Overseas education loans or self-financing? 6 points to help you choose.

Don’t know whether you should take a study abroad education loan or cover the cost of your studies on your own? Well, this is a privileged dilemma – only a handful of student can actually afford to cover the cost studying abroad on their own.

Regardless, you will still need to make a choice and this article will provide you 6 points that should make it easier to decide between the two.

1) Education loans cover every cost.

Besides 100% financing, a study abroad education loan also takes care of other expenses encountered while pursuing an overseas education. The best loans will ensure you never feel hassled to cover costs such as entrance exams fees, airfare, rent, deposits, examination charges, etc. However, when you self-finance, you’ll always have to be on your toes and ready with funds to cover costs as and when they turn-up.

2) Invest your funds to earn handsome returns!

Sure, channelizing your funds towards education is an investment on its own. However, it doesn’t bring you any immediate monetary returns. However, if you were to invest the same funds in a fixed deposit, you are sure to earn steady returns on the investment. You can go for more aggressive investments too by opting to invest your monies in burgeoning equity markets.

3) Funds at hand when you need it.

Let’s face it – financing your overseas education takes a lot of funds. These funds could prove very handy in case of an emergency. Therefore, it’s better to opt for a student loan and pursue your dream education whilst still holding to funds that could prove to be a life saver in an emergency.

4) Don’t need to worry about inflation.

A study abroad education loan offers to cover all costs even if inflation causes price hikes later on. However, if you were to self-finance, cost may shoot up dramatically and you always face the risk of covering these increased costs.

5) Tax Benefits.

This is probably one of the biggest advantages of opting for an overseas education loan. Under section 80E of the Income Tax Act, you can use the interest amount paid in a year to avail deductions on your taxable income. The best part? There is no cap on the amount of deductions claimable.

6) Credit Score.

Credit scores have really risen in importance. Applying for almost any kind of finance solutions requires you to submit your credit score. So not only will repaying a student loan help you boost the score, but the fact you’ve taken a student loan will also improve your rating (mix of credit is responsible for up to 15% of your credit score).

So there you have it, 6 points to consider when confused between a study abroad education loan & self-financing. These points aside, taking a student loan and repaying it on your own will give you an immense sense of satisfaction and pride. It ensures you are a self-made person.

We hope this has given you the perspective you need to make the right decision. Good luck and all the best, study hard!