Ask any student who is pursuing higher education abroad and they may say that there was a mighty force behind them who always supported their dream – Their family. The parents are the unsung heroes who not only provide unwavering emotional support but also stand as a strong pillar of strength when it comes to finances. With this financial backing, the dream of pursuing an education in a foreign land that once seemed impossible becomes a reality!
As a parent, you understand the importance of getting an overseas education loan to provide your child with access to quality higher education abroad – a dream you have cherished for the child since day one. So, this article is dedicated to parents like you! From overseas education loan types and responsibilities to even education loan for abroad studies by Indian government banks, consider this as your all-in-one guide. With this in your hand, the sky is the limit for your child’s educational dreams!
As a parent, it is important to understand what types of education loans are available to support your child’s overseas education dream, so let us list down the two major ones,
Secured Loan: A loan providing lower interest rates and higher loan amounts but requiring assets as collateral security.
Unsecured Loan: A loan option that doesn't require collateral, providing flexibility and ease in the application process.
In both loan types, usually, parents serve as primary co-borrowers or guarantors, although in some cases, guarantors can be some close friends or extended family members as well.
Well, for both loan types, it is important for the parent to follow some of the guidelines that will increase their chances of securing an overseas education loan for USA, Canada, UK, and any other higher study destinations,
Ensure a Strong Credit Score: Lenders prioritize those with good creditworthiness. In India, ensure your credit score or CIBIL score is above 700 to qualify for loans with favorable terms.
Explore Loan Options: Be thorough and compare education loan offerings from various financial institutions, including nationalized banks, private banks, and cooperative banks, international lenders, and non-banking financial companies (NBFCs).
Understand the Collateral Requirements: There are two major types of collateral options mainly tangible collateral which includes property, vehicles, gold, valuable metals, and machinery or equipment and the second one is intangible collateral which consists of government bonds, fixed deposits, future income streams, life insurance policies, licenses or permits, and mutual funds.
Learn about Tax Advantages: The tax benefits provided under section 80E of the Indian Income Tax Act 1961 offer deductions on the interest paid, benefiting both the borrower and co-borrower whoever is paying the EMIs.
Develop a Solid Repayment Plan: Create a repayment plan by carefully evaluating the loan amount, interest rates, and monthly instalments. Ensure the plan is feasible and aligns with your financial capabilities.
Cultivate Financial Literacy: With your children, discuss the importance of budgeting and wise spending choices in their host country. Also, encourage them to explore part-time job opportunities to gain financial independence.
As we have seen the guidelines for a parent in their overseas education loan journey, let us look at the different types of Government loans given for abroad studies.
Here is the list of various government-sponsored student loans designed to support international education aspirations,
Dr Ambedkar Central Sector Scheme
NBCFDC Education Loan
Padho Pardesh Scheme
Vidya Lakshmi Education Loan
Remember, these options represent just central government initiatives. Additionally, individual states and union territories may offer their own schemes; for example, the Government of Gujarat provides the Gujarat Government Education Loan for overseas studies. So, be sure to inquire about state-specific offerings based on your residency.
When it comes to financing your child's education abroad, it is natural for parents to have concerns about various expenses. However, rest assured that education loans cover a wide range of costs, including,
Tuition Fees
Living Expenses (On-Campus / Off-Campus)
Health Insurance
Exam Fees
Visa Fees
Study-Related Expenses
Miscellaneous Expenses
Travel-Related Expenses
With these important expenses covered, parents can feel more confident in supporting their child's educational journey overseas.
Alright, it is time to wrap things up! We believe this article set out to give you everything on overseas education loans. As parents, we all want the best for our kids, and that also includes making sure they have the means to pursue their dreams abroad. Along with you, the children do worry about financial considerations. So, as a parent, it becomes our responsibility, to not let them worry and encourage them to ace their studies abroad.
Speaking of making things easier, we would also like to bring your attention to Élan - one of the leading overseas education loan advisors offering the best online loan services for studying abroad. With Élan by your side, you can breathe in ease knowing that all the complexities in the overseas education loan will become a breeze, so can totally focus on what truly matters – your child's education and success!
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