International education is now more accessible than ever to Indian students. Today, students eagerly await the opportunity to pursue higher education at a prestigious college abroad, coupled with the wide range of experience and exposure that comes with it. Unfortunately, international education is also more expensive than it has ever been, and its growing popularity has led to a commensurate increase in competition. Student loans become difficult to obtain even with the best references. However, that may not be all, as 84.8% of student loans are approved by NBFCs. There can be a myriad of reasons why your student loan may be rejected, many of which are not well known to students or parents.
Here are some things to keep in mind when applying for your study abroad loan:
Academic performance
Perhaps unsurprisingly, your educational background is an important consideration in your student loan approval. Banks and NBFCs generally seek consistency more than high scores; thus, delayed admission in a year, being held back for a semester, or having to take an internal exam multiple times tend to have a bad impact on applications. The reasoning behind this is simple: banks are looking for students with the potential to earn enough money after college to pay off their debts. While major academic achievements are undoubtedly great additions, simply maintaining strong performance year after year can go a long way to improving your chances of getting a loan.
University and Courses
Since banks view students as investments for the future, the college you get admitted to can have a big impact on your loan prospects. The top tier of universities like the Ivy Leagues in the US or the Russell Group in the UK are seen as better for your future than the alternatives. Although this may seem somewhat narrow-minded; after all you can end up doing a great job no matter what school you go to, from the bank’s point of view a harvard prospect just makes more sense than a state university applicant . Apart from these notable institutes, lenders can use university rankings like the annual QS list or research the institute themselves to determine its specialties and potential to contribute to future success.
A similar logic applies when it comes to the courses themselves: STEM courses are generally favored because of their high earning potential. That said, some international student finance managers are now extending their analysis beyond these simple metrics and considering individual potential where possible.
Generally speaking, undergraduate, postgraduate, doctoral and certificate courses are considered viable for student loans. While more niche, short-term or non-economic courses are less likely to be considered.
Documentation
It goes without saying that student loans require detailed documentation from students, their parents, schools, colleges, and other institutions. From identification to credit history, all of this documentation can be difficult to keep track of, especially when it comes to all the other aspects of overseas travel planning. It becomes even more difficult when the loan is obtained from the country of destination, since the correction of the documents takes much longer. As such, it is important to double check the veracity of all these documents to ensure the proper processing of the loan. It is convenient to have the assistance of third-party student loan services that can help you with the technical details of the process, both at home and abroad. Since they work with hundreds of student loan applications, they have the experience to advise you on what could go wrong with the application.
Credit ratings
As with any other loan or credit application, your credit score will be of paramount importance to the bank or NBFC helping you. In general, a CIBIL score of 600 or less is considered unattractive from a lender’s perspective. For international students, this credit consideration is extended to your loan co-signer, who is usually a resident of the destination country who supports your credit application and assumes some responsibility for the debt. In this way, the credit score restriction must be applied twice as often when studying internationally.
Destination
Following the “student as investment” analogy, the country you hope to study in makes a difference in your loan application or at least the terms you will be offered. Countries typically associated with high-level higher education, such as the US, UK, Australia, etc., are much more attractive candidates than students going to atypical countries such as Mexico, Japan or China. This is again a form of security assessment for the bank, as stable, well-developed Western countries are seen as offering better employment and development opportunities.
Overall, applying for an international education loan can be a time-consuming process. However, by taking the time to plan all the steps, taking into account the different aspects of the loan and using the services of experts as needed, you give yourself the best chance of a successful first application.
Author: Sayantan Biswas, Co-Founder, UniCreds
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