Are you thinking about applying for an education loan? You have certainly landed on the right page. We are here to help you with all the aspects related to it so that you can proceed ahead with clarity.
Studying abroad is a dream for many Indian students but comes with significant expenses that often require financing support. Education loans have enabled thousands to pursue higher education at top international universities. However, it is crucial for loan applicants to fully understand their obligations and responsibilities involved before signing on dotted lines.
This post aims to provide comprehensive information on the five most important factors aspiring borrowers must carefully evaluate when considering foreign education loans. With global exposure come additional complexities requiring diligent research and planning. By knowing these aspects thoroughly, students can make informed choices to enjoy learning journeys smoothly while managing repayments sustainably post graduate returns.
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Things To Know While Taking An Education Loan For Studying Abroad
Below are the essential pointers to consider while taking an education loan for studying abroad.
Eligibility Criteria
The first and foremost step is checking loan eligibility laid out by non-banking financial institutions (NBFCs) and private banks approving such finances. Key eligibility benchmarks include:
- Minimum scores in entrance exams like IELTS, TOEFL, SAT, GRE etc. as required by target universities.
- At least 60% marks in Class 12th and subsequent graduation/post-graduation if applying while already enrolled in a domestic program.
- Age bracket is usually between 18-30 years allowing adequate time to complete studies and repay debt.
- Annual family income limits generally between Rs.8 lakh to Rs.15 lakh depending on loan amount and cost of education.
- The maximum study period allowed ranges from 3-5 years for undergraduate to 5-7 years for PhD programs.
Fulfilling these norms considerably smoothens the approval process avoiding common roadblocks. It is prudent to contact multiple lenders to compare eligibility conditions in advance.
Repayment Terms
Repayment plays a key role in long-term planning and hence must be thoroughly understood. Average terms include:
- Moratorium period of 1-3 years providing relief from payments during studies.
- Loan tenor typically extends 5-15 years post-moratorium allowing income-calibrated EMIs through productive career stages.
- Interest levy linked to floating interest rate benchmarks like MCLR, typically hovering at 10-14%.
- Processing charges and prepayment penalties need clarity in case plans change dynamically.
- Consequences for late/foreclosure of payments warrant attention to avoid liabilities.
Comparing multiple offers and factoring personal budgets and careers helps choose the most optimal financial structure.
Managing Forex Volatility
Currency fluctuations present a key challenge since loans are Indian rupees denominated against foreign currency expenditures. This demands periodic review and strategic hedging through:
- Opting for multiple currencies EMI plans to secure tuition fee outflows.
- Buying forward contracts for covering known expenses in ensuing semesters.
- Maintaining top-up facilities to augment loan limits if exchange rates swing adversely.
- Purchasing repayment insurance products safeguarding EMIs from currency risk impacts.
Proactive monitoring and timely actions ensure education investments remain reasonably insulated from volatile forex dynamics over loan cycles.
Repatriating Funds Back Home
Post studies, it is prudent to plan fund repatriation from abroad:
- RBI regulations permit inward remittance within given thresholds requiring due approvals.
- Designated bank branches facilitate currency conversions to Indian Rupees.
- Earnings from campus jobs and internships abroad require appropriate tax filings.
- Savings can be gainfully invested for gradual loan repayments.
Adhering to foreign exchange guidelines ensures a smooth inward flow of incomes and savings serving dual objectives of financial responsibilities and utilization.
Career Prospect Evaluation
The ability to repay education loans depends enormously on career prospects and remunerations after returning to India. Some factors worthy of consideration include:
- In-demand sectors like Technology, Management Consulting, Healthcare employability and pay prospects.
- Industry role models and success stories from chosen country-course combinations.
- Post-study work permit duration of selected country easing initial job searches.
- Domestic job market demand for overseas qualifications and experience.
- Entrepreneurial possibilities leveraging global exposures and networks.
Weighing options factoring industry inputs and forecasts allows realistically optimum higher education-career pathways minimizing future repayment uncertainties and defaults.
Final Thoughts
In conclusion, research and diligence across these five important parameters enable informed loan decisions to equip borrowers to gracefully complete quality education while prudently managing global financial commitments. With new opportunities come responsibilities requiring extra preparation and clarity at the outset. By proactively addressing these vital aspects, aspiring students can confidently set out on rewarding international higher education journeys designed for maximum utility and repayment ease in the long run. If you need any further assistance for an education loan, then you can always consider connecting with the experts at Cliftons Study Abroad and get all your needs covered. Good luck!
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