Higher education abroad comes with a hefty price tag. On average, an Indian student spends around INR 20 Lakh – 30 Lakh annually for international education. This amount varies as per the country and course selected by the learner.
Amidst the increasing demand to study abroad, student loans are emerging as one of the most helpful ways to assist students in their study abroad journey. From managing tuition fees to accommodation charges, student loans can cover it all for the applicants. Here, MSM Unify experts break down the jargon related to educational loans, making it easy for you to understand the right approach to aid your study abroad journey.
Types of student loans
Broadly, for international education there are two types of loans available:
- Federal loans – These are the kind of loans offered by the federal government such as Direct Subsidized Loans, Direct Unsubsidized Loans, or Direct PLUS Loans. Federal loans offer competitive interest rates and flexible repayment options, making them an attractive choice for students pursuing education abroad.
- Private loans – As the name suggests private loans are offered by banks, credit unions, and other private financial institutions. These loans can provide additional funding for studying abroad. These usually have higher interest rates and less flexible repayment options compared to the federal loans.
Also read: 10 Most affordable countries for studying abroad for Indian students https://www.msmunify.com/blogss/10-most-affordable-countries-for-studying-abroad-for-indian-students/
Eligibility criteria for student loans to study abroad
Different banks have their own guidelines, which must be followed while applying to the respective bank. These aspects must be considered before applying for a student loan:
- Citizenship: This is the most important aspect to apply for a student loan. Some loans are available only to citizens or permanent residents of a specific country. For the Indian students, the mandate is that the candidate must have an Indian nationality if you are applying for a study abroad loan in India.
- Enrollment and acceptance into the institution – In order to get a loan for international education you must be enrolled or must be accepted into an accredited educational program and an institution recognized by the loan provider. The loan can be sanctioned as per the program level. Proof of acceptance into the institution is often required by the bank This could be in the form of an acceptance letter, enrollment confirmation, or a valid student visa.
- Financial necessity – The bank will analyze your financial need or creditworthiness to assess eligibility. For federal loans, the main consideration is usually financial need, determined by completing the Free Application for Federal Student Aid (FAFSA) form.
- Repayment ability: Income potential, anticipated career trajectory, and other financial obligations are some of the factors assessed by the loan providers before sanctioning the loan. This assessment helps ensure that you can manage loan repayment after completing your studies.
- Underwriting standards – These standards are set by lenders to ensure only safe loans are offered. They are also important because they are used to determine if a person is eligible for a student loan to study abroad and how much the student is willing to borrow at what rate.
Student loans have become a way to fulfill dreams for aspiring students who wish to pursue their education abroad. MSM Unify provides best-in-class solutions for your international education financial needs. From affordable interest rates to very less paper work we aim at making the process easier for students. With industry-leading loan providers – M power financing and ICICI Bank I smart education loans studying abroad becomes hassle-free. You can check details on these student loan services and their eligibility here
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