Should you go for an Education Loan or should you Self-Fund through other means? We tell it like it is and put down some relevant points to help you decide for yourself.
Self-Financing requires the entire year's fee to be paid upfront before the semester begins. The cost of living, being a significant amount, is not included in this (often around 50% of the total cost of education).
Education loans cover the entire cost of education, including living costs, tuition fees, etc. The principal amount repayment begins only after completing your course, giving you the head start you need.
When you Self-Fund your education, the entire payment is expected to be paid in bulk from your account.
Education Loans can be paid back in flexible and gradual payments so you can plan your finances well in advance.
Self-Financing often requires one to liquidate their life savings, which is often a financial security for family contingencies and could have been used for investment purposes.
Education Loans allow you to easily retain your financial savings for family contingencies as well as for investment purposes.
Self-Funding can come from many means, like selling still-profitable investments such as property and gold or borrowing from your relatives, but they may not always be the best paths to take - don't lose out on profits and family relationships.
An Education Loan empowers you by saving you from the long-drawn out processes of selling prime investments like land, gold that may still be profitable or the chance of souring relationships when you borrow from your relatives.
Your liquid funds need to be displayed in a solvency letter to get confirmation on your admission if you choose to Self-Finance. The funds need to cover more than a year's fees (fees + 50% more) to be convincing of one's financial capacity.
An Education Loan can get sanctioned before your admission is confirmed! We even provide you with a proof-of-funds letter at the time of application so your admission is processed smoothly.
With the requirement of liquid funds as a criteria for a solvency letter, those interested in an education abroad may find it difficult to show 'proof-of-funds' with overseas education fees ranging from 30-90 lakhs.
Your liquid funds can be well-utilized elsewhere as investments or savings as Education Loan provides a solvency letter to the university stating your 'proof-of- funds'. Meanwhile, you get the benefit of paying the lender back in easy EMIs.
The world markets are facing a volatile period, with fluctuations in foreign exchange ranging from 20-30%. This makes it even harder to produce additional funds to meet this demand.
An Education Loan can meet cost increases such as volatile forex rates up to the sanctioned credit limit. This makes it a good idea to opt for a loan.
Self-Financing always requires you to be on your toes, keep track of payment dates, transactions, fees, and this gets harder when there are international payments involved.
The hassles of payments, especially international, are a thing of the past with Education Loans. A simple instruction from your end is enough to process payments from the lender's end.
When you Self-Fund yourself, you lose the chance to build a good credit history, which is useful for the student as they progress through their lives and careers, post university.
When you take an Education Loan and make timely and responsible payments, you build a good credit history that will come in very handy for your future.
Financing your child’s education takes away the chance for them to value the worth of their education and the importance of responsibility.
Every child has to understand the value of finances. As parents, it is good to cultivate the seed of accountability by giving your child the opportunity to build their own future.