An increasing number of Indian students are now aspiring to pursue higher studies at top-notch universities or premier institutes either in India or abroad. However, pursuing professional studies in engineering, doctorate or aviation, postgraduate degrees is no piece of cake due to the escalating cost of education. Parent’s save up for the education costs of their children, and meritorious students bank a scholarship, however, the creeping costs will just not help this amount to bridge up at any point of time. Borrowing from friends or relative is a matter of dignity and taking a personal loan or traditional finance will burn a big hole in your pockets.
So, choosing a Education Loan would be one of the wisest decisions by parents as well as students. These loans can seem like a blessing in disguise for worthy students. Study loan is a kind of credit advanced to professional scholars and students being designed to help students pay for college tuition, books, laptops, hostel fees and other living expenses. They provide the money for tuition expenses upfront have lower interest rates as compared to a personal loan or traditional finance and can be paid back once the student starts working.
Yes! You heard it right. The best part of these loans is the paying back process starts after 6 months when a student gets his or her first job or after 1-year completion of degree depending on which date comes first[/b]. This is termed as moratorium period.
Following are some factors to consider while applying for higher education loan: [/b]
Student loans need guarantors/collateral security[/b]: Because of the rising number of defaults over a couple of decades, lenders require you to have some sort of collateral on hand. Also, they scrutinize the credit score of the guarantor to ensure that their money could be repaid on time. Since students don't hold credit history or have any collateral to offer, it’s the parents or guardian who can apply as co-applicants to increase your chances of getting a loan. So, ensure that your parents check their credit score before applying for a loan, as their poor credit will hamper the loan amount, interest rates and create difficulty in sanctioning.
Research[/b]: Since students are concerned about their higher studies, they just don't believe in doing enough research on the subject. Rather they just go in for the first company or bank that offers them the loan. However, it’s better not to jump on the first loan offer made to you. Instead, compare the interest rates, processing fee, penalty charges, loan tenure, discounts or concession given and other important terms and conditions before you zero in on a particular firm or bank. When you take admission in foreign universities or institutes you have to show sufficient proof of funds. Student face problems such as getting a visa clearance, fund approvals, slow loan processing, incomplete finances etc. Some lenders offer Education Loans approval letter, which is basically a pre-approved education loan -- even before students start applying to Universities.
Thus, it’s a major win-win situation for students because you can show the potential funding to the foreign university for pursuing higher studies. Private finance firms are willing to finance 100% of your higher studies and with proper documentation; your loan gets approved within 3 to 4 working days.
Always bear in mind that although all universities project high placement percentages, however, they cannot offer you higher salary packages. It’s the kind of degree, your ability to grasp practical and theoretical knowledge that will qualify you for higher packages. So, it’s better to check the job prospects, your willingness to achieve dream goals and then go for a loan amount. You also have to remember that your salary should be as such that around 40% of the amount you earn should comfortably make your monthly installment payments
Higher education loan is often the first line of credit a student applies for[/b]. It forms the basis of his or her credit history which determines their repayment ability. So if you miss payments or default on your loan it’s bound to affect your credit score and further chances of getting other loans in future.