Studying abroad with student loan

The undergraduate university students in Bangladesh are fortunate. The tuition costs in the best public universities are such that even the low-income families can afford the average tuition costs without much hardship. In the developed countries, the university students endure significant financial stress as the tuition costs can rack up to several thousands of dollars per year. However, financial assistances and scholarships are available from the governments and universities for high achieving students. Generally, in many developed countries like Australia, loans are available for undergraduate students to support the high tuition costs with conditions that the loans will be paid off as extra income taxes once the students find suitable employment. Unfortunately, such financial assistances are not available for postgraduate students, except those in postgraduate research degrees. Usually, students enrol in postgraduate degrees in full time or part time mode once they are able to support the high tuition costs of university postgraduate degrees through ongoing income or through the savings made from past income.

Those high achieving university students in Bangladesh who wish to further their knowledge and skills through Masters or PhD degree in research are not always lucky, since the research capabilities are limited in Bangladesh. These students look for opportunities of studying abroad in the prestigious universities of USA, UK, Australia or other European countries. Many students also search for non-research degrees in areas such as engineering, IT, business, health, science, social science etc. Unfortunately, financial assistances or scholarships for international students are very limited and highly competitive, and not widely available for non-research degrees. Very few students are able to win the scholarships and financial assistances from the foreign universities.

Each year, thousands of students from countries like Bangladesh, India and Pakistan seek admissions in both research and non-research degrees in the US, UK, Australian and other European universities. The primary bottleneck is the university tuition costs of tens of thousands of dollars in these foreign universities. Only a handful of students from affluent families are able to meet such high tuition costs.

Many high achieving students from middle-income families still attempt to fulfil their dreams of studying abroad. They manage the funds from whatever source they can. They see it as a major career investment; however, the stakes are high and the returns are not guaranteed. Financial risks are taken by many, and fortunately, in most cases, they pay off. That's why many are still prepared to take the risks. They resort to part time employments with nominal income alongside their studies to support their tuition and living costs. Many struggle to manage both work and studies at the same time, and manage the extraordinary costs. Those who survive and successfully complete their degrees generally find suitable jobs and join the workforce abroad. Many also return home and take the desired career paths.

Unfortunately, many high achieving students from low- and middle-income families can't manage the funds necessary to apply for overseas university admission and student visa. They give up on their dreams of studying abroad.

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The number of Indian nationals currently studying in overseas universities is quite noticeable. In 2012, nearly 200,000 Indian students were enrolled in overseas institutes, particularly, in the USA, the UK, Australia, Canada, New Zealand, China and Germany. The majority of them are postgraduate students.¹

India introduced student loan (education loan) scheme in 2001-02 to support the tuition costs that can range from Rs 5,000 per year in a government-run college to Rs 100,000 per year in the Indian Institute of Technology (IIT) Bombay and up to Rs 600,000 per year in a private medical institute. The growth of student loan in India is quite phenomenal. The total loan amount from public and private banks jumped from Rs 3,000 crore in 2003 to over Rs 48,000 crore in 2012. The number of student loan accounts jumped from 250,000 in 2003 to nearly 2,500,000 in 2012. Public sector banks accounted for over 90% of the total loans in 2012.²

The student loans in India don't just apply to local students. According to a recent survey by the WES (World Education Services), half of all Indian students pursuing overseas education were supported by student loans received from Indian banks.¹ This explains why so many Indian students are able to study in overseas universities. Many Indian banks offer student loans up to Rs 3,000,000 for overseas education which is sufficient to cover the tuition and part living costs.

Overseas education by Bangladeshi students is also a booming sector. According to the US Embassy, between the one year period of October 2012 and September 2013, Bangladeshi students in the US rose 15.5% to 3,828.³ While the number looks promising, it is not as great when compared to the 2012 figure of nearly 100,000 Indian higher education students enrolled in the US.¹ The overseas student ratio of 1:30 between Bangladeshi and Indian students in 2012 was four times smaller than the population ratio of around 1:8 between them.

The government of Bangladesh and, more specifically, the banking sector of Bangladesh should introduce student loan scheme, similar to that in India, for students wishing to study abroad. Investing in high achieving students studying abroad could yield high return for the banking sector in Bangladesh if the banks are able to recognise it. Offering student loans to high achieving students will help them fulfil their dreams of studying or undertaking research in the prestigious and highly ranked US, UK, Australian or other European universities. Even the non-high achievers can find and study technical degrees in overseas colleges in areas such as IT, engineering, digital media, design, performing arts, commerce, and build a technical career or become entrepreneurs in Bangladesh or abroad. By helping Bangladeshi students with financial assistance for overseas education, the public and private banks can also help build a highly skilled workforce that could contribute in the growth of foreign remittance as well as in the development of technology, manufacturing, health, policy, IT and other important sectors.

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Tariq Sadat is a PhD candidate at RMIT University, Australia.

References:

[1] 'Indian Study Abroad Trends: Past, Present and Future', World Education News & Reviews (World Education Services), December 6, 2013,

[2] 'Student Loans Jump 15 Times To Rs 48,000 Cr In 9 Years', IndiaSpend, May 17, 2013,

[3] 'Bangladeshi students 'all-time high' in US', bdnew24.com, November 14, 2013,

< http://bdnews24.com/bangladesh/2013/11/14/bangladeshi-students-all-time-high-in-us>