Here's a little bit of homework that you must do before packing your bags to get that foreign degree on your resume

Racial attacks, weak global economy or a slowdown in hiring in developed countries - nothing seems to distract Indians from the 'foreign' fixation when it comes to pursuing higher studies. But before you decide to get that foreign degree on your resume and your visiting card, here are a few things that you need to keep in mind.

Plan Early:

Ideally, students should plan one year before the admission season starts. "Students who plan to take admission in Fall 2011(October 2011-January 2012) have already started identifying universities and funding options for courses of their choice," says Saraswati Vishwanathan, founder and principal counsellor at Gyanfoundation, a firm which offers consultancy services for overseas education. For instance, an MBA, or a Master's degree or Ph.d programme requires you to give certain exams such as Graduate Record Examination (GRE) Graduate Management Admission Test (GMAT), Test of English as Foreign Language (TOEFL) or International English Language Testing System (IELTS). It is advisable to take these exams at least 10-12 months before the admission deadline. The entire application process, which includes transcripts evaluations, essays and letters of reference, is time-consuming.

Should I Leave My Job?:

There may be two reasons to quit your current job and study abroad. One is that you want to study abroad (for instance, the United States) and want to get a job in the same country. The other reason may be that you expect career growth in India after you acquire a foreign degree. So, if you are leaving your current job you should be largely sure that you will get a better job immediately after you complete your study. "You should do some research on the scope and the likely salary packages you would get after completing your course. This will also give an idea about your likely repayment capacity and choose the loan amount accordingly," says Pankaj Mathpal, a certified financial planner.

Another common mistake Indian students make is in the choice of the course they decide to specialise in. It is better to pursue a course that is relevant to your current job. "I often see engineers taking up a course in MBA, thinking that the jobs are most monetarily rewarding in the financial services industry. But what they forget is they have to start from scratch and often their past work experience may not be considered. Hence, unless an engineering student is absolutely passionate about finance, I would advise him to opt for a Masters of Science program," Mathpal adds.

Start Saving:

Getting a scholarship or a bursary is a matter of chance. So, if you are working now with the intention of doing an MBA or any Master's Degree, in three to four years' time, start saving now. For instance, 25-year-old Nisha S Nair, a Mumbai-based software professional, who is very clear about doing her MBA in one of top 30 universities in the United States says, "It shouldn't happen that I don't get a job after I am struggling to service my loan after finishing the course."

She is in the process of applying for an education loan, and is simultaneously exploring the option of obtaining scholarship for financing her MBA course. But she doesn't want to take on a huge liability. She says, "I have been saving some money to meet some component of the overall cost of the course. I don't want to take the burden of repaying a huge loan." Nisha has been investing in mutual funds for the past three years, which have been offering a return of 20% per year. She has been investing 10,000 per month through the SIP route. She also deposits 25,000 in mutual funds once in six months. Roughly, she has accumulated around 6.80 lakh so far.

Scholarships & Bursaries:

Students can also consider applying for loan scholarships commonly called as fellowships or trust loans. The Aga Khan Foundation, Inlaks Scholarships, Rotary Ambassadorial Scholarships, JN Tata Endowment and KC Mahindra Education Trust are some popular options among students. The terms and conditions of every aid vary. In case of JN Tata Endowment, the selected students need to start repaying the one-time loan scholarship (which is interest-free) from the fourth year of the scholarship being granted, or once s/he secures employment, whichever is earlier. It has to be repaid by the seventh year.

Similarly, overseas aid is available depending upon the course and the university. "For MBA courses below the twentieth rank, students get 30% to full funding on an average. 10-20% of the students take up campus jobs which aggregate to 20 hours per week, which adds to their financial aid," Vishwanathan adds. For engineering courses, however, financial aids are offered after the course commences. PhD students can secure aid, which is usually in the form of tuition waiver, insurance, subsidised housing etc, at the time of admission.

Education Loans:

Banks offer education loans, but the collateral and the terms are more stringent for overseas degrees. The collateral could be in the form of fixed deposits (FDs), National Savings Certificates (NSCs), insurance policy or even a house worth the loan amount. You may also require a co-borrower depending upon the bank and the loan amount you borrow. The maximum loan amount is capped at 20 lakh. But students have to pay 15% of the cost of the course out of their own pocket.

What if you get cheaper aid once you get to the foreign institution you decide to study in? There are always two stages to the loan. One is the approval stage and another is the disbursal stage. Although, the total loan amount gets approved in principle, it's disbursed on an annual or semester basis, depending upon your requirement. "We don't disburse the loan unless the student puts in a request," says a general manager with Andhra Bank.

The repayment period varies between five years and seven years, and starts a year after the completion of the course or six months after securing a job, whichever is earlier. "Before you finalise the bank, please check how they compute the interest rate. Some banks, especially many public sector banks, offer an EMI holiday during the study period," says Harsh Roongta, CEO, Apnaloan.com.

Most foreign or private sector banks charge a simple or compound interest on the loan. If you do not repay it during the study period it keeps getting added onto the principal amount. Once you start repaying the loan, the EMI is calculated on this accumulated principal. So, effectively you will end up paying interest on interest. "Hence, it is in the best interest of students that they or their family pay off the interest component during the study period. That eases the repayment burden to a considerable extent," says Roongta.

Till 2007-08, students used to borrow from overseas banks, which offered softer interest rates for students - at a concession of 0.5-1 percentage point. "But now these overseas banks insist on the co-guarantor being a green-card holder and a long-term citizen, as pre-requisite to sanctioning such loans," Vishwanathan adds. If you are spending a fortune for an overseas degree, treat it like an investment. Do your homework before you spend every penny so that it pays off in future.

Source: http://epaper.timesofindia.com/