5 things borrowers should know before applying for a student loan

There are many challenges that could affect student loan approval for aspiring to go abroad and the transfer of funds abroad if not properly managed.

Inflation in the education sector is much higher than the rate of price increase in many other sectors. Despite this, the demand for higher education abroad is increasing dramatically, as is the demand for student loans.

“The number of Indian students applying for 2022 admission to foreign universities has almost doubled. More and more Indian students prefer to go abroad in search of better infrastructure, access to a well-connected professional network, flexibility in the education system and an environment conducive to entrepreneurship. and innovation. However, most students will need to avail of a student loan to take advantage of these opportunities. There are many challenges that could affect their loan approval and transfer overseas if not managed well, ”said Saurabh Jhalaria, Head of SME and Education Loans, InCred.

Jhalaria lists 5 key things student borrowers should know before opting for a student loan –

Set up your applications

Applications to foreign universities increase every year. The growth of international students has exceeded the growth of domestic students by more than 6 times in the past three years, reaching 770,000 in 2019. This number is expected to double by 2024, reaching 18 lakh students. In addition, universities seem to be giving scholarships much more generously this year. In this scenario, it is prudent to tidy up your house so that you don’t miss an opportunity simply because of procedural loopholes. Start your research well in advance and choose the most suitable university, course, and destination based on your budget. Make sure you complete all required applications well in advance of the time and submit the necessary documentation by the deadline.

Loans can take time to process

Most students need to apply for a study loan to study abroad. With the increase in the number of student applicants, there could be a long wait for the approval of a student loan. Before sanctioning a student loan, banks will pre-inspect and verify the co-applicant, educational institution, etc. which could lead to long lead times. Keeping a tampon for 1 to 2 months would be a good idea here.

Maintain a good credit rating

Usually, a parent or guardian is the co-applicant for a student loan. It is imperative that the borrower has a good credit history to ensure that the application is not refused. Even a long delay in paying off your credit card bill could hurt your chances of getting a student loan approved.

Imminent Omicron Threat

Covid has raised its ugly head again, this time in the form of another variant, Omicron. Various countries around the world have started to impose lockdowns and restrict international flights. This complicates matters for students who plan to apply for the fall start of 2022. If the situation worsens, universities could be forced to revert to online teaching mode. There’s not much you can do at this point other than keep up to date with the latest developments in the country you plan to study.

Keep an eye on interest rates

Today, private and public sector lenders offer a plethora of student loan options. Some loans do not require collateral while others offer a reasonable rate of interest. That could change if a third wave hits. Therefore, study the eligibility criteria of each lender and then ask for the option that is best for you.

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