Education is the key to laying a strong foundation for a secure future. A highly educated person will have the resources and skills to make informed choices about his or her future by carefully weighing all the available options. While there is no dearth of reputed colleges and universities in India with many increasingly moving towards tie-ups and collaborations with premier educational institutions abroad, many students and professionals continue to harbour the dream of studying abroad.
From the United Kingdom and the US to Germany and Scandinavian countries, the living expenses and funding patterns may vary. Nevertheless, one common thread which runs through them all is the importance of proper financial planning, failing which, students and their parents, in some cases, will land in thick soup. If you are keen on getting a degree or doctorate abroad, make sure that you don’t mess up your finances and bite off more than you can chew.
The following are some of the tips to ensure that overseas education does not burn a hole in your pocket.
Analyse all loan options
Banks offer different loan options to cater to all kinds of customers. Customers would do well to analyze the various options available to zero in on the one that best suites your financial requirements. Once you select the right loan options, you can negotiate the terms and conditions.
Read the fine print
You should not risk becoming complacent after finalizing the terms and conditions. Read the offer document carefully to understand it thoroughly. If you do not concur with any clause, ensure that you clarify it with the authorities before signing the document. For instance, in some cases, EMIs have to be paid immediately after completion of higher education.
Changing times of the rupee
There is nothing more important that the value of the Indian rupee when you are studying abroad. A very volatile rupee will impact the cost of your loan and repayment since your loan will be denominated in rupees. A student should, therefore, be prepared to bear the risk of foreign exchange. For instance, if you take a loan of Rs.30 lakh, you will have to shell out more for your education if the rupee weakens owing to exchange rate fluctuations.
Eye on credit score
In most cases, parents usually become guarantors for the loans taken by their wards to study abroad. If you don’t plan ahead and end up delaying your EMI payments or even default on some, there’s no way you can rein the adverse impact your bad credit behaviour will have on the credit score of your parents.
As explained in the aforementioned example, the burden of depreciation of rupee will have to be borne by the guarantors as well.
When pursuing an overseas education, it is pertinent to undertake proper planning and budgeting to keep track of expenses. Any random spending spree or bout can wreck havoc on your financial security.
Many students, therefore, take up a part-time job to meet their living expenses. Akin to credit cards, education loans are reflected in the CIBIL report of the borrower. Timely repayment is, therefore, of seminal importance. Non-repayment of EMIs will lead to a low CIBIL score, and mar your chances of acquiring another loan or credit card.
If you find yourself in the uneviable position of defaulting on your loan repayments, you should try to negotiate with your bank for lowering your EMIs or even increase your loan term. Some banks in the country have introduced some top-up schemes wherein they attempt to fill in the gap created by exchange rate fluctuations, thereby ensuring that the future of students studying abroad is not jeopardized.