Know about expenses covered by your education loan

What expenses are covered in an education loan?

1. Tuition Fees

   Tuition fees make up the biggest portion of your total educational costs. It is the amount you must pay to attend classes conducted by your college or university. The tuition fee amount may vary from one semester to another. The actual amount would depend on the course and number of hours of classes held in a specific semester. Paying the high tuition fee from your own savings would be difficult for most students. Hence, every lender includes the tuition fee component in the education loan amount.
    

2. Cost of living

   Although not directly related to educational expenses, living expenses can put a major dent in your wallet. Food, rent, travel, and other necessities fall into this category. If you plan to enrol in a college in India, you may be able to cover these costs. However, if you are studying abroad, such as in Europe, where a rupee roughly equals 0.0123 Euros, managing your living expenses may become extremely difficult. However, with easy access to education loans, you will not have to worry about these costs. But remember that education loans are not meant to cover all your living expenses. Depending on your profile, they may cover only up to 30%-40% of the total living expenses.
    

3. Health and travel insurance

   Many countries around the world do not allow foreigners to enter their territory unless they have adequate insurance coverage. Schengen countries, the United States, the United Arab Emirates, Qatar, Turkey, Russia, and Ecuador are among the countries where insurance is mandatory. These countries require you to have insurance to cover your treatment costs in the event of a medical emergency. If you want your lender to include the insurance cost in the education loan amount, you must inform them about it.
    

4. Air Fares

   If you wish to study abroad, you must be aware of the expenses that will be incurred for flight reservations. Airfares can range from Rs 30,000 to Rs 1,50,000 and more, depending upon the location. A normal middle-class individual may not be able to afford such excessive costs on their own. As such, various financial institutions also include this expense in the education loan amount. But in case they do not, you can always take a personal loan for meeting your additional funding needs.
    

5. Other study-related expenses 

   When you enrol in any college, there are several significant expenses that you may overlook. These include the cost of books, examination fees, extracurricular activity fees, laptop costs, and a few others. Financial institutions, through education loans, can assist you by covering these expenses entirely or partially.
    

What are some of the expenses that an education loan does not cover?

• Travelling expenses for exploring new places
• Cost of movie tickets
• Clubbing
• Sightseeing charges

Key considerations for calculating the expenses covered by an education loan

• If you are not staying on campus, you should look for shared rented accommodations or private hostels available near your college. Compare the prices and see what services they provide. 

• When calculating your living expenses, consider whether you will cook for yourself or order food from outside.

• Consider the cost of using public transportation from your hostel to college.

• When studying abroad, check to see if your visa includes a work permit. If so, you can apply for part-time work even before you arrive in a foreign country. This would help reduce your reliance on the loan amount.

Do's

• Choose your course wisely and check to see if it is in high demand. Pursuing a degree with limited career opportunities will make loan repayment difficult.
   

• Prior to applying for admission, always check the college placement record. Financial institutions are more likely to lend to a university that guarantees good placements.

• Always be realistic about your future salary expectations. Avoid applying for an amount that may exceed your repayment potential in the future.

Don'ts 

• Never enrol in a course solely because funds are readily available.

• Many people take an education loan for their undergraduate studies. However, after finishing the course, they apply for a post-graduate education loan without paying off the existing loan. This only adds to their liabilities and may pose financial problems for them later.

To conclude