When it comes to studying abroad, finances constitute an immediate challenge. From tuition fees, to accommodation, to ensuring a rich cultural experience, the thought of funding is almost instantaneous. However, with several scholarships and loans being set up to secure quality education, students can navigate this challenge with remarkable convenience. Here is a comprehensive blog to familiarise you with two of the most popular funding options for studying overseas.

What are Scholarships?
Scholarships are a type of financial aid offered to students pursuing higher education. These are often offered on the basis of academic record, and need not be repaid. There are various kinds of scholarships, including:
(a) Merit Based Scholarships:
As the name suggests, merit-based scholarships are offered based on exceptional performance–either academic or extracurricular. Universities may take into consideration academic record, GRE scores, extracurricular achievements, artistic ability, musical ability, and so on. However, these scholarships maintain a rigorous standard, and are often very hard to obtain.
(b) Need Based Scholarships:
In contrast to merit-based scholarships, need-based scholarships are awarded on the basis of financial status. If the income of the concerned student, or their family, is below the level pre-determined by the institution, they are eligible for need based scholarships. However, since a lot of students apply for these, the university usually employs another round of selection, which is merit-based.
(c) Scholarships for International Students:
Many institutions have implemented scholarships exclusively for international students in recognition of the growing importance of international educational interaction. These scholarships contribute to the development of an inclusive campus. The criteria for this scholarship typically include being an international student, demonstrating language proficiency in the language of the host country, and submitting letters of recommendations from previous teachers and/or mentors.
(d) Scholarships for Underrepresented Groups:
These scholarships ensure education for historically excluded or socially disadvantaged groups, such as women (for instance, in fields wherein they are grossly underrepresented, like STEM, engineering, etc.), the LGBTQ+ community, racial and ethnic minority groups, etc. Qualifying criteria for admission in most cases include proof that one belongs to a certain community or gender, proof of financial need, and personal statements.
What are Loans?
Loans are yet another type of financial assistance awarded to students for covering tuition and accommodation costs. However, unlike scholarships, loans are borrowed funds and require repayment, often with interest. Education loans are mainly of two types:
(a) Collateral Loans:
Known as secured loans, these loans are provided after the students or guardians deposit some kind of asset, like property or fixed deposits, that is used to secure the borrowed money. On default, the lender can repossess the asset and use it to pay off the debt. The lender comparatively has less risk hence students and students' parents are able to secure a higher amount at relatively low interest rates. However, the borrower must ensure that they can repay to avoid losing the asset pledged.
(b) Non-Collateral Loans:
There is no asset or property to be used as collateral in non-collateral loans. These are essentially based on the creditworthiness of the borrower, grades, and potential earnings. While interest rates may be a little higher than the collateral loans, there is no risk to any of the assets. Non-collateral loans are recommended for students who do not have assets or properties to offer as collateral.
Scholarships vs Loans
Without requiring repayment and covering a significant amount of tuition, scholarships are highly sought after by students. However, it is imperative to realise that these are extremely competitive and very challenging to secure. Due to a rigid, selective process, it is wise to not rely solely on scholarships for funding, and look at them as more of a supplement.
Loans, on the other hand, are easier to access. Usually offered by banks, they are especially available to students who attend the top-ranked universities. In this case, loans are provided at low interest rates. But for lower-ranking universities, loans may be difficult to obtain.
When looking for financial assistance, it is ideal to strike a balanced approach. One should pursue both scholarships and loans. While scholarships can provide significant relief, they are challenging to obtain, and loans can help secure the necessary financial support.
Education Loans: Easy to Secure vs. Hard to Secure Countries
Countries with Easy Access to Loans | Countries with Harder Access to Loans |
United Kingdom | Canada |
United States | Dubai |
Australia | Germany |
Ireland | France |
The United Kingdom, United States, Australia, and Ireland are countries where loan systems for studying abroad are relatively accessible. In such countries, banks and other financial institutions usually provide a customized loan plan to international students, based on their academic profile, future earning potential, and the reputation of the university they are attending.
Canada, Dubai, Germany, and France put forth more challenges to securing an education loan. Countries like Canada and Germany present a harder access to loans, especially for international students without a cosigner. They are also particularly rigid about their criteria. For example, there might be an uncompromising demand for an excellent credit history. On the other hand, loan schemes for international students are less developed in Dubai and France, and availability could even be even more constrained by demands of employment and financial stability.
In conclusion, financial assistance, a critical concern, is often fraught with a wide array of challenges and complexities. However, by familiarizing oneself with the details and specifics, one can skillfully navigate the daunting process and secure an enriching overseas educational experience.
If you aspire to study abroad, but are demotivated by financial concerns, contact TFM! A leading overseas educational consultancy, our team of experts is committed to helping you achieve your study abroad aspirations, offering comprehensive financial guidance throughout the process. Book a free session with us NOW!
Frequently Asked Questions
Q. What is the major difference between a scholarship and education loan?
Ans. Scholarships are a type of financial assistance that is awarded to the student based on demonstration of exceptional performance and need not be repaid. On the other hand, education loans constitute a borrowing for educational purposes, and require repayment with interest.
Q. Are education loans easy to get for low-ranking universities?
Ans. It is typically more difficult to get loans for low ranking universities, as banks offer preference to high ranking institutions where future earning potentials are higher. However, it is not impossible, and loans can be secured for low-ranking universities, although with a higher rate of interest.
Q. Can I use education loans for accommodation purposes as well?
Ans. Yes, education loans often cover accommodation expenses too, in addition to tuition fees. The amount you can borrow will depend on the loan provider and the country’s regulations.
Q. When do I have to repay an education loan?
Ans. Repayment terms differ by lender to lender but usually begin after the student has graduated. The loan repayment period may be several years, or up to 10-15 years, depending on the amount and the country.
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