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Planning Is the Key To Successfully Financing Foreign Education One of the best ways to fund education abroad is through scholarships or sponsorships

By Sunit Gajbhiye

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Almost every student in India dreams of studying abroad for higher education. Although many Indian universities are known for providing world-class education, education at a reputed foreign university provides an additional edge to the students in their professional life. Exposure to fellow students from different countries helps students gain experiences and develop life skills that prove helpful in their personal and professional lives.

Studying in foreign countries is an expensive affair. Often, students find it difficult to raise funds to finance their foreign education. Education loans are the most popular means of paying for education abroad, however, not everybody is able to secure an education loan. Education loans come with high interest rates and are subject to changing regulations. More importantly, education loans only cover the cost of studies. The other costs such as visa fees, travelling, and stay have to be borne by the students. Consequently, even after securing an education loan, the students or their families have to make arrangements for a significant amount of capital. Therefore, an education loan alone is not enough to fund education in a foreign country.

One of the best ways to fund education abroad is through scholarships or sponsorships. Many international universities offer scholarships and fellowships to top-notch students. However, such grants are limited and the majority of students don't qualify for them. Often these grants only cover the tuition fees and the remaining amount has to be borne by the students.

Planning years ahead is the success mantra

In order to fund overseas education without any hassle, planning need to be done years in advance. Due to the young age of students, it is the responsibility of the parents to do this planning. Parents should keep a timeline of 5-6 years while making a plan. While saving the money in the bank account could be the first thought in the mind, parents should also consider other investment options. Various investment options like real estate, mutual funds, etc., are available for parents to maximize their return on investment. If possible, people should try to anticipate the amount required to fund education. Factors like inflation and currency appreciation or depreciation should also be taken into account.

One of the important aspects of planning foreign education is choosing the right destination. Destinations Canada, the US, the UK, Australia, and Europe are generally the target of most students. Due to high demand, education in these places is quite expensive. However, there might be other destinations where a similar quality of education is available at competitive prices. Staying flexible with the choice of destination and exploring multiple destinations could help in finding a location with a high-quality education at a lower expense.

What if all the planning fails?

Sometimes, even after planning for years, parents might fall short of the funds required for education in a foreign country. Education loans are the most viable option in such cases. One should understand that not all education loans are alike. Education loans can differ in the rate of interest, terms of payments, legal requirements, etc. Therefore, before committing to a particular bank for education loans, the parents should do thorough research and cost-benefit analysis of the available options. The inflation in the destination country and currency value fluctuations should also be taken into account. The applicants must also keep the provision of top-ups to the loans in case of any emergency or unplanned increase in expenses. It is advisable to keep the portion of the loan as small as possible in the mix of financing tools.

Hunt for new tools in the market

Besides traditional banks, there are other NBFCs and edu-fintech companies that specialize in education financing. Such companies often provide cost-effective and hassle-free finance for financing foreign education. Such companies employ new age techniques like AI to determine the creditworthiness of the applicants, therefore in most cases, credit history or CIBIL score is not a hurdle.

Education in a reputed foreign country can open a world of opportunities for a person. However, it can also lead to a debt trap. Many students spend their prime years repaying their education loans. Some even have to let go of some lucrative opportunities for advanced education or entrepreneurial ventures due to the loan liability. Careful planning can help parents and students avoid any such situation or at least lessen the impact. Diversifying the tools to fund education should be the basic mantra in this planning.

Sunit Gajbhiye

Chief Business Officer, Financepeer

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