An international academic journey is undeniably exciting, but when it comes to financing through education loans, a misstep can have lasting consequences. Imagine budgeting to get admission to your dream university but forgetting crucial expenses like accommodation or unexpected hiccups along the way, certainly it will cause a blunder.
In the quest for higher education abroad, funding your education by opting for a study abroad loan can be instrumental in bridging the gap between ambitions and reality. However, there are common mistakes that students often make, inadvertently escalating their student debt burden.
Whether you take a collateral loan or non collateral education loan for abroad education, it is important to understand and avoid mistakes for a smoother and more financially viable educational journey. Thus, let us move ahead and explore the common mistakes to avoid that can increase your education loan debt.
Common Education Loan Blunders to Avoid That Can Increase Student Debt
Below are some of the common mistakes that you must be aware of before applying for an overseas education loan.
- Inadequate Research on Loan Options
One of the most prevalent mistakes is insufficient research on available loan options and financial institutions. It is rightly said that patience is the key to success since it is observed that students often rush into agreements without exploring various lenders, interest rates, and repayment terms. Investing your time to compare ensures that you select a loan structure aligned with your financial capabilities and prospects. However, to save your time on research it is better to consult overseas education loan advisors for better guidance.
- Ignoring Interest Rate & Terms
Another very common mistake made by students is ignoring the interest rate, it can significantly impact the overall cost of an education loan. All financial lenders have different interest rates for secured and unsecured loans and failing to comprehend the terms and conditions associated with interest rates may lead to unexpected financial strain in the long run. Thus, it is important to choose a loan with favourable interest rates and clear terms to avoid unnecessary financial pressure during your abroad studies.
- Underestimating the Total Cost of Education
Do a little math! Some students make the mistake of underestimating the total cost of education, considering only tuition fees and overlooking living expenses, travel costs, and unforeseen expenditures. Indeed, you are not jumping through hoops, you just need to have a comprehensive understanding of the total expenses. Because it is essential for determining the loan amount required and preventing financial shortfalls during the academic journey.
- Borrowing More than Necessary
Many students overborrow without understating their total cost of education. While it is tempting to borrow the maximum amount offered, doing so without a clear budget can lead to overborrowing. However, borrowing more than necessary can result in higher interest payments and an extended repayment period, contributing to increased financial stress after your abroad studies.
- Lack of Financial Planning
Better preparation always leads to better results. A lack of financial planning is another common mistake. Students often fail to create a realistic budget that considers not only loan repayments but also daily living expenses. Thus, it is important to develop a comprehensive financial plan to help manage funds efficiently and avoid unnecessary debt accumulation.
- Neglecting Repayment Terms and Grace Periods
Now comes the important part, overlooking the repayment terms and grace period is a critical mistake. It is important to understand when repayments begin, the duration of the grace period, and the consequences of missing payments is essential for avoiding late repayment and negative impacts on credit scores.
- Unaware of Concessions Offered by Financial Lenders
Many students are unaware of the concessions offered by some financial lenders. For example, government banks offer discounts for girl child and some lenders have additional discounts if your university is listed in their prime list. Thus, it is important to consult the financial institutions to see if they have any schemes or concessions so that you can benefit from them.
- Poor Communication with Lenders
Communication and timely follow-up are the key when it comes to managing education loans. There are some students that make the mistake of avoiding communication with lenders when facing financial difficulties. Thus, it is important to proactively engage with lenders which lead to more flexible repayment options and prevents escalation of debt.
After glancing at the common overseas education loan mistakes that can increase student debt, we are moving ahead to help you pick the top financial lenders which are mentioned below.
Top Financial Institutions Providing Overseas Education Loans
These are some of the top financial institutions that you can choose to finance your overseas education loan.
- Public Banks:
These are financial lenders that are owned by the government, they provide secured and unsecured overseas education to students.
Top Public Banks: State Bank of India, Union Bank of India, Bank of India, Punjab National Bank, Bank of Maharashtra, and Bank of Baroda.
- Private Banks:
These financial lenders are run privately; they also provide both secured and unsecured overseas education loans to students.
Top Private Banks: ICICI Bank, Axis Bank, and IDFC First Bank
- NBFCs:
These financial lenders are Non-Banking Financial Companies, and they offer both secured and unsecured study abroad loans to students.
Top NBFCs: HDFC Credila, Avanse, Incred, and Auxilo
- International Lenders:
These are registered financial companies offering unsecured overseas education loans. However, these lenders provide loan amounts in dollars only.
Top International Lenders: MPower Finance, and Prodigy Finance.
Final Thoughts
Pursuing an overseas education journey requires careful consideration and strategic planning, particularly when it comes to financing. By avoiding these common mistakes and approaching education loans with a clear understanding of terms and responsibilities, students can ensure a more manageable and financially secure academic experience.
Thus, we recommend you take guidance for the best education loan interest rate for abroad study from top overseas education loan advisors. Their expert counsellors provide end-to-end assistance and get all your queries resolved. We hope you will keep a note of all these common mistakes, avoid them completely, and get your loan sanctioned to study at your dream university. Good luck.
