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Pursuing higher studies abroad is an exciting proposition and has become a cherished dream for many students and their families. However, studying abroad can be very costly and it comes with financial responsibilities that require meticulous planning. In this article, we will understand the banking and financial aspects that will help you plan your overseas education.
Have you estimated the cost of living for your international studies?
The most important step for moving abroad to study is to research and estimate your overall expenses including the cost of living in your destination country. These include:
- Tuition and university-related fees, including textbooks and co-curricular activities.
- Visa and travel related expenditure including travel and health insurance.
- Accommodation expenses.
- Day-to-day living expenses including groceries, meals, and local transportation etc.
- An emergency fund for medical/travel/unplanned exigencies.
In addition to the above, you should keep a buffer to account for any currency fluctuations during the course of your study. Taking all the above factors into consideration, studying overseas can be an expensive proposition. Generally, as a student you will either self-finance the amount or consider a loan to cover the expenses.
Financing your overseas education
Basis your estimated cost of living, your next step should be to identify suitable financing options to fund your studies abroad. As a student, you have various financing options available at your disposal.
1. Education loans: Almost all leading banks and Non-Banking Financial Companies (NBFCs) offer loans for overseas education. These loans come in two forms, secured loans, which necessitate collateral, and unsecured loans, which do not. The decision to provide secured or unsecured education loan is subject to the internal credit policies of the bank. You may be required to provide a collateral if the loan is above ₹7.5 lakh.
Education loans typically come with a moratorium period of six to 12 months, which varies from bank to bank. During this period, you can:
- Defer loan repayments altogether; or
- Repay only the interest that is accrued during the moratorium period; or
- Start making EMI payments on the loan.
Before availing an education loan, it is essential to conduct a thorough review of the applicable interest rates offered by your chosen loan provider as this will determine your EMI. You can also avail tax benefits under Section 80E of the Income Tax Act, 1961, on the repayment of your education loan. Please note, that this benefit is available only under the existing tax regime and can only be claimed by the person who repays the loan (either the student, or the parent as per the case).
You can use ICICI Bank’s Expense & Tax Benefit calculator to ascertain the same.
To avail an education loan, you need to submit a set of documents. Click here to refer to the checklist.
2. University scholarships/grants: You should look out for scholarships or grants that may be provided by your university. You should submit your application for these scholarships keeping in mind the deadline set by the university.
3. Part-time jobs: Many countries permit international students to work part-time. Working part-time can help you cover some of your expenses, whether you are saving for tuition fees or paying for living costs. Additionally, it may also add to your work experience.
Opening a student account for your overseas education
Before leaving for studies abroad, international students should open a student account or obtain a forex card to manage their finances overseas. These options are also safer than carrying traveller's cheques or cash, reducing the risk of theft.
Banks like ICICI Bank, provide a variety of country-specific student accounts and card options. These include:
1. International bank accounts:
Certain banks provide migrating students the convenience of opening country-specific accounts digitally, while they are still in India.
For instance, ICICI Bank UK offers students the advantage of opening Home Vantage Current Account completely digitally and instantly using ICICI Bank UK iMobile Pay. You can open this account while you are still in India or from the UK. You also get access to internet banking, debit card, and mobile banking.
Similarly, ICICI Bank Hello Canada offers Permanent Residents (PR) and work permit holders the convenience of opening a Canadian chequing account prior to moving to Canada. ICICI Bank India customers can also open a Canadian savings account in their home country before their move. ICICI Bank Canada has collaborated with Royal Bank of Canada (RBC) to make it easier for newcomers (PR, study and work permit holders) to help settle in Canada by giving them access to their products. This collaboration provides account holders, access to over 1,200 RBC branches and 4,200 RBC ATMs across Canada, an RBC credit card with a limit up to CAD 15,000 plus other exclusive offers.
2. NRI accounts: You have the option to open NRI accounts, such as Non-Resident Ordinary (NRO) account, Non-Resident External (NRE) account, and Foreign Currency Non-Resident Bank (FCNR(B)) accounts in India. These accounts help you with seamless money transfers between your home country and the country you are studying in.
3. Student Travel Cards & Forex Cards: Travel cards are very helpful for students studying abroad because they allow you to pay for things in the local currency and avoid any conversion charges.
It is imperative to create a financial plan to estimate the cost of living while studying overseas. These expenses can either be self-financed or financed through scholarships/ a loan from a bank. You can also open an international bank account or get a forex card before you move so that you can transact in the local currency and save on the foreign exchange conversion fees.
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