Since globalisation has taken over the world and our lives, we have become a part of a multifaceted society connected through economies, cultures, technologies, politics, trade, etc. As a result, a plethora of possibilities have opened up to explore and unfold the hidden opportunities beyond territories and boundaries. One such factor that has significantly impacted the global economy is the prospect of overseas education, which has only become possible due to the interconnectedness and interdependence of various societies on each other.
In fact, overseas education was previously restricted to only a certain privileged section of society. However, with the advent of globalisation, people have started to reconsider their choices and are more than ever aware of the power of education. Although the prospect of overseas education holds the strength to transform the world through innovation, it often makes people conscious about their financial upholding. To no surprise, many students who envision studying abroad deliberately renounce their dreams due to their unwillingness to ask for financial assistance.
Surprisingly, this perception regarding education loans has significantly evolved with time. Earlier it was seen as a financial burden with high interest rates and a looming sense of debt, it is now considered a smart and strategic choice, which prevents you from depleting your liquidated funds and assets for financial security. Therefore, if you plan to study abroad in the UK, Ireland, or any other country, this article will guide you through everything you need to know about securing an education loan.
Notably, there has been a sudden spike in the number of education loan borrowers in the last few years, which indicates a growing awareness among people about strategic financial planning and management. As a result, people have started to consider education loans as a safe, secure and smart option for maintaining their financial stability without hampering their current economic scenarios. Let us now discuss the advantages of an education loan and how it can help you maintain your finances wisely.
It is unquestionably true that overseas education can lead to a promising career and can exponentially spearhead one’s personal and professional growth. However, this decision can take a toll on your finances, pushing you into an overwhelming situation where you contemplate between self-funding extraneous expenses or sanctioning an education loan. While both self-funding and education loans are highly challenging situations, their repercussions are drastically opposite.
Self-funding your education abroad can drain you of your life’s savings including important assets like gold, properties, insurance, etc., leaving you with little or no financial security during unforeseen circumstances. On the other hand, an education loan can pull you out of such critical junctures by helping you overcome your financial barriers. Additionally, it will not only cover the tuition fees, living costs and other expenses but will also provide you with monetary advantages in terms of low interest rates, tax relaxation, flexible repayment terms, and even government subsidy and education loan insurance in some cases.
Here are some key benefits of education loans you can get hands-on:
Secured loans are usually offered based on collateral security, where a borrower pledges collateral to secure a loan so as to provide compensation to the lender for an outstanding loan debt. This kind of arrangement is done to ensure timely payments and if in case the borrower fails to do so, the lender is liable to seize the collateral and make ends meet. Whereas unsecured loans do not require any collateral, but the borrower has to have a co-signer with a good credit history, excellent academic scores and admission to a recognised university to avail of this loan.
Both secured and unsecured loans have their pros and cons but consider the below-mentioned factors while choosing between them, refer below:
All these factors play a huge role in determining the type of education loan you want to opt for. Therefore, compare your options before moving through the application process.
Since students are increasingly opting for overseas education, it has proportionally increased the number of education loan borrowers in the country. Resultantly, the government has invested in special schemes at subsidized interest rates for students from special backgrounds.
As per Dr Ambedkar’s Central Sector Scheme on Interest Subsidy on Educational Loan for Overseas Studies for OBCs and EBCs, the annual parental income should not exceed more than 2.5 Lakh. This scheme is applicable for admissions to approved courses at Masters, M. Phil or Ph. D levels, intending to increase employability among economically weaker sections.
Moreover, the “National Scheduled Castes Finance and Development Corporation (NSFDC)” applies to full-time technical and professional courses with up to Rs 40 Lakh or 90% of the fee (whichever is less) and the Vidhya Laxmi Scheme offers a loan of Rs 15 Lakh with 5 to 7 years of grace period and tax benefit.
For more information, dig deep into these schemes to reap the amazing advantages.
It is important to know that education loan applications involve a complex process in terms of documentation and eligibility criteria. Therefore, to simplify the application procedure, we have jotted down the basic requirements which you need you fulfil beforehand.
Now, look at the step-by-step guidance on how to apply for an education loan.
You must know that you can enhance your loan approval chances through certain tips mentioned below:
Make sure all the above-mentioned documents are complete and accurate to streamline the loan approval process.
Generally, education loan repayment is considered a critical step as it involves strategic financial planning to manage timely payments. Let us look into some repayment plans that will help you simplify this process.
Education loan repayment involves critical thinking and strategic financial management to calculate the loan tenure and interest rate. Below mentioned are some important factors that you can consider while choosing these two.
After you decide on the interest rate, choose the right loan tenure for manageable EMIs so it does not severely affect your finances.
To manage your education loan efficiently and without any financial strain, one must create a budget plan to calculate the living costs in the UK and Ireland and start allocating your funds for emergencies to avoid eleventh-hour complications.
Note that, a student can work 20 hours per week during term-time and 40 hours per week during vacations. Therefore, utilise this time to your maximum potential to effectively repay the loan EMIs.
Furthermore, in some cases, a borrower is given loan repayment holidays, so it is highly suggested to make the best use of that.
To sum up everything, it can be said that choosing the right education loan can make a big difference in your study abroad journey. In today’s world, when it becomes too hard to manage finances, availing of an education loan will not only help you strategically manage your finances without draining life’s savings, but it will also shower you with endless benefits that will improve your future financial health. However, it is wise to explore multiple options before finalising your lender as small differences can create huge differences in the overall loan amount.
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