All aspiring students must explore the possibilities that education loans offer and take the first step toward a brighter future
In a globalised world, the pursuit of overseas education has become a transformative goal for countless aspiring students. The dream of pursuing higher education abroad has always been alluring but has become increasingly expensive in recent years. As the cost of education abroad continues to rise, it’s essential for aspirants to opt for an accessible financing option to pursue overseas education, such as an education loan. In fact, over the years, it has been observed that an education loan has become a prudent choice for many to embark on their journey of fulfilling their academic aspirations.
The growing popularity of education loans for international education
According to the Ministry of External Affairs, more than 13 lakh Indian students enrolled at international universities across 79 countries in 2022. Subsequently, growth in education loans registered a 17% surge in the last financial year that ended March 2023, as per data by RBI. This surge in demand for education loans in India can be attributed to several factors:
• Pro-credit sentiment: Students aspire for quality education, and their parents support their academic ambitions. Hence, these days, the student community turns to education loans. This pro-credit sentiment signifies the growing awareness of the importance of higher education and the role education loans play in making it accessible.
• Rising cost of education: Tuition fees at foreign universities have been steadily increasing, making it gradually more challenging for Indian students to access international education. Education loans emerge as a lifeline in this scenario, offering a feasible solution to bridge the financial gap.
• Cost of living abroad: Beyond tuition fees, the cost of living in a foreign country can be significant. This includes expenses such as accommodation, food, transportation, and study materials. This comprehensive financial support by availing a loan ensures that students can maintain a comfortable standard of living.
• Competitive job market: An international education often opens doors to better career opportunities. To stay competitive in the job market, many Indian students seek education loans to invest in their future. Obtaining a degree from a reputable international institution increases their chances of securing desirable positions and achieving long-term career success.
Education loans serve as a decisive resource, unlocking a realm of possibilities for students aspiring to pursue their dreams of a higher education.
Benefits of student loans for international education:
Students opt for education loans due to the following benefits associated with the decision:
• Atmanirbhar: Students neither need to compromise on their dreams due to lack of funds nor be dependent on their parents for financial assistance. With education loans, they can fund their education independently and earn a self-made badge.
• Financial accessibility: One of the most significant advantages of education loans is their ability to make international education financially accessible.
o Holistic cost of education: Education loans typically cover tuition fees, travelling costs, accommodation expenses, the cost of learning devices, living expenses, and other educational costs, which can be a considerable relief for students and their families.
o Flexible repayment options: New-age, education-focused NBFCs provide education loans that come with flexible repayment plans that consider the financial requirements of students. So, students can start contributing during the moratorium period in the form of simple interest/partial interest, as it is not an interest-free period. Also, various modes of payment are made available to students, such as National Automated Clearing House (NACH), Electronic Clearance Services (ECS), UPI apps, Digital Wallets, Internet Banking, Debit Cards, Cheques, and Post-Dated Cheques (PDCs). These flexible repayment methods and modes enable a seamless education loan experience.
• Diverse course and institution choices: Education loans enable students to spread their wings and explore diverse courses and institutions across the world.
o Access to renowned universities: Many Indian students aspire to study at prestigious international universities. Education loans make these dreams attainable by providing the necessary financial backing.
o Pursuing a wide array of study programs: Education loans are offered for various courses, including conventional, non-conventional, executive, skilling, upskilling, and reskilling. Conventional study programs such as Science, Technology, Engineering, Math (STEM) and MBA, non-conventional courses such as Music Production, and Executive programs such as Executive MBA are quite popular among aspirants, for which education loans are easily available.
• Building a strong credit history: Apart from the immediate benefits, education loans also have a long-term impact on a student’s financial journey. Successfully managing an education loan helps students establish their creditworthiness, which can be beneficial for future financial endeavours. This can unlock multiple benefits when opting for other financing solutions such as a home loan, car loan, or credit card.
• Enhancing future financial prospects: A degree from an international institution can lead to better career prospects and higher earning potential, making it easier to manage financial responsibilities.
Chief Business Officer – Student Lending & Insurance Business
• Maintain savings corpus: Education loans help parents maintain their savings corpus by preserving financial security for emergencies and future goals. Thereby not depleting their savings, parents can continue to invest, potentially capitalising on opportunities for higher returns.
Education loans have become crucial for Indian students aspiring to study abroad. With the rising cost of education, these loans provide a pathway to financial accessibility, diverse educational choices, and the opportunity to build a strong credit history. As the demand for education loans continues to soar, it’s evident that they have the transformative power to make the dream of education abroad a reality. All aspiring students must explore the possibilities that education loans offer and take the first step toward a brighter future.
