Money Matters: 4 Things To Keep In Mind While Applying For Education Loan To Study Abroad

Studying abroad can be quite expensive and you might have to apply for an education loan. While most students opt for this, many fail to consider a few aspects of it that can hamper their financial planning.

To provide you with an in-depth detail on the subject, we connected with Bhanu Pathak, a finance content creator on Instagram. Here are three things you should keep in mind while filing for an education loan to study abroad.

Check Interest Rates Of Banks

When you take a loan from the bank, you have to pay interest. Each bank lends money at a different rate of interest which you must check before applying for a loan. Many Indian banks offer education loans at a lower rate of interest.

You should compare the interest rates of banks before narrowing down your final choice. For example, the State Bank of India (SBI) is currently charging interest at the rate of 7.25%, while the Bank of Baroda (BOB) is charging 7.45%.

Check Timeline To Repay Loan

One of the crucial aspects when applying for an education loan is to check the timeline in which you will have to repay the loan. Different banks have different criteria and even have penalty charges in case you fail to adhere to the terms and conditions.

For example, the SBI has two options for repayment. Your repayment EMIs will start a year after you have graduated or six months after you start earning, whichever is earlier. The maximum time in which you will have to repay the loan is 15 years. They even have a policy of 'NO' penalty charges for prepayment. A person can prepay their entire loaned amount at any time.

Check Expenses

When applying for an education loan (Home Loan For Women), you should conduct thorough research about what expenses will be covered. For example, the loan offered by SBI covers fees payable to the college, library, school, examination, hostel, and laboratory. It would cover expenses for travel, instruments, books, equipment, and computer required for the completion of the course.

It will also cover other expenses on projects, study tours, thesis, etc. However, these must be capped at 20% of the entire tuition fee. You can also claim tax deductions under section 80(E).

Check Scholarship Programmes

Before applying for an education loan, you should check out a few scholarship programmes. Many options not only help you pay your tuition fees but also provide you with accidental coverage and monthly allowances.

Depending on the field of study, you can pick from scholarships like Fulbright-Nehru Doctoral Research Fellowships, National Overseas Scholarship, Fulbright-Nehru Master's Fellowships, Agatha Harrison Memorial Fellowship, and Erasmus Mundus Joint Master Degree among others.

Most banks offer in-depth details when you approach them for a loan. If any institution says that they will provide you with the loan at a lesser rate of interest compared to Indian banks, but they do not offer any detail about expense coverage and repayment time, you should stay cautious of such luring advertisements.

Studying abroad is a crucial decision and can be financially draining if you do not apply to the right bank for an education loan. Be cautious while making the decision.

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