Things to note before applying for an education loan
Getting quality education from a major institution is a dream for many. Availing of an education loan helps facilitate that. These loans cover all the expenses related to higher studies. You can take it for either pursuing education in India or overseas.
They enable parents to fund their child’s education without denting their savings. You, as a student, can also pay for your education by yourself. Lenders provide various benefits. It is vital to consider some crucial aspects before you apply for student loan. Here are things to consider:
Determine your needs: You should decide on the student loan amount you need. You can start by shortlisting the universities based on the course. They should have a good career scope to repay the loan efficiently. After this, you ascertain the loan amount by visiting the university’s website to check their fee structure. Include all the costs involving the tuition fees, hostel costs, etc., to get an accurate estimate.
Eligibility criteria: Check your student loan eligibility for avoiding rejections. You do this by going to the lenders’ websites and checking their eligibility parameters. The standard criteria include your age, academic record, university reputation, course potential, and co-applicant’s credit score. Hence, proactively check for them online to prepare documentation for the same.
Loan interest and tenure: You get varied study loan interest rates and loan tenure. However, the typical interest rate is 7% to 11%. The loan tenure is up to eight years for unsecured and 10 years for secured loans. It is best to compare the lenders’ offers to finalise the best one. It vastly differs for education loan in India and overseas. Your repaying capacity also affects these variables.
Repayment plan: Lenders provide a moratorium period which is equal to the course period. You need not pay instalments during this period. You start repaying after six months to one year of the course completion. It offers you the convenience to start paying after employment. However, the interest keeps accumulating throughout this period. So, it is best to pay off interest during the moratorium period to reduce the burden.
Consequences: It is essential to consider the repercussions of failing to repay the loan. It enables you to plan the repayment and budgeting with discipline. Have another in case you fail to get employed within the moratorium period. You do this by taking the loan in instalments for each semester to avoid increased interest build-up. You can also make a surplus down payment to reduce the loan amount burden.
The student loan in India has gone through many changes over the years. The application process has become simpler for student convenience. Be mindful and prepared with all the points mentioned to complete the process hassle-free.