

Key Factors to Consider Before Applying for a Student Loan

Careful evaluation helps you borrow responsibly and plan repayments effectively.

Education Loan Rate and Total Cost

The amount you repay on an Education Loan over time is affected by the interest rate charged by the lender. For example, if you borrow ₹ 10 Lakh at 10% interest rate for 5 years, you will end up paying ₹ 13.59 Lakh, including the interest. Therefore, you need to examine each loan's interest rate, repayment plan, and total cost before making a decision.

Loan Coverage and Limits

Tuition fees can account for 40–50% of total education expenses. You must verify which expenses the loan you are applying for can cover. Some loan programs allow you to cover more types of expenses, and others only allow for a set amount. Choosing a loan that will cover a full year of expenses prevents you from having to find additional funding.

Repayment Tenure and Future Earning Potential

You should apply for an Education Loan based on the length of your intended career and your future earning potential. While a longer loan will have lower monthly payments, it will also have a higher total interest because of the extended repayment period. A shorter loan will increase your financial burden in the early years of your career.

Finding the right balance between the length of the loan and your realistic future earnings will help you preserve your financial well-being after graduation.

When is the Right Time to Apply for an Education Loan?

Optimally timing your application will help you get approved and plan financially. The best time to submit an Education Loan application is after you receive your initial confirmed Acceptance Letter. At this stage, you are clear on the total course fee and the required loan amount and can determine the ideal loan tenure.

Applying for a loan at this stage will provide you with ample time to prepare your documentation. You can easily get approved for the loan and then proceed with the visa application without unnecessary last-minute stress.

Read Also: Education Loan for Study in USA: Visa Processing and University Requirements.

To Conclude

International education is a significant investment in your future. Although tuition fees may seem overwhelming, there are many ways to manage your financial commitment through the comprehensive coverage of education loans.  By understanding how student loans work, you can focus on preparing for a successful career while maintaining financial stability.

Poonawalla Fincorp’s Education Loan offers competitive interest rates and flexible repayment tenures to help bridge the gap to your dream career. Connect with us today for more details!

FAQs

What expenses are covered under an Education Loan for abroad studies?

An Education Loan can be used for tuition fees, living expenses, accommodation, health insurance, travel, and other school-related expenses.

What impact does the Education Loan rate have on the total loan cost?

The Education Loan interest rate directly affects how affordable your Education Loan is because it determines the additional interest you would pay.

Are education loans available for all recognised international courses?

Lenders may offer education loans to students enrolled in most recognised international courses, subject to the lender's eligibility requirements.

When is the best time to apply for an Education Loan?

The best time to apply is after receiving an offer letter from your chosen institution, and before beginning with any visa applications.

In what ways are modern student loans different from conventional student loans?

Modern student loans provide flexible repayment terms and a completely digital application process. The loan structures are also mindful of the moratorium period.