Seeking higher education comes with significant financial commitments, making it important to understand what an education loan covers. Proper financial planning can help students focus on their studies without worrying about expenses. Various banks and non-banking financial institutions in India offer education loans that cover tuition fees, travel, and even living expenses.
However, students often have concerns such as, "Does education loan cover living expenses?", "What specific costs are included?" or "Will I need a separate loan for accommodation and daily needs?"
Does Education Loan Cover Living Expenses: Highlights
The table below provides a quick overview on does education loan cover living expenses or not, helping you understand the financial support you can expect while studying abroad.
What is an Education Loan?
An education loan is a financial aid option that helps students cover expenses like tuition fees, books, living costs, and transportation. Since these loans are unsecured, a co-signer (such as a parent, relative, or friend) may be required if the student is unemployed or still studying. Education loans come with flexible repayment terms, making the process straightforward and manageable.
Education loans vary based on the type of course and location of study.
1. Domestic Education Loan
It is for students pursuing courses within the country. Approval depends on eligibility criteria and institution.
2. Study Abroad Education Loan
It is for students studying outside the country. Approval requires securing admission to a recognised international university or college.
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Does Education Loan Cover Living Expenses?
Yes, in most cases, education loans for studying abroad cover more than just tuition fees. They often include essential living expenses such as accommodation, food, local transportation, and study materials.
Some loans may also cover travel expenses, including flight tickets to and from your study destination. Other costs like visa application fees, health insurance, and exam registration fees might also be included, depending on the lender.
What Expenses are Covered in Education Loan in India?
Education loans in India do not just provide tuition fees—they cover various costs to support students in their academic journey. While coverage varies from lender to lender, here are the significant expenses that can be included in an education loan:
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What Expenses Are Not Covered Under An Education Loan?
While education loans cover many essential costs, some expenses are not included. Here are the key expenses that banks typically do not cover:
1. Entertainment & Leisure
Education loans do not cover expenses like movie tickets, personal travel, and other recreational activities.
2. Personal Travel
Non-academic trips and vacations are not covered by education loan
3. Partial Coverage of Living Costs
Some banks may cover only 30-40% of living expenses.
4. Flight Tickets
Not all banks include airfare, and coverage varies.
Can We Use Student Loans for Living Expenses?
Yes, student loans can be used to cover living expenses, whether you stay on campus or off campus. The amount you receive is based on your school's Cost of Attendance (COA), which includes tuition, books, housing, and other necessary costs. Once your tuition and fees are paid, the remaining funds can help cover everyday expenses such as:
1. Rent & Accommodation
Student loans can help pay for your housing costs, whether you live in a dorm or rented apartment.
2. Transportation Costs
This includes fuel, parking, public transportation, or even bike rentals.
3. Food & Groceries
You can use the loan to pay for daily meals and grocery shopping.
4. Utilities & Household Essentials
Electricity, water, internet, and essential household supplies can be covered.
5. Basic Furnishings
If you need furniture or other essentials for your accommodation, student loans can help.
Should We Take a Loan For Living Expenses?
To take a separate loan for living expenses depends on your financial situation and preferences. Many students and parents believe that education loans do not cover living expenses, leading them to explore alternative funding options. However, education loans typically include living expenses, so taking out a personal loan separately is not always necessary.
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Why Some Consider Non-Education Loans?
Some students and parents think the education loan process is complicated or time-consuming. Bank managers may promote personal loans over education loans to meet their sales targets, promising faster approvals. Non-education loans may seem more accessible but often have higher financial burdens.
Why Are Education Loans A Better Choice?
Education loans are a better option for covering living expenses than personal loans. The table below compares both options:
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Top Banks Offering Education Loan For Indian Students
Here are some of the most well-known education loans available for Indian students, along with their respective interest rates:
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Things to Keep in Mind Before Declaring Expenses for Education Loan
Before submitting your expenses to the bank, it’s important to carefully list all the costs you might incur while studying abroad. Education loans cover various expenses, but missing any key costs in your application could lead to financial issues later.
To avoid this, consider the following points:
1. List All Expenses in Advance
Ensure you include tuition fees, accommodation, travel, books, and other essentials.
2. Double-Check Before Submission
Once the loan is approved, additional expenses cannot be added later.
3. Include Travel Costs
If you forget to mention flight tickets, the bank may not reimburse them after disbursement.
4. Be Clear on Loan Coverage
Understand what your bank covers and ensure all necessary expenses are listed.
5. Accommodation Costs
Research rental prices near your university to get an estimate.
6. Food Expenses
Consider whether you'll cook at home or rely on dining options.
7. Daily Living & Transportation
Factors include the cost of dining out, commuting within the city, and intercity travel for academic purposes.
8. Transportation Costs
Include public transport fares or fuel expenses if you plan to use a vehicle.
9. Part-Time Work Opportunities
Check if your visa allows part-time jobs and whether suitable options are available near your stay.
How to Cut Down on Daily Expenses?
Managing your finances effectively during college can help you save money and avoid unnecessary expenses. Here are some practical tips:
1. Plan a Budget
Keep track of your income and spending using a budgeting app or notebook. This will help you spot areas where you can reduce costs.
2. Cook Your Meals
Eating homemade food is often more affordable than dining out or ordering takeaway regularly.
3. Make Use of Student Discounts
Many stores, restaurants, and services offer discounts for students, so always check before purchasing.
4. Split Costs with Roommates
If you share accommodation, divide expenses like rent, utilities, and groceries to lighten your financial burden.
5. Use Public Transport
Instead of owning a car, consider using buses, trains, or metro services to save on fuel, parking, and maintenance expenses.
How Are Living Expenses Transferred to Students Abroad?
The process of disbursing living expenses into a bank account depends on the policies of government banks. Typically, larger government banks follow one of the two main approaches:
1. Using a Foreign Travel Card (FTC)
- Many government banks initially transfer living expenses onto a Foreign Travel Card (FTC), a prepaid card.
- The FTC allows students to access funds immediately upon arrival in a foreign country.
- It functions like a debit card, enabling ATM withdrawals and direct payments.
- Students can transfer money to their foreign bank account through net banking if the bank mandates FTC use.
2. Direct Transfer to a Foreign Bank Account
- Some government banks permit direct disbursement of living expenses to a foreign bank account once it is set up.
- This provides a more straightforward way to access funds without needing an FTC.
For students applying for a Guaranteed Investment Certificate (GIC) or a blocked account, living expenses often must be transferred to a foreign bank account before obtaining a visa. Many government banks have established policies to facilitate this process.
Comparison of Living Expense Disbursement Methods
To answer the question, does education loan for living expenses cover all costs? Yes, in most cases, education loans provide financial assistance beyond tuition fees, including housing, food, and transportation. However, students should carefully review the loan terms, as coverage varies by lender. Proper financial planning and choosing the right loan can ensure a smooth academic experience without unexpected financial burdens.
Why Propelld?
Propelld is a finance company that provides education loans to students. It helps cover tuition fees, living expenses, and other education-related costs. Propelld offers flexible repayment options, quick approval, and minimal paperwork, making it easier for students to fund their studies without financial stress.
The following are the primary benefits of Propelld.
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