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3 Ways To Manage Your Education Loan

By Author: Mihir Yande
Total Articles: 7

When it comes to building a bright and fruitful life, nothing can replace education. However, with the education costs on an all-time high, it is getting difficult for parents to finance their child’s dreams. Hence, there is a high demand for education loans to cover study expenses. An education loan in India these days are given to worthy and talented students in India. Presently, every bank and non-banking company (NBFC) offers an educational investment.

A study loan covers all kinds of courses: undergraduate, graduate, post-graduate, professional or doctoral degrees and others. It is a myth that educational credits only include the cost of the course. Additionally, it also takes care of the tuition fees, travel expenses, accommodation, day-to-day purchases overseas, library charges, uniforms, and laptop costs.

What are some of the salient features of an education loan in India?

1) Anyone can avail of educational loans
2) A parent has to act as a co-signor when applying for the loan
3) Female students are offered additional discounts/lower interest rates
4) The annual family income is the main document when obtaining the education loan
5) Loans taken above INR 4 lakh will require collateral
6) You can take loan amount up to INR 10 lakh for domestic study and amount of INR 20 lakh if studying abroad. Also, the tenure is usually for 15 years
7) You can start paying the loan amount once you acquire a job
8) The interest rate of study loan falls under tax deduction as per section 80E of the Income Tax Act

After you take the educational loan, you have to use it meticulously:

1) Moratorium period: One of the biggest advantages of education loans is the waiting period. It is a period where you do not have to repay the loan amount. This period starts a year after the completion of your studies. Though you might be in college still, you can start paying the interest here. This way your equated monthly instalment (EMI) will reduce. So, an interest rate that usually adds as a pile on will ease out. A comfortable EMI can make your life easier.

2) Over-ambitious EMI: Generally, people opt for lesser tenure to get done with the debt. Due to which they opt for high EMIs. Ensure to choose EMIs that you can manage, despite your salary and other living expenses.

3) Optimise bonuses and stipend: You can fasten the study loan repayment by channelising your bonuses and allowance in the right manner. However, lenders charge you for pre-closure. So, before making pre-payment, check the pros and cons of it financially.
You have to plan your budget after you take an education loan. Do not default. It could hamper your credit score and affect your future credits as well.

About the author:

Mihir Yande is an aspiring post-graduate. He covers various financial aspects through his freelance work. In this article, he has written about how to manage study loan

Total Views: 39Word Count: 479See All articles From Author

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