Looking to get education loan for abroad studies? Here are key things to know

“The education loan should take should also mirror that. Student debt isn’t necessarily bad, and managing the right expectations early on can make things easy. For example, if Mr X as to pursue a Masters program in Sports Management, priced at Rs 20 lakh in the UK, and he knows that he will get a £30,000 job after graduating from it, and after taxes be able to save enough to pay it off in <5 years, then this becomes a fairly calculative call for him. Every student needs to customize and follow this process for themselves, and estimate the ROI of their degrees,” Chaturvedi explains.

Secondly, it’s important to find the right loan provider, who understands the value of that specific program.

As per Chaturvedi, students are able to take rupee loans at anywhere between 10-14 percent. The interest rates considerably decline with some of the best international partners but have a very strong correlation with the program or college that the student is heading to.

The education loan ecosystem, according to Chaturvedi, is still very unstructured today, and hence a lot of players have their parameters - “when to give a loan” and “whom to give a loan to” - aligned to baseless rankings, that reward prestige.

“This needs to change and instead be mapped to employability, which is the only true lens with which one can gauge a student’s upcoming success. In the absence of these systems, students have to often mortgage assets if their University doesn’t make it through the lists,” he opines.

As per Chaturvedi, COVID-19 has not changed the scenario for banks while giving these loans.

"In fact, it’s got a shot in its arm thanks to the easing immigration policies, especially in countries like the UK. When there is reasonable assurance that the macro will not interfere in a student getting employment opportunities in the same country after graduating, it leads to a corresponding relaxing effect in how education loans are sanctioned," he tells.