Does Education Loan Cover Living Expenses In India?

A few of the biggest questions that come to mind when a student thinks of taking out an education loan are “Does an education loan also cover living expenses?”, 
“What expenses are covered in an education loan?”, ”Does an education loan cover flight charges?”, “Does an education loan cover hostel fees?” and  “Do I have to take out a loan for living expenses?”. 

In this article, we’ll try our best to answer these questions and discuss all the expenses from tuition fees to miscellaneous expenses. 

A common myth is that an education loan does not cover all of the expenditures that students are expected to spend while studying abroad. This, however, is not true, any education loan, be it secured education loans from government banks or unsecured education loans from private lenders, caters to the following list of education loan expenses that are crucial to the education process.

Tuition Fees

The cost of studying at foreign universities is a big part of the education loans given out for studying abroad or in India. 
The goal of these loans (Secured and Unsecured) is to assist students in paying for their university fees. All study abroad loans in India include coverage for tuition fees. 
So, when figuring out how much loan you need, make sure to focus on the tuition fees first.

Living Expenses

Many things can be part of this term. When a student is figuring out their total expenses, they need to consider more than just tuition. 
Living expenses, like where you stay, food, and everyday costs like travel and all of that. 
So, when you're adding up all your costs for studying abroad, make sure to include these living expenses.
Note that each country has their own average cost of living so make sure to calculate accordingly 

Health Insurance

A lot of universities abroad require international students to purchase health insurance. 
Expenses for an education loan in India for studying abroad cover this particular expense as it is one of the requirements of studying abroad for a lot of students. 
A lot of banks have made it optional ever since covid so now it depends on individual banks.

Laptops, Travel Tickets, Books, field trips and other miscellaneous

If the letter from your foreign university says you have to pay for things like field trips and other small activities during your course, you can add that to the education loan details. 
Also, when applying for both types of education loans in India, students can mention the cost of things like books, laptops, Travel tickets and other study materials as part of their total expenses.

The disbursement of living expenses into the bank account varies depending on the policies of the government banks. In many larger government banks, the common practice is to transfer the living expenses directly to the student. 

This is often done through a Foreign Travel Card (FTC), a type of prepaid card. The bank loads the funds onto this card, providing you with a convenient means of accessing money during the initial days in the foreign country. 

You can use the FTC like a regular debit card, making withdrawals from ATMs or making payments by swiping. Once you've set up a bank account in a foreign country, the process may change. Some government banks are willing to transfer the living expenses directly to your foreign bank account. 

However, others may follow a policy of transferring the money onto the travel card only. If your bank insists on transferring the funds to the travel card, don't worry there's a solution. You can easily transfer the money from the card to your foreign bank account using net banking.

So, the procedure involves initially receiving living expenses through the FTC, then possibly transitioning to direct transfers to your foreign bank account after you've opened one. This way, you have flexibility in managing your living expenses while studying abroad, ensuring a smooth process for financial transactions. 

If you need to create a Guaranteed Investment Certificate (GIC) for living expenses or a blocked account, you'll typically need to transfer your living expenses to a foreign account before obtaining your visa. Fortunately, many government banks have policies in place to facilitate this transfer.

Whether or not you need to take out a personal loan for living expenses depends on your personal situation and preferences. Some students or parents choose alternatives to education loans for funding their studies abroad as they feel like an education loan might not include living expenses. 

But if you’ve read the article till here you know that it does. So, no you don’t have to take out a separate loan for living expenses. 

Others opt for a personal loan or non-education loans because they perceive the education loan process as difficult. Some might be influenced by bank managers who, in an attempt to meet their targets, may recommend other products over education loans, making promises of faster approval. 

However, it's important to consider the reasons behind choosing these alternatives. Many individuals opt for non-education loans because they perceive the education loan process as difficult. Some might be influenced by bank managers who, in an attempt to meet their targets, may recommend other products over education loans, making promises of faster approval.

Despite these alternatives, there are compelling reasons to consider an education loan. 

• Firstly, education loans often come with a repayment holiday, allowing you to focus on your studies without the immediate burden of repaying the loan.
• In contrast, other loans may require you to start repaying from the next month, adding pressure.
• Moreover, education loans offer government subsidy schemes like the Padho Pardes scheme and Dr Ambedkar scheme, where the government covers the interest during the study period.
• These subsidies are applicable only to education loans, not other types of loans.
• Additionally, education loans provide tax benefits under section 80E, allowing you or your parents to reduce the interest by up to 30%. This benefit is specific to education loans and not applicable to other types of loans.

Before telling the bank about your education expenses, it's important to make a careful list of all the things you might need money for while studying abroad. Even though education loans usually cover a lot of different expenses, sometimes you might forget to include something important when you're making your list. 

Although expenses for an education loan cover all the apparatus which are likely to be incurred during the course of higher education abroad, it is still possible that some of you may forget to include all of them while submitting the final list of expenses to your respective banks. 

Hence, it is very important that you take note of the exact number of expenses before applying for an education loan in India to study abroad.For example, if you forgot to include your flight ticket cost in the estimated list of expenses to be covered by your abroad education loan, then it is highly possible that you will not be able to apply for a reimbursement of the same after having taken your education loan disbursement. 

If you approach your bank with this concern of refunding your flight tickets after having taken your first disbursement, they can rightly deny you the same. Hence, it is extremely important to have a clear understanding of the exact expenses and make a list of the same before applying for an education loan in India for study abroad.