By Sayantan Biswas, Co-founder, UniCreds
International education is now more accessible to Indian students than ever. Students today look forward to the opportunity of higher education from a prestigious college abroad coupled with the wide array of experience and exposure that comes along with it. Unfortunately, international education is also more expensive than it has ever been and its rising popularity has resulted in a proportional rise in competition. Student loans are getting difficult to obtain even with the best credentials. However, this may not be the whole story as 84.8% of student loans are approved through NBFCs. There may be myriad reasons for your education loan to be rejected, many of which are not well-known among students or parents.
Here are some points to keep in mind while applying for your overseas education loan:
Academic performance
Perhaps unsurprisingly, your academic track record is an important consideration in your student loan getting approved. Banks and NBFCs generally look for consistency more than high scores; so delayed admission into a year, being held back for a semester, or having to give an internal exam multiple times tend to reflect poorly on applications. The reasoning behind this is simple: banks look for students with the potential to earn well enough after university to clear their debts. While major academic accomplishments are undoubtedly great additions, simply maintaining good performance year after year can go a long way toward improving your chances for a loan.
University and Course
Due to the fact that banks consider students as investments for the future, the college you get admission into can have a considerable impact on your loan prospects. The top echelon of universities like the Ivy Leagues in the US or the Russell Group in the UK is perceived as being better for your future than the alternatives. While this can seem somewhat narrow-minded; after all, you may end up doing great work regardless of the school you go to, from the bank’s perspective, a Harvard prospect just makes more sense than a state University applicant. Outside of these notable institutes, lenders may use university rankings like the annual QS list or research the institute themselves to determine its specialities and potential to help with future success.
A similar logic applies when it comes to the courses themselves: STEM courses generally being favoured due to their high-paying potential. Having said that, certain international student finance managers today extend their analysis beyond such simple metrics and take individual potential into account where possible.
Broadly speaking, undergraduate, post-graduate, PhD, and certificate courses are taken as viable for study loans. While more niche, short-term, or non-economical courses are less likely to be considered.
Documentation
It goes without saying that student loans require extensive documentation from students, their parents, schools, colleges and other institutions. From identification to credit histories, all this documentation can be difficult to keep track of especially while dealing with all the other aspects of planning overseas travel. This becomes even more arduous when the loan is being obtained from the destination country as correcting documents becomes far more time-consuming. As such, it is important to double-check the veracity of all such documentation in order to ensure the smooth processing of the loan. It is convenient to avail support from third-party student loan services which can help with the technicalities of the process domestically as well as overseas. Since they work with hundreds of student loan applications, they have the experience to advise you on what could go wrong with the application.
Credit scores
Just like any other loan or credit application, your credit score will be of paramount importance to the bank or NBFC helping you. In general, A CIBIL score of 600 or below is considered unattractive from a lender’s point of view. For international students, this credit consideration is extended to the co-signer of your loan, who is usually a resident of the destination country that backs up your credit request and takes on some of the liability of the debt. In this way, the credit score restriction must be applied twice as many times when going for international study.
Destination
Following the ‘student as an investment analogy’, the nation you are hoping to study in makes a difference to your loan application or at least the terms you may be offered. Countries that are typically associated with top-level higher education such as the US, the UK, Australia, etc. make for far more attractive candidates as compared to students going to atypical locations such as Mexico, Japan, or China. This is again a form of security assessment for the bank, as stable and well-developed western countries are considered to offer better employment and development opportunities.
All in all, applying for an international education loan can be a time-consuming process. However, by taking one’s time to plan all the steps, accounting for the various aspects of the loan, and utilising the expert services as and when needed, you give yourself the best possible chance for a successful application on your first go.
