Funding higher studies abroad: Follow what experts say

Aditi Sharma, (name changed) 23, a resident of Delhi is planning to pursue her Masters's in Canada. Going to Canada and pursuing her higher education there has been her dream since her school days. While she is hardly a few steps away from achieving her dreams, one of the major concerns that bother her is managing funds for her studies abroad.

Studying abroad is on the bucket list of many students, but one of the major challenges that come along the way is funding education and managing other expenses while in a foreign country. Thus, this requires one to plan their finances in advance.    

While talking to many aspirants it turns out many of them don’t have a clear plan as to how they would manage to fund for their education abroad.    

Here is what our experts suggest to young aspirants: 

Apply for an Education loan in advance:

One of the most convenient ways to fund education is to go for an education loan. Education counsellors suggest that even before one gets the final letter of enrolment from the university, it is important to have an idea of the process of a loan application, the kind of loans to apply for and which bank or financial institutes to approach for funding.

Education loans can be both secured and unsecured loans that cover tuition fees, books, living expenses, and other expenses such as transportation costs. The repayment of loans is done when students complete their education. While applying for a loan always pay attention to which type of loan suits students' needs, and interest rates.

Ankit Mehra, co-founder & CEO, GyanDhan, education financing marketplace, says, “Mostly the students finance a majority of the expenses of studying abroad through education loans. Education loans come with several tax advantages that are not available with personal funds.”

The TCS (Tax Collected at Source) on education loans taken from authorized financial institutions is a mere 0.5%, while, on the other hand, the TCS on personal transactions over Rs 7 Lakhs in a financial year is 5%. Moreover, borrowers can avail of tax deductions with Section 80E of the Income Tax Act of India.  

But experts also advised that it is better to have a detailed analysis of the financial profile of the loan applicant and the guarantor before applying for the same. Education loans are offered by most public service banks, private banks, and several non-banking financial companies.

Find the best scholarships

One should always apply for all the scholarships available. Some of the scholarships are in-house scholarships offered by the universities and while there also are other scholarships like Chevening and Commonwealth scholarship. There are merit-based scholarships, sports scholarships, university scholarships, and government scholarships are some of the potential options that a student can look into.  

Use of personal funds  

At times, students who have saved the corpus or whose parents have ample back up may choose to self-fund their education, instead of taking loans.

“Students who have worked for a few years or parents who have created a corpus of funds for their child’s higher education can use personal funds,” said Mehra. But personal funds can often be limited, and with the rising cost of education, it could be difficult to manage the expenses with only personal funds.  So experts advise smart usage of all three sources of funds.

One of the best utilizations of personal funds is to manage pre-arrival costs, such as GRE/IELTS test fees, visa costs, application fees, etc. Apart from this, students can also keep personal funds as a buffer for when an emergency strikes, or when there is a need for additional funds, such as interest rate hikes, rupee devaluation, and inflation.

Support yourself with part-time jobs  

Most countries allow students to work part-time jobs. This is something students can choose to support themself financially. Part time jobs also teach students ways to manage finances and budgeting.

Fight the adversity  

Crowdfunding is a process of funding education by raising small amounts of money from a large number of people via the Internet.  This has merged as a popular means for students looking to pursue education overseas. One of the reasons for this is that students can raise funds not just for their fees, which a conventional loan would provide them, but also for their living expenses.

Arjun R. Krishna CoFounder, WeMakeScholars.com says, “There are few cases which have that much of a need and story behind them, only they can avail it.”