Planning to study abroad on a loan? Here’s how you can tackle the debt if unemployed

In the absence of a current source of income, the most foolproof alternative is to explore investing through a well-diversified portfolio.

“What if I am unemployed after graduating. How will I repay my loans?” the prospect of studying overseas on a loan may lead to worrying thoughts. Indeed, such apprehension can trigger stress and ignite second thoughts about the decision.

But, the script does not have to be this dire. You can rewrite it and ensure a happy ending.

Experts we spoke to have outlined some solutions that — if executed well — should allow students to push their loan repayment worries away and focus on their academic pursuits.

Investment tools

In the absence of a current source of income, the most foolproof alternative is to explore investing through a well-diversified portfolio. “Utilising their savings in varied, well-researched investment tools and earning returns will help students be prepared for loan repayments,” says Amit Singh, Founder of education loan firm UniCreds.

This is also a good long-term strategy as these returns can help students after they get a job, he adds.

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Singh suggests students explore investment options in India and abroad based on their understanding and have both short-term and long-term options operating concurrently.

“In most cases, this comes down to Equity and Debt-based investing, where the debt-based investments make sure that the short to long-term instalments are taken care of — for example, FDs, bonds, balanced mutual funds etc,” he says.

“And equity-based investments (can)  give a return in excess of the rate of return of the loan, thereby making a small profit and still helping pay instalments on time. For example, all equity-based mutual funds, exchange-traded funds, index-traded funds, stocks, etc,” Singh adds.

You can always refinance the loan

Universities have dedicated career centres that work around the clock to help students find meaningful employment that not only helps them repay loans but also eventually apply for a valid work permit, says Akshay Chaturvedi, Founder and CEO of study-abroad platform Leverage Edu.

Nevertheless, in the event a student is unable to repay a loan, he says it can be refinanced. “Depending on the student and cosigner's CIBIL score, they end up sometimes paying a lower interest rate, too.”

However, Chaturvedi has a note of caution: if the student has defaulted on any payments, the refinancing lender may either not consider the application or demand a very high interest rate to offset their risk.

So, what are your other options?

Don’t shy away from part-time jobs and internships 

When Mansi Shenoy (name changed) was not able to secure a full-time job opportunity in Ontario, Canada, after completing her Master’s, she turned to side gigs and later got an internship completely unrelated to her field of education.

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“It's sometimes demotivating. But such gigs often expose you to different kinds of learning,” she says. Five months into the internship, Shenoy got the opportunity to become a full-time employee based on her performance.

“I am planning to continue this job until I get something related to my field as it's helping repay my loans,” she says.

In such situations, Charushilla Narula, Founder Director of education consultancy University Connection, suggests candidates regularly visit the ‘Career Services Division’ at their colleges.

“Regular meetings with your career advisor can show how keen you are and ensure that they put you first in line for campus interviews,” she suggests.

She also recommends staying in touch with seniors, alumni and even professors because you don’t know whose recommendation can open doors for you outside

“There’s so much more and it mostly stems from students’ understanding that you don't go to college just for a degree; you go there to make a life,” Narula says, adding, “Loans can be a burden but they can also serve as motivation to be and do more.”