Education loans, quarantine costs and scholarships: All you need to know about studying abroad

Garima Devnani had completed her undergraduate degree in Computer Science and Engineering last year, from an Indian university. She wanted to do a Masters in Data Science from a university in the United Kingdom (UK) from September 2020. She got admitted, but couldn’t join the program. The admit letter got delayed due to the COVID-19 pandemic and lockdown in the country. The dreams of many students to study abroad were shattered just as Devnani’s was last year.

This year, Devnani again applied for the same Master’s program a bit early for the September intake and, luckily, she got the admit letter with a scholarship. But, whether Devnani could join the university and be able to attend classes in person are unanswerable in the present scenario due to fear of COVID-19’s third-wave in the country, rising cases of delta variants in India and restrictions in international airline services till July 31. There are multiple challenges ahead for students such as Devnani planning to travel abroad for education during the pandemic.

Also read: Short on money for overseas education? Here’s how you can raise funds

Banks introduce new assessment method for education loans

Due to the pandemic, banks and non-banking financial companies (NBFCs) are taking additional precautions in terms of evaluating education loans. This year, many foreign universities aren’t asking for GRE and GMAT entrance test scores for their master’s programs. So, it makes financial institutions more cautious while assessing the student’s profile.

For instance, if a student scored 320 out of 340 in GRE, she would be considered a good student in the lender’s system and the application moved for further evaluation. “Now, if a student doesn’t have an entrance test scorecard, we have to look at other parameters such as understanding the financial goals and plans to repay the loan after completing the course. We evaluate employability after completing the program student has enrolled for and estimate income bands after completing the course,” says a retail banker, requesting anonymity. Banks are also evaluating whether the co-applicant or guarantor is capable of repaying the education loan if the student defaults. If the lender is not satisfied with the applicant’s educational background, internship, or work experiences there is a probability of the education loan application getting rejected or being sanctioned with higher interest rates.

The above assessment measures are beyond the traditional parameters financial institutions used to evaluate applicants. This includes evaluating the student’s past education profile, foreign university giving the admission, course enrolled for, employment history, if any, entrance test scorecard, collateral security against the education loan, etc.

"After the evaluation of factors such as the impact of the pandemic on the economies and employment scenario in the country of their choice, many students are now going ahead with their higher education goals rather than postpone their plans," says Arijit Sanyal, MD & CEO of HDFC Credila Financial Services.

Also read: Education loans: How to choose from banks, NBFCs and fintechs

Low possibility of getting the scholarship

Generally, in the US and UK, there is an average increase of 5 percent in the tuition fees every year. But this year, the average increase is around 2.5 percent. “Due to the pandemic, on average, this is very little growth in tuition fees charged by these foreign universities,” says Dhaval Mehta, CEO & Founder, TNI Career Counselling.

“This academic year, due to the pandemic, many universities in the US, UK, Canada, etc. have announced more scholarships than before,” says Naveen Chopra, Founder & Chairman of TCGlobal. But, not all students are eligible for scholarships from foreign universities. This is because the student has not appeared for GMAT or GRE entrance test.

For instance, Rajat Dave,27, of Nashik had applied for two-year MBA program of a US-based university this January, for the September 2021 intake. As it was not a mandatory requirement by most universities to appear for the GMAT entrance test, he submitted his application without the test score. The university evaluated his application profile based on his undergraduate degree, internships, past work experience of two years, etc. Dave says, “I got admitted, but didn’t get a scholarship.” Later, while inquiring with the university admission cell on not getting the scholarship, he got to know that his university encourages students to appear for the test as it gives a holistic view for them to evaluate student’s profile. There is a high chance of getting the scholarship after submitting the GMAT score. He can appear for the test and submit the score by July 31. “The admission cell will evaluate the whole application profile with the entrance test score and give the scholarship if I am found eligible,” says Dave.

Also read: Explained: Here are the rules for international student travel from India

Quarantine requirement could be added cost

Quarantine norms for students traveling abroad are in place, but they are dynamic. “Norms vary from country to country and university to university. Some universities are reimbursing the entire cost or 50 percent of the quarantine cost in foreign countries,” says Chopra.

For instance, in the UK, most of the universities reimburse the entire quarantine cost. This will be reduced from the tuition fees. “Similarly, in Australia, top universities will bear the quarantine cost for international students. But, most of the universities in Canada do not reimburse this cost,” says Mehta.

In the US and Canada, there are no quarantine requirements if a student travels from India and has had both the vaccinations. “But, it may change as per the prevailing situation in August-September, when students prefer to travel abroad for fall intake. The delta plus variant and India going through a possible third wave of the pandemic may cause disruptions,” says Rohan Ganeriwala, Co-Founder & Director, Collegify. He adds that in such a situation, the foreign country may ask students to be quarantined despite their being fully vaccinated.

If you don’t take the vaccine, then you will have to undergo mandatory quarantine as per the foreign country’s regulations, which could be between 10 and 14 days. This will be added cost for the students traveling abroad for education.

“Many parents cannot afford the mandatory quarantine expenses. ,” says Eela Dubey, Founder of EduFund. ICICI Bank sanctions up to 15 days’ quarantine expenses to students in the education loan.