Debunking 3 myths about a student loan for abroad studies

Higher education helps students master the skills of their vocation, and thus, grow with the field. But many meritorious students do not have money to cover the costs of their higher education. A student loan helps such students. Even though such loans have become more accessible than they were before, many myths about them exist among students. Read this blog as it talks about myths about a student loan for abroad studies, debunks them, and improves your understanding of education loans in general.

 

 1.     Education loans cover tuition fees only

Students often believe that a student loan for abroad studies covers course tuition fees only. It is true in some cases; not all. Many lenders cover tuition and overhead expenses that come along with higher studies. Students often need to relocate to a different city from their hometown for their higher education. In that case, they need money to cover the cost of traveling to that city, the lodging, and boarding expenses to live in that city for the duration of their course, and the mess expenses. They also need money to cover university development fees, exam fees, library fees, books and stationery expenses, the cost of a laptop, and so on. An education loan from good lenders covers these expenses completely apart from the course tuition fee.

2.     Students have to contribute margin money always

Students believe that lenders cover only 90 to 95% of their higher education costs, and they have to bear the remaining costs. This is partly true. Some lenders ask students to pay margin money while others cover all the higher education costs of students. For instance, NBFC lenders are known to cover 100% of the cost of a student’s higher education. Students do not need to use their family assets or savings to finance the rest of the expenses of their higher education. They can keep those assets and savings unused to secure themselves against other contingencies.

3.     Students have to pay back the education loan as soon as they complete higher education

Students believe that they have to repay their student loan for abroad studies as soon as they finish their degree. This is not true. They get a grace period—also called the moratorium period. It lasts up to 1 year from the time students completes their education, or up to 6 months from the time they get their first job, whichever happens, earlier. In this period, they are supposed to establish a source of income from a job or business venture and start earning money to repay their education loan. They then have to pay a small, fixed amount of money—called Equated Monthly Instalment or EMI—every month to gradually pay off their student loans.

 

So, these are the 3 common myths about a student loan for abroad studies among students. We hope that after reading this blog, those myths have been debunked, and you have gained fine knowledge about education loans. Please consult a financial advisor to plan the finances of your higher education whether you decide to pursue a degree in India or abroad. Have a nice day!