Higher education is considered to be one of the biggest investments in the life of a student. Tuition fees and living expenses are daunting, whether you are studying in India or abroad.
In fact, in 2023-24, Indian students remitted approximately ₹29,000 crore to foreign countries for overseas education, which is almost 1,200% higher than the amount they sent back a decade ago. This illustrates the increasing demand for international education and the reason why most students and parents are using loans to make it more affordable.
The major question is: Which is better to take, a domestic education loan or an international education loan in India? Let’s break it down to help you choose the right option.
What Is a Domestic Education Loan?
A domestic education loan is one that is aimed at learners who intend to study higher in India. Banks and Non-Banking Financial Companies (NBFCs) provide these loans to finance tuition fees, exam fees, library fees, and other related expenses.
- Usually, the borrowing amount is smaller in India, as education is relatively inexpensive compared to other countries.
- Depending on the size of the loan, one may or may not be required to place collateral.
- The repayment period normally begins upon the completion of the course, including a grace period.
This option is better suited to the students applying to Indian universities, colleges, or professional institutes.
What is an International Education Loan?
An international education loan assists the students of India to finance their studies in foreign countries. These loans cover a broader scope of expenses, such as tuition fees, travelling expenses, housing, and living expenses.
- The loan amount is higher because foreign education is more expensive.
- Interest rates may fluctuate, and in most cases, they are slightly higher than domestic loans.
- Repayment is also flexible, typically commencing after the course, with the option to extend the tenure.
- Some loan disbursal is done in foreign currency, and this minimises the exchange rate risks.
This is the best option for students seeking to pursue their studies in countries such as the USA, UK, Canada, Australia, or Europe.
Domestic vs Abroad Loan: Key Differences
Choosing between a domestic and international education loan depends on the type of scholarship that will help you in your studies. Education is made available by both types of loans, but there are major differences between them.
| Feature | Domestic Loan | International Loan |
| Coverage | Tuition and academic fees | Tuition, travel, living expenses |
| Loan Amount | Lower (₹10–20 lakhs approx.) | Higher (₹20 lakhs–₹1 crore) |
| Collateral | May be required for large loans | Often required for high amounts |
| Interest Rates | Slightly lower | Slightly higher |
| Currency Factor | Indian Rupees | Sometimes disbursed in foreign currency |
| Repayment | Shorter grace period | Flexible with longer tenure |
In short, the domestic loans can suit students learning in India or those who need a smaller amount of money with reduced interest rates. International loans, on the other hand, are available to students studying abroad who require additional funds and more favorable repayment terms.
Pros and Cons of Domestic Loans
Domestic education loans are aimed at higher education students in India. Although they are convenient and cost-effective, there are some limitations associated with them.
Pros of a Domestic Loan
- Easier to obtain from the local banks.
- Lower loans mean faster approval.
- Reduced rates of interest in comparison with foreign loans.
Cons of a Domestic Loan
- Applicable to Indian institutions only.
- The amount of the loan might be insufficient when it comes to expensive courses.
Pros and Cons of International Loans
International education loans are provided to students who want to study in another country, at a higher cost, plus extra expenses. Such loans offer increased financial flexibility but come at a price.
Pros of an International Loan
- Funds tuition, travel and cost of living.
- Higher loan amounts available.
- Flexible repayment options.
Cons of an International Loan
- Interest rates are higher as compared to domestic loans.
- Collateral is often required.
- Repayment costs may increase due to exchange rates risks.
Factors to Consider Before Choosing
When making up your mind on which to select between a domestic vs abroad loan, remember these:
- Career objectives: Studying abroad may open global career opportunities, while domestic courses can also lead to great jobs in India.
- Budget: Think about how much your family will be able to contribute and how much you will have to borrow.
- Future income: Predict what you will earn after your studies so that you will be able to pay back easily.
- Location: In case you are confident that you are studying abroad, an international education loan is required.
Local Options for Your Education Loan
If you are in the Tricity area, you have some of the best options for securing an education loan. You can visit various banks for student loans in Panchkula, but many traditional lenders often trap you in complicated documentation and lengthy processes.
At Unipay Forex, we make it simple. Whether you need a domestic loan to study in India or an international education loan to study abroad, we will ensure you get the best loan at the most favorable rates. The local credit history and pre-existing banking relationships can also help you obtain better interest rates or reduced collateral requirements. This simplifies the whole procedure and increases reliability.
By comparing offers and making the right choice, students in the Tricity will be able to find an offer that is efficient, transparent, and affordable.
Which Loan Is Right for You?
The best loan depends on your goals, budget, and future plans. Here are some key points to help you decide:
- Studying in India: If your course fees and living expenses are manageable, a domestic loan is simpler, cheaper, and less risky.
- Studying abroad: For higher tuition, travel, accommodation, and living costs, an international education loan may be necessary despite higher interest rates.
- Future earnings potential: If studying abroad significantly improves your career prospects and income, the extra cost of an international loan may be justified.
- Risk factors: Consider currency fluctuations, higher interest rates, and potentially tougher repayment terms for international loans.
- Family’s repayment capacity: Assess whether your family can comfortably manage the loan after you graduate. If the burden is too heavy, a domestic course or cost-saving measures abroad may be a better choice.
Final Thoughts
Education decisions are long-term choices that impact not only your resume but also your finances. Whether you opt for a domestic loan or pursue an international route, your success depends on thorough research and realistic planning.
Compare interest rates, loan amounts, collateral requirements, and repayment terms carefully. Speak with banks, understand local loan options, and ensure you are aware of all potential costs before signing any agreement. If you choose wisely, either loan can support your studies without placing you under overwhelming debt.
Frequently Asked Questions
Is it worth taking a loan to study abroad?
An education loan for studying abroad ensures you have enough funds for tuition and living costs, letting you focus on your studies. It also helps you invest in your future career while managing expenses effectively.
Which is the better type of student loan to get?
A subsidized loan is often the best option because the government pays the interest while you’re in college. There are different types of student loans available, but eligibility varies, so not every loan suits every student.
Which is better, a personal loan or an education loan?
For education expenses, an education loan is better as it offers longer repayment terms and a moratorium period. Personal loans are more suited for other non-educational expenses.
Are international lenders a good option for student loans?
Yes, international lenders specialize in loans for studying abroad and may offer flexible terms and cover tuition, living expenses, and travel. They can be ideal if local banks require high collateral or cosigners.
What should I consider when choosing an education loan?
Consider interest rates, repayment terms, loan amount limits, processing fees, and whether a cosigner is needed. Choose a loan that fits financial needs and offers flexibility during and after studies.
