Top 5 Mistakes Students Make When Applying for an Education Loan

Dreaming of studying abroad? An education loan can turn that dream into reality, but a single mistake can lead to delays or sometimes rejections.

An education loan is a valuable investment for your dream of studying abroad. Unfortunately, students make several mistakes when applying for an education loan for study abroad. If you plan to study abroad, avoid these top 5 mistakes students make when applying for an education loan.

Table of Contents:

1. Not Researching
2. Underestimating Total Cost of Education
3. Ignoring Repayment Terms
4. Over Borrowing Without a Repayment Plan
5. Ignoring Collateral or Co-Signer Requirements
6. Tips To Get Faster Approval
7. Frequently Asked Questions

Not Researching

One of the most common and avoidable mistakes is not researching thoroughly. In today’s world, there are tons of education loan options available for study abroad, and not researching can cost you higher interest rates or more.

Education loans are customized based on your needs, program, university, and country. Loan criteria are also different; some banks may offer you lower interest rates for abroad education loan, while some may offer flexible repayment plans or longer grace periods.

Underestimating Total Cost of Education

Always calculate the total cost of education instead of just tuition fees. This typically includes tuition costs, accommodation, transportation, food, clothing, books, materials, and personal expenses. Ignoring these expenses can lead to financial difficulties.

Ignoring Repayment Terms

Students often look at overseas education loan interest rates and finalize the loan. However, several other terms should be considered before your loan application. Grace periods, repayment tenures, monthly installments, and other loan terms are as important as interest rates. Overlooking them can lead to financial problems in the future while increasing your total loan amount.

Over Borrowing Without a Repayment Plan

When you are planning to study abroad in a new country and are unaware of your expenses, it is tempting to borrow more than you need. However, borrowing more than you need can lead to higher debt during repayment. While applying for a loan, check the loan details carefully and compare it with the amount you need to avoid over-borrowing.

Ignoring Collateral or Co-Signer Requirements

Students who think they have all the right documents and their approval is guaranteed often face loan rejection. Several lenders ask for collateral (a secured loan) or a co-signer for the loan. Collateral can be your property, fixed deposits, or more, while a Co-signer is often a parent, guardian, or someone you know.

Tips To Get Faster Approval

If you are planning to apply for an education loan, here are some tips that can get you a faster approval:

Frequently Asked Questions

What are the basic eligibility criteria for an education loan to study abroad?

Most lenders require the student to be an Indian citizen. They should also have a confirmed admission letter from the university and must meet the academic requirements. Some lenders may have age limits, so check before applying.

Do banks require collateral for an education loan to study abroad?

Some banks may require students to provide collateral documents for an education loan to study abroad. The collateral requirement may depend on the loan amount, as a higher loan amount requires collateral.

How much of a loan can I get to study abroad?

The loan amount may vary depending on your program of study and university. Indian banks offer loans ranging from INR 10 lakhs to INR 3 crores for studying abroad.

What is the interest rate for education loans abroad?

Interest rates for studying abroad typically range from 8% to 15%. The loan amount, collateral, and co-signer may affect the interest rate. If you are looking for a low-interest rate loan, Nomad Credit offers loans starting from 3.47%.

What expenses does an education loan cover?

An education loan for abroad often covers tuition fees, accommodation, living costs, travel expenses, books, materials, insurance, and other miscellaneous costs.

How to get education loan for study abroad?

To get an education loan for study abroad, apply through a bank or lender with all your necessary documents. Ensure that you are meeting the education loan for abroad eligibility requirements thoroughly.