Posted on: April 14, 2016

Education Loan Amount on the Rise for International Students

International Students

With the continued decline in the value of the rupee vs. the US dollar and a substantial increase in tuition fees at overseas institutions, the education loan requirements of Indian students have witnessed a noticeable increase in recent times. According to data provided by education loan providers in India, the loan requirement of students interested in pursuing MBA in the US has increased by Rs. 5 lakhs, while those pursuing MS in the US will witnesses an increase to the tune of Rs. 3 lakhs.

A key reason for the hike of tuition fees in the US is the post-recession scenario, where many educational institutions had to ensure federal/state funding cuts. This led institutes thus affected to revise their tuition fees upwards by 5-6%, which combined with the declining value of the rupee vs. the US dollar, has led to a 15.5% annual increase in the loan burden for aspiring overseas students.

Education loan providers such as Credila, an HDFC subsidiary, have also observed a trend where education loan applicants have put in applications for a 4-8% increase of their initially approved loan amounts due to the depreciation of rupee. Experts feel that even more students with current education loans are expected to apply for an extension or increase of their loan amount in the near future especially if they have not managed to secure funds from other sources.  

As a result of these key factors, a larger number of parents and students are focusing on ROI (return on investment) of higher education and the loan payback period before they sign the dotted line. This is because, though a weaker rupee increases the loan burden, it favours students who land overseas jobs after graduation.       

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