By Rajesh Kachave

In an increasingly globalised world, the pursuit of quality education abroad has become a transformative goal for countless aspiring Indian students. The interconnected world has encouraged many students to chase successful global careers. The dream of studying abroad has always been alluring but has become increasingly expensive in recent years. As the cost of education abroad continues to rise, aspiring students need to explore accessible financing options to pursue global education without financial strain.

Growing Popularity of Education Loans for International Study

As per the Ministry of External Affairs data, over 13 lakh Indian students were enrolled at international universities, showcasing the upsurge in the growing demand for overseas education. Additionally, the growth in education loans registered a 17% surge in the last financial year ending in March 2023, as per the Reserve Bank of India data. With the changing times and scenarios, it has also been witnessed that ambitious students aspire to finance their education independently by opting for an education loan, thereby earning a self-made badge.

Some of the factors that have contributed to the surge in demand for education loans in India are as follows:

Pro-Credit sentiment: One of the primary drivers behind the surge in education loan demand is a pro-credit sentiment. Students aspire to receive quality education, and their parents are increasingly supportive of their academic ambitions. This signifies a growing awareness of the importance of higher education and the role that education loans play in making it accessible. As parents recognise the power of quality education, they are more willing than ever to actively participate in their children’s academic journeys by embracing education loans as a viable means of investment in their future.

Rising tuition fees and living costs: Tuition fees at foreign universities have been steadily increasing, making it progressively challenging for Indian students to afford international education. Beyond this, the cost of living in a foreign country has also been on the rise. New-age education-focused NBFCs often provide education loans that offer students comprehensive financial support, ensuring that students can maintain a comfortable standard of living without financial constraints. They often provide a holistic cover that includes tuition fees, living expenses, the cost of travelling, and other miscellaneous costs.

Self-reliance: Education loans allow students to be “Atmanirbhar” by funding their education. They neither have to compromise their academic aspirations due to a lack of funds nor have to depend entirely on their parents for financial assistance. Students these days prefer earning a self-made badge by funding their education. This drive towards financial independence reflects the changing mindset of the new generation, emphasising the importance of self-reliance and taking ownership of their academic journey. It signifies a shift towards a more empowered and responsible approach to education financing, where students actively contribute to shaping their educational future.

Flexible repayment options: New-age, education-focused NBFCs provide education loans with flexible repayment plans and personalised solutions. So, students can choose the tenure and EMIs that suit them the best. They can also use an Education Loan EMI Calculator, a smart online tool that helps them arrive at an estimated EMI by simply adding the mix of tenure and loan amount that suits them the best. Furthermore, new-age financial institutions offer multiple repayment modes such as National Automated Clearing House, Electronic Clearance Services, Cheques and Post-Dated Cheques (PDCs).

Diverse course and institution choices: Education loans enable students to explore various courses and institutions across the world without making any compromises. This enables them access to prestigious international universities and pursue specialised fields of study as per their dream career. Students can opt for conventional courses such as Science, Technology, Engineering, and Mathematics (STEM), unconventional programs such as music production, and several other certification, vocational, skilling, reskilling and upskilling programs.

Global connections: Students can be exposed to interacting and uniting with various other students from different countries, which helps develop cross-cultural communication skills and enhances and broadens their intercultural horizons. Creating these experiences and global connections will increase their net worth. Moreover, these international networks can lead to lasting friendships and professional connections that may prove invaluable in their future endeavours.

Visa policies: Various student-friendly visa policies and benefits are offered by many countries, such as the USA and the UK. Students can work up to 20 hours per week part-time during their course duration in the USA and the UK, and for Australia, it is 48 hours per fortnight. The post-study work visa is one of the key factors that encourage students to explore exciting career opportunities, thereby acquiring global exposure. The post-study work visa in the US is known as Optional Practical Training (OPT). Students can apply for OPT with a 12-month minimum duration course, which will allow them to stay in the USA for one year after completing the course. For the UK, the post-study work visa is for 2-3 years, depending on the course. This enables students to gain global exposure, encouraging them to opt for student loans as it offers an increased return on investment.

In the quest for global education and exposure, Indian students are increasingly turning to education loans to fulfil their academic aspirations. With the rising cost of education, these loans provide a pathway to financial accessibility, diverse educational choices, and the opportunity to be self-reliant. It reflects the determination of the new generation to overcome financial barriers and embark on a transformative journey of knowledge and personal growth.

(Author is Chief Business Officer- Student Lending and Insurance Business, Avanse Financial Services)