विदेश में अध्ययन करने के लिए शिक्षा ऋण बनाम स्व-वित्तपोषण
29 सितम्बर 2023
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Studying abroad is a dream for many students. It allows them to receive a quality education besides exploring new cultures and gaining global exposure; however, financing an international education can be a significant challenge for most students.
When funding their overseas study, students often contemplate options of self-funding and student loans.
In this blog, we will evaluate both options so that you can make an informed decision.
What is Self-Funding?
Self-funding refers to using personal savings, family contributions, or scholarships to finance one's education. Self-funding for studying abroad involves relying on your resources and financial capacity to cover tuition fees, living expenses, and other associated costs.
Study Abroad Student Loans
Student loans are financial tools designed to assist students in financing their education. These loans for students are specifically tailored for educational purposes and are available from various financial institutions, both private and government-backed.
An education loan for study abroad can cover tuition fees, accommodation costs, travel expenses, and other educational-related expenditures.
Types of Student Loans
There are two main types of education loans based on the presence or absence of collateral:
Collateral Loans:
These are loans that are secured by collateral. When a borrower pledges collateral to obtain a loan, the lender has some assurance of partial payment in case of unpaid loan obligations.
If the borrower fails to make timely payments, the lender has the right to sell the collateral to recover the outstanding amount. In India, public sector commercial banks are considered reliable sources of student collateral loans.
Unsecured Loans :
These loans do not require any collateral or security. Students who do not have sufficient assets to use as collateral can still access these loans. Unlike tangible assets, unsecured student loans are typically based on the borrower's creditworthiness, income potential, academic background and also based on the institution he enrolled.
Considering the rising cost of education and the importance of quality education, many individuals now view education loans as an investment.
Some of the education loan benefits include:
Competitive Interest Rates :
Education loans often come with competitive interest rates, generally lower than other types of loans. This helps to make the loan more affordable for students and their families.
Education loans often come with competitive interest rates, generally lower than other types of loans. This helps to make the loan more affordable for students and their families.
Flexible Repayment Options :
- The bank provides flexible repayment terms, including a moratorium period, allowing students to start repayment after completing their education or finding suitable employment.
- The maximum repayment upto 180 months after course completion + 12 months
- Bank charges simple interest during Moratorium period.
Wide Range of Expenses Covered
- The loan covers various expenses, including tuition fees, accommodation, travel, books, and other educational expenses, ensuring comprehensive financial support.
- Need based Funding
- Bank of Baroda provides upto 100% finance.
Building Credit History :
Successfully managing an education loan and making timely repayments can help students build a positive credit history, which can benefit future financial endeavours, such as obtaining other loans or securing better interest rates.
Education Loan Vs. Self-Finance
Several factors must be considered when comparing self-financing and education loans abroad. Let's take a closer look at some of these factors:
Financial Situation :
One of the most critical factors is your financial situation. Self-funding may be a viable option if you have substantial savings or access to funding from your family. However, if you lack the necessary financial resources, student loans can bridge the gap and make studying abroad a reality.
Interest Rates :
Interest rates play a significant role in the cost of borrowing. Education loans may have fixed or variable interest rates depending on the lender. It is crucial to compare interest rates and determine whether the interest accrued over the loan term is reasonable compared to the potential return on investment from studying abroad.
Debt Burden :
Taking on student loans means taking on a financial obligation that can impact your future. Considering the potential debt burden and how it may affect your post-graduation plans, such as career choices or further education, is crucial.
Self-funding eliminates the need to repay loans and offers more financial freedom once you complete your studies.
Which is Better: Self-Funding or Student Loans?
There is no one-size-fits-all answer to this question, as the best option depends on individual circumstances and preferences. Self-funding may be more suitable for students with significant financial resources or access to scholarships. It provides a debt-free education and greater financial independence.
When deciding between self-funding and student loans for studying abroad, it ultimately comes down to personal circumstances and priorities. Here are some final thoughts to consider:
Financial Capacity :
Self-funding is an excellent option if you have the financial means to cover your education expenses without relying on loans. It provides the advantage of graduating debt-free and offers greater financial independence after completing your studies.
