Indian students take property backed loans to meet their educational costs abroad

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Many students are now moving to foreign universities to complete their studies in undergraduate and post-graduate levels. The main reason for this migration is that the students are unable to find their choice of courses within the country and unable to get admission to the local universities. A huge amount is needed to be invested for this overseas education which includes both the tuition fees and the living expenses. If a student  goes abroad for his/her studies  it could cost anything between Rs 50 lakh and Rs 1.5 crore, depending on the course Many parents take loans to meet these expenses and pledge their homes as collateral security. They are taking property backed loans.

According to UNESCO figures 2012, the number of Indians studying abroad was 189,472. Industry guesstimates says that every year about 2.5 lakh-3 lakh students travel from India abroad to study and at least one among three takes a property backed loan to meet their expenses.

The US is the most preferred destination for Indians students and the statistical data reveals that there are about 103,000 Indian students in the US in the academic year 2013-14 which is more than double the number of students 15 years ago. Engineering is the most popular subject taken by students abroad and it is followed by computer science.

The business of education consulting agencies has increased rapidly as many students approach these agencies to get an admission in foreign universities. They get almost half of their business from students seeking admission in undergraduate schools abroad. Most undergraduate programmes in popular universities abroad costs about Rs 1 crore over four years. Princeton University which is ranked No. 1 by US News and   World Report charged $41,820 (Rs 26.3 lakh) for tuition and fees in 2014-15.For an education consulting agency that provides loans, real estate is better collateral. But for banks and other financial companies they are more comfortable in lending money against property because they have the collateral in case of any default.

As the disposable incomes of the upper middle-class and middleclass increases the number of first-generation undergraduate admission seekers emerging from India to study abroad also increases.

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