A higher education might cost an exorbitant amount, especially if you decide to pursue a coarse abroad. Study loans are hence useful to the students. Loans can be procured from both banking and non-banking financial institutions. Not only do student loans cover college fees, they also cover library fees, lab fees, travelling allowances, dorm and hostel charges and cost of course materials.
The interest rate for educational loans are lower. There are educational loans available at a nominal processing fee of 1-2% of the loan amount and a 12.7% interest. Student loans ensure that you don’t need to spend all your family savings on that one course. They make sure that no financial difficulty affects your education plans. They provide you a sense of independence since you don’t need to borrow money from family or friends in times of difficulties. Your educational loan money can be supplemented by money earned from part time jobs, scholarships and grants by the university. Maintaining a good credit score for your educational loan will help you get loans more easily in the future.
It is easy to opt for student loans. However, one must be prudent. The student should ideally have a long talk with his or her parents to figure out the best repayment option for his or her situation.
Here are a few tips to reduce the burden of education loan for students:
- Plan a repayment strategy: Although the repayment period of loans does not start immediately, it is important to plan ahead. While long term student loans allow students to start repaying after they start working, the student must have a repayment strategy in mind even before they sign up for the loan.
- Do not miss the EMIs: A good credit score helps you get loans from the bank in the future, a bad one may permanently blacklist your name. Not paying your EMI on time creates a bad credit score, thus the student might have a hard time getting loans in the future if they do not pay up on time.
- Start financial planning: Being prudent always pays. When studying abroad there are so many ways in which you can cut down your spending. Try to save more money by reducing unnecessary expenses. You could also go for grants and scholarships and even take up a part time job. All of this will help in the repayment of your loan. This will work for the student’s awesome career.
- Concessions: It is important to be aware of all concessions available. Try to find out about the different discounts on educational loans and which ones you are eligible for. For example, women are eligible for a 0.5% concession on educational loans. Though this might not seem like a huge amount it makes a world of difference. There are also concessions available for students from minority groups.
- Take care of the fluctuation rates: Interest rate differs from bank to bank. It is important to take the market conditions into account when you opt for a floating interest rate.
- Pay and earn: When looking for a part time job keeps in mind that you need time to study as well. Go for a job that leaves you with enough time to study so that you do not need to quit when things get demanding at school. You could also apply for government grants and scholarships to ease your burden.
Remember, a loan that is repaid on time is never a burden. Once you have conducted your online research and have found the student educational loan that offers the best deal. Use these tips to maintain a good credit score.