Studying abroad in one of the top foreign universities is a dream for many students, but the financial liability that comes with it can often be quite a hurdle. With tuition fees, travel expenses, and living expenses piling up, an education loan becomes essential for many students. While choosing the right education loan may seem a bit overwhelming at first, making an informed decision can ease your mind and the financial burden, helping pave the way forward for a smooth academic journey and a fruitful career.
Here is a basic guide of practical tips for choosing the best education loan for abroad studies, which can help ensure that both students and parents feel confident about their decision.
Evaluate the Loan Coverage
Be mindful before choosing a lender that not every education loan available in the market covers the same expenses. Some may only cover tuition fees, while others may cover additional costs, such as living expenses, transportation costs, study materials, and even student insurance. Hence, ensuring that the loan you choose covers all essential aspects of studying abroad is important to reduce the need to depend on additional funding.
Compare Interest Rates
Interest rates are one of the most crucial factors to consider when choosing a suitable education loan. Even a slight difference in rates can impact the total repayment amount significantly over time. Make sure that you compare interest rates from different lenders to find one that offers the most competitive interest rate.
Look for Moratorium Periods
A moratorium period is the grace period that most lenders offer, where you are not required to start repayments for your loan immediately. This period typically lasts until you complete your studies and sometimes extends a few months beyond, depending on your chosen loan. A longer moratorium period offers you the flexibility to start repaying the loan after you have secured a job post-graduation.
Check the Repayment Tenure
The repayment tenure refers to the time you have to repay the loan. A longer repayment period means lower monthly payments, but it also means paying more interest over time. A shorter repayment period will have higher EMIs but a lower overall interest paid. Use an online educational loan calculator to find the balance between what you can afford monthly and how much the loan costs you in the end. Ensure that the lender you choose offers flexible repayment options that align with your financial capabilities.
Examine Processing Fees and Other Charges
Beyond interest rates, education loans come with various processing fees and hidden charges. Some charges include the loan application fees, prepayment charges, late payment penalties, etc. Check with your lender before finalising the loan and read the final print to check for any extra fees associated with the loan you wish to apply for.
Choosing the best education loan scheme for studying abroad is not overwhelming if you approach it with the right information and a clear plan. Additionally, online tools like educational loan calculators can further help simplify the process.