As a novice, it is natural to feel confused about technical terms, processes, eligibility criteria, documents required, and so on. So, we have been sharing some interesting information about education loans through our blog series to assist you with your academic journey.  In this series, we bring some more valuable information that will bring clarity about education loans. So, let’s quickly dive into it.

Education loan v/s liquidating your savings

Effective learning becomes feasible because parents extend full support. They take care of every need of the child, including financial needs. Your parents have done everything so that you can get a quality education. Higher education is expensive whether you choose to study abroad or in India. Most parents choose to liquidate savings that they have been saving for the rainy day to ensure their children pursue higher studies.

What if we tell you that you can finance your own education instead of having your parents liquidate the savings? You can opt for an education loan for higher studies and choose to fund your own education. Your parents need not liquidate savings or investments or pledge gold or even have to borrow from friends and family. A student loan is an incredible way to earn a self-made badge!

Education loan covers all the education-related costs like tuition fees, equipment costs, airfare for study abroad students, and so on. This makes the whole academic journey stress-free, not just for you but for your parents too. So your parents can keep their savings and investments intact for the future, and you can focus on your studies.

Millennial outlook: know what your peers think

Most millennials choose to finance their own education instead of depending on their parents. Being self-reliant is one of the important goals of every student’s life. Also, once you complete your studies, you will need a strong credit history to buy a car loan, home loan, or credit card. Education loan gives you the chance to build a healthy credit score early in your life.

Now, let’s take a look at what mistakes you must avoid

1. Little to no research

Researching on interest rates is undoubtedly important. However, most students make a big mistake by shortlisting the education loan provider based on just one criterion i.e. interest rate. You also need to consider other important factors like the sanction time required, if the education loan meets your requirements and so on. So, conduct online research to find out if the provider is credible. Also, apart from tuition fees, there are several other academic expenses that you need to consider. Find out if your lender covers all the education-related expenses like equipment fees, airfare for studying abroad, and so on. Know these aspects well about the providers you have shortlisted to make a well-informed decision before applying for an education loan.

2. Borrowing more than needed

Although EMIs start after you complete your studies, an education loan begins accruing interest immediately. By borrowing more than needed, you unnecessarily increase your debt, for which you will eventually have to pay interest. You may consider using Education Loan EMI Calculator, or College Course Expense Calculator to arrive at the approximate amount you need to borrow. These online tools are excellent ways to try different permutations and combinations of factors like EMIs, interest, loan amount, etc., to find the right fit.

Before arriving at the loan amount, consider expenses like:

• Tuition fees
• Living expenses
• Accommodation cost
• Travel expenses
• Equipment cost

3. Not reading/not understanding the fine print of the loan document

Most reputed providers will not charge any hidden costs; instead will be extremely transparent about the whole process. However, it is advisable to read the fine print to ensure no expenses or fees other than the ones conveyed to you are mentioned in the document. Also, it is best to read the terms and conditions to avoid any complications in the future.

Imagine this, a certain education-related cost is not covered by your student loan, and you learn about this when you have already taken a loan. Stressful indeed. So, to avoid such a situation, it is best to check if your education loan covers all the important education-related expenses.

4. Interest rates are important but not just the only crucial factor

Selecting an education loan provider based on interest rates can bring in a lot of regrets. Don’t fall for a provider that only promises but never delivers. Beware of fake loan providers, especially fake loan apps. Read reviews about the education loan provider and also about the time they take to sanction the loan. If you have a certain requirement, for instance, if you are interested only in a collateral-free loan, then ensure you inquire about these aspects.

Higher study in India is as expensive as studying abroad, so conduct thorough research on every aspect before applying for an education loan, irrespective of where you choose to study.

How to apply for an education loan?

You can choose from several options available to you. At Avanse, you can apply through an online application. You can contact us on 1800-266-9722 or write to us at wecare@avanse.com, and we will assist you with the entire application process.

So, these are some important things that every student must know before applying for an education loan. If you want to read blog series 1, please click here; for blog series 2, please click here.

We, at Avanse, offer holistic financial solutions which cover all the education-related costs. If you have any queries or doubts, please share them with us. We will be happy to assist you.