Grants and scholarships are few and hard to find
The cost of studying abroad in an Ivy League college comes with a huge cost that can go into crores. Despite grants, scholarships and other financial aid, the net cost remains out of reach for many deserving Indian students. The only option left for them is to get a . go to education loan,
“Grants and scholarships from foreign universities are limited to a relatively small student base. With a steady increase in the aspiring student population, this number may thin, thus potentially making higher education a difficult proposition for a significant portion of this population. Getting an education loan “A student’s chances of getting the desired admission in his/her preferred university greatly increases,” says Arijit Sanyal, MD and CEO, Credila.
The loan is often conditional, and the amount is limited.
Education loan comes in two forms, secured and unsecured. Some students easily get unsecured education loans based on the good income and good repayment capacity of the parents. Students whose parents have substantial assets also get more loan amount after giving their assets as collateral. However, it has not been easy for other students to get the desired loan amount without such a strong financial background of the parents.
Ila says, “In secured assets, the assets of the parents play an important role as they are offered as security (collateral) in case the child or the parent cannot repay the loan. The financial institution has an assurance of As such the student’s academic records are scant.” Dubey, CEO and Co-Founder of Edufund.
Many students who did not have such a strong financial background often had to give up on their dreams. Although some of these students used to get a small unsecured loan, the loan amount offered by the lenders is usually much less than a secured education loan. However, now things have changed.
Newer options offer larger unsecured loans to cover a larger portion of the cost
education finance Several new funding options have emerged especially for students who do not have any assets to offer as collateral. Ankit Mehra, CEO and Co-Founder, GyanDhan says, “New-age fintechs are emerging that provide education loans without collateral. These lenders consider a student’s past academic performance and future earning potential as the main criteria for loan eligibility. I check.”
If you have the qualifications and secure admission to some of the most prestigious institutions, funding may not be a major hurdle. “A popular option or complement to grants and scholarships today are merit-based collateral and co-signer-free loans, such as those offered by Prodigy Finance, where students do not need to rely on traditional options that rely on them and their families. “The only thing a student needs to be concerned about is their studies,” says Mayank Sharma, Country Head, Prodigy Finance.
Many of these new lenders are ready to take more risk and offer higher amounts collateral free loan to eligible students. “In an unsecured loan, no collateral is offered. The bank or financial institution takes on a calculated risk based on the child’s prospects and ability to pay back the loan offered. Here, the bank has a plethora of documents including the candidate’s previous documents. assesses. Academic record and potential of the student. In case of unsecured loans, candidates can get up to Rs 40 lakh depending on the course and the college chosen,” says Ila.
Some lenders offer even larger amounts in the form of collateral-free loans, but then these are only offered to a select few students who are going to study in the most reputed institutions. “We also offer unsecured loans up to Rs 75 lakh, depending on the eligibility of the application,” says Sanyal.
How Lenders Decide Who Gets More Unsecured Loans
These lenders are taking a huge risk by offering higher education loans, but this is done after careful evaluation of a lot of factors. “As a part of this approach, we assess the profile of the student in detail. There are approximately 50-60 parameters that are assessed to derive a student’s employability score. Some of these parameters are the previous academic performance, continuity in education, entrance test scores, pedigree of the university/institution, course selection in line with existing skills and much more,” says Rajesh Kachwe, Chief Business Officer – Education Loans, Avanse Financial Services.
Track record placement and remuneration given to previous students who had done the same course in the same institution plays a vital role in deciding whether you will get the desired unsecured loan or not. “Student does not need to provide any collateral or co-signer to apply. Collateral/ and co-signer free loans are offered based on student profile and their background. We look at the curriculum and school in which the student wishes to participate, as the credit risk is assessed on the basis of the future earnings and potential of the students,” says Sharma. Sharma says, “The occupation of the parents or their repayment capacity is not taken into account in this determination. Thus, the students can afford their studies without putting any financial burden on the parents.”
bridging the last mile gap
Despite all efforts, if you are still short of funding, you can address it once you start studying abroad. “There are other avenues such as financial institutions that provide loans in foreign currency without the need for a cosigner or any collateral. The repayment can be done in any currency without any prepayment penalty. These loans are interest-only during the course period. Payment is required. The principal amount and accumulated interest can be paid after completing the course,” says Ila.