Are you dreaming to spread your wings and fly to your preferred higher education destination to study abroad? Indeed, studying abroad opens doors to endless opportunities and the majority of international students look out for suitable funding assistance to fulfil their dreams. But about the financial side of things? Well, stress not as education loans can be a lifesaver.
Whether it be collateral or an education loan without collateral for Canada and other countries if not managed wisely, they can even lead you to fall into the well of debt. In this article, we will explore five common mistakes that students make when taking out education loans for studying abroad and how to avoid them.
6 Common Overseas Education Loan Mistakes to Avoid
Following are the common education loan mistakes that you should avoid at every cost to not increase your student debt.
- Borrowing More Than Necessary
When living abroad it feels tempting to borrow a little extra to treat yourself or indulge in luxuries or experiences. But trust us, it is a slippery slope. For the first few months, stick to the essentials, create a well-planned budget, and borrow additionally for the things related to your studies because needs can be managed and fulfilled but human wants are unlimited so understand the difference between needs and wants. - Ignoring the Impact Interest Rates
Did you know that by not clearing your interest rates timely and piling up over and over again for the next round, these interest rates can become silent debt-makers in your career-making life? Students sometimes overlook the impact of interest rates on their loan repayment. Also, it is important to always compare interest rates from different lenders available and choose the one with the lowest rate to minimize long-term debt. So, choose wisely!
- Not Exploring Non-Collateral Options
Did you know that apart from loans that require tangible and non-tangible assets as collateral, there are loans out there that don’t need collateral as well? Yup, it’s true! While planning to take a loan don’t forget to explore options for non collateral education loan for abroad as well. This type of loan can reduce financial strain and avoid unnecessary stress on both parents and students. - Skipping Repayment Planning
Who wants to think about repaying loans when you are knee-deep in your textbooks and college life? But trust me, it’s worth it. Start planning your repayment strategy early, considering factors like income potential, loan terms, and monthly payments. By having a solid repayment plan in place, you can avoid defaulting on your loans and damaging your credit score. - Not Taking a Part-time Job
Ever wondered why international students opt out of part-time jobs while studying abroad? Sure, gaining experience and covering living expenses are one such important factor, but there’s more to it. By taking a part-time job, you are not just earning some extra money – you are also setting yourself up to start repaying your early and making you responsible in your own eyes which is one of the important bricks for a strong future. - Ignoring Grace Periods and Deferment Options
Many students are unaware of grace periods and deferment options available on education loans. Well, they are your savior when the money gets tight. These provisions allow you to postpone or reduce your loan payments temporarily if you face financial hardship. Take advantage of these options if needed but remember that the interest meter may still be increasing during these periods.
So, there you have it all! The world of education loans can indeed be tricky but by sidestepping these common education loan mistakes, you will be well on your way to conquer your academic dreams without drowning in debt. Remember to explore options for education loans like collateral and non-collateral and carefully analyse their benefits and drawbacks. Be smart, prioritize responsible borrowing, and plan your repayment strategy like a boss.
For careful planning and informed decision-making to even having answers to queries like how to get education loan for abroad studies without collateral or how much money can be disbursed, it is advisable to seek guidance from a financial advisor who can assure you jet off to study abroad in no time – with little worries of debt but a bucket full of adventures in your desired destination!