The Indian education loan industry is approximately INR 20,000 crore with over 4 lakh students traveling abroad for higher education every year. With a mere penetration of 20 percent, this industry has an untapped growth potential of over INR 80,000 crore. US Consulate General in Hyderabad issues the 5th highest number of visas in the world. USA is the largest destination for Indian students with more than 80,000 students traveling to US every year followed by Canada and Australia.
Paras Education Foundation was incorporated with the aim of aiding students with their foreign education financing needs. Nearly two decades into the service, Paras has helped over 10,000 students realize their dream through affordable and accessible education loan options. Paras is also one of the only education loan facilitating company to provide US Denominator loans, extremely affordable interest rates, to students interested in pursuing education in the United States for undergraduate and graduate studies.
Manish Joshi of NewsBarons provides excerpts of an interaction with Gautam Gadgil, Vice President, The Paras Education Foundation who informs ‘Ireland, Germany, Singapore and New Zealand are amongst the new emerging destinations for education’.
NB: Tell us about the low cost ‘US Denominator loans’?
Gautam: US Dollar denominated loans are a great low-interest rate education loan option available to students going to the US for their undergraduate or graduate studies. Interest rates for these loans start at as low as 3% per annum and the loans are offered without any collateral/ security/margin money. 100% of the student’s cost of education (including tuition fees, living expenses, insurance, books, etc) can be covered by this loan. The loan offers easy and flexible repayment options. Paras Education Services is the only company in India offering these US Dollar denominated education st such low-interest rates.
NB: Do you provide unsecured education loans too?
Gautam: Yes, we do provide unsecured loans too. We offer multiple loan options depending on the student profile and destination country.
NB. What are the challenges that students face while applying for education loans?
Gautam: There are primarily 2-3 challenges faced by students during the application process:
1. Most Indian banks offer loans against collateral/security of the property of fixed deposits. This is difficult for many students to manage.
2. Students need to have a co-borrower (parents, siblings, etc) who have a strong CIBIL score and income profile.
3. The rate of interest for foreign education loans offered by Indian banks and financial institutions is between 11% to 14% per annum, which is not affordable for most students.
NB. What measures are required to grow the Indian education loan industry?
Gautam: A student’s needs and circumstances are very different from a standard borrower that banks usually encounter. Banks and Financial institutions need to come up with loan products considering the specific requirements of this category of borrowers. Some of the steps could include allowing nonfamily members as co-signers, flexibility regarding collateral requirements, etc. Also, products should be tailored to specific destination countries depending on the risk profile of the individual countries.
NB. Which are the top 5 high demand courses for Indian students traveling abroad?
Gautam: The largest demand is for MS (Masters in Science) and MBA (Masters in Business Administration) courses. However, nontraditional fields of study like Culinary, Fashion, Film, Hospitality, etc are starting to see traction. Earlier, students would primarily go for their Graduate studies but there is an increasing number of students going abroad for their Under Graduate studies.
NB. What are the new quality international education destinations to look out for?
Gautam: USA remains by far the best international education destination in terms of quality of education and career opportunities. Ireland and Germany are two of the emerging destinations which offer good quality education and increasingly improving career opportunities. Asian destinations like Singapore, UAE, etc are also preferred and are upcoming education destinations.
NB: What are the few things students should be aware of while applying for an education loan?
Gautam: There are multiple foreign education loan options available in the market. All of them have their pros and cons depending on the student’s profile, circumstances and destination country. The student needs to understand the small print of all loan options, various charges and fees, etc before making a decision on the loan product suitable for him/her. Consulting an Education Finance Counsellor may help the student in making a more informed decision. Paras Education provides this service.