Over the years, the number of Indian students studying abroad has gone up significantly. According to an estimate, over 5.53 lakh students are studying in 86 different countries. A prestigious foreign degree is considered the key to a successful career, which prompts many to enrol themselves in foreign universities, particularly of the US, Canada, Australia, Germany and the UK.
However, the cost of studying abroad is overwhelming. An MBA, which can cost anything between Rs. 20-25 lacs in India, can easily cost upwards of Rs. 1 crore in the US. And that too only the tuition fees. There are other costs such as accommodation, books, travelling etc., which further elevate the expenses.
On most occasions, students and their parents find it difficult to meet such high costs. In such a scenario, a student loan, also known as an education loan, is one’s best bet. Here’s how this loan is helping students study abroad and giving wings to their dreams.
What does a student loan cover?
Expenses for studying abroad encompasses two major things – tuition fees and cost of living. A student loan takes care of both of them. Generally, this loan covers the basic course fee along with other related costs such as accommodation, exams, and other incidental expenses. Several banks offer this loan at varied interest rates.
Other benefits of a student loan
A student loan can be procured either for a vocational course, graduation or a post-graduation course in a foreign university in the fields of management, engineering, medical and architecture among others. In such a loan, the student is the principal borrower, with parents as co-applicants. As per norms, the applicant must fund 15% of the required amount, while the bank finances the rest.
Tax breaks are also allowed for a student loan taken under section 80E of the Income Tax Act, 1961 on payment of interest. This break is allowed for a maximum period of 8 years. There’s also a moratorium period offered, wherein the student has the liberty to not pay the EMI for 12 months after the end of the course or six months after he/she starts working, whichever is early.
Since interest rate of this loan varies across banks, it’s advisable to compare rates and choose the most competitive one as it has a direct bearing on the EMI amount. The Vidyalakshmi portal managed by NSDL lists all the banks offering this loan at a single place for easy comparison.