Studying overseas? Here’s how to manage and repay your education loan wisely

Parents play a crucial role in shaping their children's financial habits, laying the foundation for responsible money management. Introducing concepts like budgeting, saving, and mindful spending early can help children develop the financial discipline needed to handle higher education loans effectively. For instance, parents of children aged 3–10 years can introduce financial literacy through simple and engaging activities. Using a piggy bank helps kids grasp the concept of saving, while games like Monopoly teach basic buying and selling principles. Parents can help teenagers develop financial discipline by giving them a set monthly budget to manage their personal expenses.

Several parents encourage their children to take up tutoring or freelancing while pursuing their undergraduate degree to gain some necessary experience and understand the value of money. Many students learn from this early experience and implement it while studying abroad by doing part-time jobs during their free time.

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Create a holistic budget that factors in macroeconomic trends

Planning for higher education abroad starts with a carefully structured budget – one that considers both personal expenses and broader economic trends. Students should start by identifying all sources of funding, including family support, education loans, and part-time work, and estimate expenses such as tuition fees, accommodation, food, travel, insurance, and day-to-day spending. Macroeconomic factors also play a key role in shaping the overall cost of international education. Currency exchange rates, in particular, can influence how much students end up spending. Over the past decade, the Indian rupee has undergone significant adjustments, moving from Rs 63 per US dollar as of March 2015 to around Rs 85 per US dollar as of March 2025. This, in turn, has increased the overall cost of studying abroad, leading students to seek higher loan amounts to cover rising tuition fees and living expenses. Additionally, visa-related costs are rising in some of the popular study destinations. For instance, Australia raised its fee from AUD 710 to AUD 1,600. Students should keep themselves updated with the information that has the potential to impact the overall cost of education so that they can plan appropriately and accordingly apply for education loans to study abroad. Student-centric NBFCs consider all these factors while designing education financing solutions for students who are aspiring to study overseas.

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Smart spending and savings

Students can save significantly by using student discounts on software, transport, and essential services. They can leverage their student ID cards to avail of these discounts. Additionally, there are dedicated organisations providing internationally accepted student identity cards, enabling them to access global discounts and student communities. They should actively research and take advantage of these offers to maximise their benefits. A lot of student-centric lenders proactively tie up with such entities to ensure that students know about these platforms and use them conveniently.

Understanding the nuances of education loans

Usually, there are two types of education loans – secured and unsecured. Secured loans require collateral, such as residential property or fixed deposits, while unsecured loans do not. To choose the best option, parents and students should consider their financial requirements and personal preferences. Tools like College Course Expense Calculators can help estimate overall costs, while EMI calculators can assist in determining estimated EMIs. Since parents often act as co-borrowers, understanding the financial implications of each type is essential.

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Strategy for loan repayment

If a student has opted for education financing, then they should have a proper repayment plan in place. Although student loans come with a moratorium period, it is not an interest-free period and will accrue interest from day one. So, students must make small contributions in the form of simple interest/partial interest during the grace period. This instils financially prudent habits, too. Beyond managing the loan effectively, consistent and timely repayments contribute to building a strong credit score. Creating an emergency fund for loan EMIs adds financial resilience in case of job delays, health issues, or currency fluctuations.

Studying abroad is a transformative experience that helps students grow academically, personally and financially. By implementing robust key financial budgeting strategies, students can support their new independent lifestyle while studying overseas and make the most of their time abroad without compromising their financial well-being. Responsibly repaying student loans is essential to build a good credit score. Therefore, it is crucial to make well-researched choices. Successfully navigating the realm of education financing depends on the ability to make informed decisions, thereby unlocking the complete potential of resources.

The writer is the Chief Strategy Officer at Avanse Financial Services

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