Foreign education is now a dream of many of our students. Gone are those days when pursuing higher education was an uphill task for most of the students. It was basically lack of financial support which was not permitting most of the parents to allow their wards for higher studies. But times have changed now. Today, money is no problem. Students can pursue any expensive courses anywhere in the world. Banks are liberally giving loans to students, whether it is to pursue a degree abroad or from a premier institute within the country.
In recent times, banks in the backdrop of government directions have been more liberal in education loans and this has helped students. Now, these education loans are available over the counter at bank branches as student borrowers don’t have to face hassles while accessing the funds through this route. Precisely, various proactive measures of banks and the government have made the education loan facility as the most popular scheme among students. Now they count their career development and prosperity in the backdrop of this loan facility. One of the most dramatic aspects of this hassle free availability of finances has been the rising appetite of students to look for pursuing a course of their choice abroad. In other words, foreign education is now a dream of many of our students.
Let’s look at some important aspects which a student should consider before going for education loan to pursue higher education abroad. In the first place, studying abroad is expensive. This expensive cost factor makes a sense for parents to do the serious financial planning. Banking on education loan means that they have to do an intensive research on comparative costs. Since the loan is to be obtained for study in a foreign country, it’s important for them and their wards to understand the currency exchange marketplaces. They also need to have awareness about right foreign exchange (forex) products and the right service providers. Here it’s important to have close watch on forex rates so that they are able to calculate their affordability.
They should thoroughly check of the entire course fee structure and accordingly take route of the education loan scheme. The main factor that affects affordability of education loan for studies in a foreign university is the foreign exchange rate. Some banks make it mandatory for all loan disbursements to be sent to the foreign university using the bank’s own foreign exchange department. Here the bank applies own forex rates, which are typically higher when compared with other banks. This way, the end customer is forced to pay a higher premium on foreign currency exchange.
Then there is a typical situation which the students would be experiencing during the course of their study. The students are mostly asked by the foreign universities to pay their fees in US dollars and incur other expenses also in dollars. When the value of rupee depreciates, it puts more burden on the students and cost of education automatically goes up. This rupee depreciation needs to be negotiated by accessing to more funds.
Meanwhile, there is a government of India special subsidy scheme for students belonging to the minority community viz Muslims Christians, Sikhs, Buddhists, Jains etc. The scheme known as Padho Pardesh Scheme is to extend interest subsidy to meritorious students belonging to economically weaker sections of minority communities so as to provide them better opportunities for higher education abroad and enhance their employability. The interest subsidy is granted in line with the main education loan scheme of the Indian Banks Association, that is, for the period of moratorium – course period, plus one year or six months after getting job, whichever is earlier.
Those student who have secured admission in any university abroad for pursuing Post-graduate Diploma, Masters, M.Phil or Ph. D level courses with the overall family income of not more than Rs. 6.00 lakh per annum can avail the interest subsidy under the scheme. Needless to mention that the student should avail education loan facility from a bank to take benefit of the scheme.
Notably, the Scheme provides 100 per cent reimbursement of Interest accrued on the education loan taken for moratorium period ( i.e. course period + one year after completion of course or six months
after getting employment whichever happens earlier). It is worth mentioning that students have to submit periodical progress reports/documents to their respective lending Banks on time to time
during the period of pursuing their studies abroad. On completion of course, student may submit a copy of Mark list and certificate to the lending Bank as well as Ministry of Minority Affairs for records.
Education loans sanctioned and disbursed for study abroad from 2013-14 onwards are eligible for the interest subsidy.
(The views are of the author & not that of the institution he works for)