Foreign Education Loan: What to Expect After Taking a Loan

Parents often take education loans for the education of their children. Suppose a student is going to Georgia in Europe for a medical course.

The fees for the 5-year course is around Rs 30 lakh, his father is managing his expenses. So they will need to take loans. But the value of the Indian rupee has declined and inflation is affecting budget expenditures.

In such a situation, the cost of living in Europe will also change. We will tell you here what are the problems faced on education loan.

Rupee Fall a Problem

Similar to the case above, some other Indian students who want to study abroad, while those who have already got jobs, are facing an even worse situation this year as the rupee weakens.

Since the beginning of the year 2022, the rupee has fallen by more than 7% against the dollar. This is a problem with foreign education loans.

Interest Rate Hiked

In March this year, if a student has taken a loan when the rupee is at 75 against the dollar, then his loan will increase by a few lakhs. 7 for every dollar of the loan will go up and this has increased the loan as well as the interest.

Tuition Fees

Indian students actually have to support themselves after the increase in the cost of living abroad when tuition fees are included.

Eurozone inflation was estimated at 10%, inflation in the US has reached a 40-year high, hitting the pockets of students studying abroad. Most of the Indian students are going there for their career. This is a problem for them.

Rising Interest Rates

The third problem is rising interest rates. Interest rates are rising. In the same financial year, the Indian central bank increased the repo rates.

The base rate now stands at 5.9%. Interest rates are expected to rise further. When the repo rate increases, the loan rates also increase. This is also a new burden on the pocket.

MCLR and BPLR

MCLR and BPLR will show an increase in interest rates over the later period of the loan. Due to this, the EMI of the existing and subsequent borrowers will increase.

The fall of the rupee will have a psychological impact on the minds of students going to the US and Europe, including their parents.