With cost of living abroad rising for students, here's what to keep in mind

Cost of Living Abroad: Studying abroad has long been a dream for many students, offering the promise of diverse experiences and educational opportunities. However, as the rupee continues to weaken against the dollar, the cost of living for students pursuing education overseas has surged, prompting many to consider their financial options carefully.

Here's what students thinking about studying abroad should keep in mind.

Cost of living abroad: Floating exchange rates

Adhil Shetty, Bankbazaar CEO told Finacial Express that one crucial factor for students to contemplate is the source of their education financing. Opting for a loan within India may offer lower interest rates, ranging between 8-14%, depending on various factors like the applicant's profile, loan amount, and credit score.

While the interest rate difference might not seem significant, it is essential for students to devise a solid repayment strategy to avoid unexpected financial burdens

For those seeking financial assistance abroad, it's vital to comprehend the implications of exchange rate fluctuations. Loans obtained in foreign currencies can be affected by shifts in exchange rates, potentially impacting repayment obligations, especially if job opportunities are delayed.

Researching interest rate structures, currency risks, and visa requirements for the host country is imperative to make informed decisions. Some foreign lenders may also necessitate a credit history or a local co-signer, adding another layer of complexity to the borrowing process.

Cost of living abroad: Tenure of Repayment

Understanding the loan disbursement process, repayment rules, and legal requirements in both India and the host country is crucial. Students should also explore insurance options to safeguard against unforeseen events that might hinder their ability to repay the loan.

Selecting an appropriate repayment tenure is essential, as it should align with future income prospects. While longer tenures may reduce monthly instalments, they can result in higher overall interest payments. Additionally, students should be aware of collateral requirements, if any, and their implications.

Many Indian financial institutions offer a moratorium period after completing the course, giving graduates some financial breathing room, Shetty told Financial Express.

Flexible repayment options, such as income-based plans, are worth exploring to manage finances efficiently. Those who don't meet eligibility criteria or require larger loans may need to secure a co-signer or guarantor with a solid credit history, typically a parent or guardian.

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