Studying abroad is something that most students aspire to as it can be a life-changing experience. However, with the rapid rise in the cost of education, it is not easy for every student to pursue their dream, particularly students from weaker sections of society. But as the famous phrase goes, “Where there is a will, there is a way”, the same way Education Loan is something that comes to the rescue of meritorious students willing to study abroad. However, applying for a loan to study abroad could be a daunting task, just like selecting the appropriate colleges/universities in a distant land. Gateway International, a study abroad consultant that has helped numerous students in fulfilling their dream of studying abroad, highlights five key factors to keep in mind while applying for a loan for studying abroad.
- Identify the type of loan you need
As someone looking to apply for a loan, you must vary that many studies abroad loans are available. Generally, there are three types- General Student Loans, Federal loans, and Private loans. All the three have different requirements to apply and what’s more important is that all three serve other purposes. General Student Loans usually differ from university to university. This type of loan is easy to apply for and get as there are fewer requirements and is open to all students. Federal Loans are usually issued to those students who have high financial needs. Students willing to apply for this loan must complete a FAFSA and submit their application to the university’s financial assistance office. Financial institutes like banks usually grant private loans. It is generally tough to get and requires a lot of paperwork. A student planning to apply for a loan must smartly select the loan that suits best their interest.
- Must ensure that your institution is eligible for the loan
This is probably one of the key factors that one must keep in mind when applying for a loan to study abroad. Why should you waste your time applying for a loan for an institute that you are not even eligible for To save? With your time and energy, it is recommended that you ensure that your institution is suitable for the loan so that you do not regret your decision later.
- Terms of the loan
Once you are done determining the type of loan you are willing to apply for, the next big step is to check the quantum of the loan amount available alongside the applicable interest rate. One must also keep in mind the total tenure of the loan and the availability of co-payment options. The student should also take the loan in instalments so that the disbursement can be made at the time of paying the semester fee as the interest, as usually the interest is charged after the disbursement of the amount. Apart from these, it is also important for a student to look at the moratorium period before starting the EMI.
- Remittance of the loan amount to the student account or the university
It is advisable that students must always check the entire remittance process of the loan amount with their lenders. It is essential to have clarity on whether your loan lender will transfer the loan amount to the student or directly into the university’s account. Many renowned private banks and nationalised banks have a complex process for the remittance of the loan amount. They remit the number of tuition fees directly to the university and living expenses like rent, and all are disbursed in Forex card or as per the visa norms. However, the case with international lenders is different as they remit the tuition fee and on-campus accommodation charges into the manner of semester-wise directly to the university.
- Keep track of your loan repayment
Before applying for a loan, a student must be sure that they can repay the loan via monthly instalments after successfully finishing their studies. It is usually believed that the loan moratorium period, also known as the grace period, can be a boon for students; however, a student must keep in mind that they should start settling the loan as soon as they land a job. The reason is that the faster they start the loan repayment, the less they will have the burden of interest on them. One must always keep in mind that non-repayment of loans can become a significant cause of concern if the unemployment rate is very high.