The coronavirus outbreak has impacted and changed the lives around us quite significantly. It also caused changes in student loan borrowing trends and has been a major deterrent for aspirants who wish to pursue their higher education abroad.

If you wish to understand how the COVID-19 pandemic has impacted the trend of acquiring student finance, read on –

1. More requirements to fulfill when getting a student loan

Since the pandemic has caused the number of employment opportunities to decrease, the rate of delinquencies committed by the students has inevitably increased. This has, as a result, increased the number of bad loans given by financial institutions and thus has compelled them to provide loans on much stricter terms. Many financial institutions have raised the minimum credit score required to procure a loan. Thus, it has become very important for the applicant to have a strong credit score if they wish to get an education loan.

2. The number of borrowers has increased

As the students have been compelled to pursue their education from home due to the pandemic, the flexibility required to pursue multiple courses has also increased. Owing to this, the number of aspirants requiring student finance has increased. However, with the ability to pursue multiple courses, students are able to take on multiple educational avenues; while some finish all the undertaken courses, a few others drop out midway. Coupled with the lack of employment opportunities, this increase in the number of borrowers has also increased the number of defaulters.

3. Many student loans have been restructured upon request

As students have been finding it difficult to pay back their loans due to the pandemic, financial institutions have been compelled to restructure thei student loans in order to help the young learners avoid any unintentional delinquencies. In India, the RBI has allowed the restructuring of student loans upon request only if the repayment has been made regularly till the 31st of March, 2021. A student who submits his/her student loan application for the first time after the aforementioned date can choose from a range of different lending schemes that have been designed by keeping the pandemic situation in mind.

4. The moratorium period has been increased

The moratorium period is essentially the time given to the borrower during which he/she does not have to repay the loan. For student loan borrowers, the moratorium period ends when the individual has completed the said course. In many cases, the student usually lands an employment opportunity after completing the course and thus is able to make the repayments quite conveniently. Given the difficulties that students currently face in landing a job, financial institutions have further increased the moratorium period depending on the merits of the borrower.

We hope this article helps you understand how the student loan borrowing trend has changed due to the pandemic.