5 Tips For Managing Your Education Loan

By Author: Rishabh Aravinda
Total Articles: 1
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If you seek to do higher studies, you can do it with the help of an education loan. Banks and NBFCs provide loans to deserving students at relatively low-interest rates. These loans help you bear all the costs associated with the higher degree. Once you have completed your degree, you can begin repaying the loan in Equated Monthly Instalments. However, it is essential to manage the loan from the time it gets sanctioned.
Evaluate other expenses
The costs of achieving a higher degree are not just limited to tuition fees. There are several miscellaneous expenses such a cost of books, dormitory fees or rent, library costs, travel expenses, food, and so on. You also must calculate other charges such as processing fees, evaluation and administration tasks, stamp duty, etc.
Check accessibility of financial aid
If you wish to reduce the cost of your education loan in India, you should check if you can avail any financial assistance. Deserving students can typically receive financial grants and scholarships, which can ...
... help reduce the cost of the loan. You do not have to repay the sums you get as financial aid. Look out for awards on the internet. You could even ask your current educational institution to assist you in securing these grants.
Have collateral in place
A student loan is usually a high-value loan. Typically, if the principal loan amount exceeds INR 4 lakh, banks ask you to provide some security or collateral to sanction the loan. For students, their parents can serve as guarantors. You could also serve as a guarantor for your spouse pursuing higher education in India or abroad. The guarantor generally provides collateral or security. Banks accept properties, gold, fixed deposits, LIC policies, etc., as collateral, which is returned on loan repayment.
Earn while studying
Let’s say your student loan in India was taken to pursue higher education in the USA. If you can manage it, you can take on a job after school hours and keep putting money aside. The money helps to cover certain personal expenses so that you do not have to depend on your loan entirely.
Opt for mid-term loans
Typically, education loan in India have tenures lasting up to 15 years. However, it is not very wise to opt for long-tenure loans. While the EMI may be lower, choosing longer terms can increase the interest pay-out considerably. As such, the overall cost of your loan can increase manifolds. Evaluate your capabilities before determining the loan tenure.