Risk and Responsibility :
Self-funding risks depleting your savings or facing financial strain if unexpected circumstances arise. On the other hand, student loans come with the responsibility of repayment, which can be a burden post-graduation. It's crucial to assess your risk tolerance and long-term financial goals before deciding.
Interest Rates and Repayment Terms :
Student loans have varying interest rates and repayment options, so it's essential to research and compare different loan programs. Consider the impact of interest rates and repayment terms on your financial commitment.
Return on Investment :
Studying abroad can offer numerous benefits, such as enhanced career prospects, cultural exposure, and personal growth. Evaluate the potential return on investment from your chosen study program and assess whether the long-term benefits outweigh the cost of financing. Consider factors like the institution's reputation, the quality of education, and the potential for internships or job placements.
Future Financial Plans :
Self-funding may offer more flexibility and fewer financial obligations if you intend to pursue higher education or make significant financial commitments post-graduation. On the other hand, student loans may limit your financial choices.
Conclusion
The decision between self-funding and student loans to study abroad is complex. It requires thoroughly assessing your financial situation, risk tolerance, and long-term goals.
Self-funding offers the advantage of independence and graduating debt-free, while student loans provide the means to pursue your dreams when financial resources are limited. Remember to consider the interest rates, repayment terms, and potential return on investment when making your decision.
Ultimately, prioritise your financial well-being and choose the best option with your circumstances and aspirations.
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डिस्क्लेमर
इस लेख/इन्फोग्राफिक/चित्र/वीडियो की सामग्री का उद्देश्य केवल सूचना से है और जरूरी नहीं कि यह बैंक ऑफ बड़ौदा के विचारों को प्रतिबिंबित करे। सामग्री प्रकृति में सामान्य हैं और यह केवल सूचना मात्र है। यह आपकी विशेष परिस्थितियों में विशिष्ट सलाह का विकल्प नहीं होगा । बैंक ऑफ बड़ौदा और/या इसके सहयोगी और इसकी सहायक कंपनियां सटीकता के संबंध में कोई प्रतिनिधित्व नहीं करती हैं; यहां निहित या अन्यथा प्रदान की गई किसी भी जानकारी की पूर्णता या विश्वसनीयता और इसके द्वारा उसी के संबंध में किसी भी दायित्व को अस्वीकार करें। जानकारी अद्यतन, पूर्णता, संशोधन, सत्यापन और संशोधन के अधीन है और यह भौतिक रूप से बदल सकती है। इसकी सूचना किसी भी क्षेत्राधिकार में किसी भी व्यक्ति द्वारा वितरण या उपयोग के लिए अभिप्रेत नहीं है, जहां ऐसा वितरण या उपयोग कानून या विनियमन के विपरीत होगा या बैंक ऑफ बड़ौदा या उसके सहयोगियों को किसी भी लाइसेंसिंग या पंजीकरण आवश्यकताओं के अधीन करेगा । उल्लिखित सामग्री और सूचना के आधार पर किसी भी वित्तीय निर्णय लेने के लिए पाठक द्वारा किए गए किसी भी प्रत्यक्ष/अप्रत्यक्ष नुकसान या देयता के लिए बैंक ऑफ बड़ौदा जिम्मेदार नहीं होगा । कोई भी वित्तीय निर्णय लेने से पहले अपने वित्तीय सलाहकार से सलाह जरूर लें।
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विदेश में उच्च शिक्षा प्राप्त करना कई विद्याथियों का सपना होता है। तथापि, विदेशों में अध्ययन करने के लिए आवश्यक एक बड़ी धनराशि एक बड़ी चुनौती हो सकती है। इस बाधा को दूर करने के लिए, विद्यार्थीगण विदेशी शिक्षा ऋण लेते हैं। ऐसे ऋण छात्रों के सपने को पूरा करने के लिए आवश्यक वित्तीय सहायता प्रदान करते हैं।
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