Over the next three months, students across India will set out to fulfil their dreams to acquire a foreign degree – from universities in the US, Canada, UK and other countries.
While some already have their plans in place, others would still be scrambling to complete their education loan paperwork or give final touches to their accommodation arrangements. Whether you and your parents have sorted out all documentation and money matters, or your plan to study abroad is still a few years away, this overseas education special from Moneycontrol will shine the torch on the way forward. So, here goes:
What are the recent trends in the overseas education space, in terms of courses and destinations in demand?
Courses, post-course opportunities, cost of living, and, of course, university rankings play a role. According to education counsellors, business, finance, and STEM courses continue to drive students’ interests. However, post COVID-19, courses in clean tech, specialisation in medical devices, psychology, liberal arts and so on are also in vogue. Study abroad consultancies and students also point out that cost of living is a great factor while deciding on the destination city or country. For example, students in the UK may not mind joining a good university in New Castle instead of London. This is because while the cost of living in London is about £15,000 a year, it falls to around £10,000 in New Castle. Ranking of universities too is a factor. While global university ranking is a key parameter, local ranking gives a better sense of a university’s value.
What are my options to finance my education abroad?
The best approach is for parents to save for their kids’ education well in advance, say counsellors. Scholarships, full or partial, can offer significant relief. While education loans can make up for any shortfall, you would do well to take a loan for the minimum amount possible to reduce the repayment burden.
How should parents save and invest for their children’s education?
Most banks cover tuition fees, living expenses, health insurance and cost of study material in the education loans. Before getting into investment avenues for creating an education corpus for your child, be clear about the number of years to the goal and targeted corpus size and then work backwards. Start by checking the present cost of education at coveted universities. While estimating the cost one has to take into account around 4 percent inflation and around 3 percent currency depreciation per year, experts say. If you start early, your investment horizon will be longer, which means you can invest regularly through equities to earn returns that can comfortably beat inflation. Experts recommend investing through systematic investment plans (SIPS) in well-managed diversified equity mutual funds.
When should I start applying for scholarships?
Do your homework on scholarship application deadlines of universities you have shortlisted. Many universities have three-four rounds of applications. Usually, there's a fund allocated for scholarships. But, it is better if you apply for a scholarship in the first or second round itself, as the likelihood of securing scholarships starts dropping in the third and fourth rounds as universities inch closer to exhausting the allocated funds. So, if you are planning to apply for the Fall 2023 intake, then by July this year, you should start applying for a scholarship. Anyone seriously looking for scholarships must begin their search early with thorough research.
How will a bank evaluate my education loan application? What are the expenses that an education loan will cover?
Banks or any other financial firms that provide loans process loan applications after evaluating your admission letter because the education loan amount varies with the country, your course and the university, among other factors. The collateral that you offer also plays a role. Financial institutions typically do not accept, say, a plot of land as a valid collateral. Parents need to be aware of such landmines while investing for their children’s overseas education goal.
Most banks cover tuition fees, living expenses, health insurance and cost of study material for education loans. Some banks also cover airfare, cost of laptop, study tours and other expenses that students have to incur to complete the course. However, if you decide to enrol for external coaching, your education loan will not pay for such fees. Likewise, cost of a holiday during vacations, car or bike purchase for commuting, etc., will not be covered.
How should I manage my finances once I reach my destination country? What are the financial pitfalls I need to steer clear of once I start studying abroad?
Step one is to be aware of the additional, recurring expenses that you could incur – cost of accommodation, food and commuting, networking trips, industry tours, and so on. Open bank accounts with local banks and carry prepaid forex cards to meet such expenses. You should also carry international credit cards issued in India – either your own or add-on to parents’ credit cards – for emergency expenses. However, ensure that you use your credit card judiciously – do not be swipe-happy. A default due to overspending will affect the credit history of your parents in India. If you are using your own credit card issued in your destination country, a default or delayed bill payment will dent your credit score, affecting your chances of securing credit later. It could also be a black mark if you intend to settle down in that country.