Education is an important aspect of the Indian culture. Securing a child’s future is one of the critical goals for most Indian parents. Thus, as soon as secondary education is completed, parents encourage their children to pursue higher education to secure a brighter and promising future.

One of the concerns these days is the increasing cost of education. The expenditure required for higher education both in India and abroad calneeds proper planning. Hence, a highereducation loan is one of the options which eases out the pressure both on parents and students. Taking an education loan is usually the first borrowing activity for a lot of students.

This makes it more important for you to be careful in terms of understanding and managing this debt amount. There are multiple benefits of funding your educational expenses with the help of an education loan. But to reap its benefits to the fullest, you need to know all the details and avoid committing mistakes that might create an unnecessary burden on you. Here’s a list of things that you should avoid while opting for an education loan.

Making a decision without proper research

When you decide to apply for an education loan, the first thing you have to do is ‘research’. Look up on the internet, speak to family members and peers especially who have taken such a loan before to get a clarity. Post gathering such details compare between different financial institutions offering education loans. If you do not compare, you will not be able to crack a better financial deal.

Borrowing more than needed

When you decide to take a loan, analyse how much is going to be your expenditure. Never take more than what is needed. Remember, the more money you take from the financial institution, the more you will have to return along with interest. In fact there are EMI calculators to help you understand that if you take ‘X’ amount of money today, how much EMI you have to pay later. Every student borrower should use an education loan EMI calculator before applying for an education loan. It will help you make smart financial plans and ensure that repaying the loan is not difficult in the future.

 

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

A lot of ignorant applicants end up signing up for a loan without reading the complete details mentioned in the fine print. This is a terrible mistake. If you or your co-borrower do not understand the nuances of the financial matters, you should seek out for professional advice. Reach out to someone from your family who understands such things or spend an extra buck to hire a professional who can explain the details of the fine print. Once you are convinced, only then seal the deal. This will save you from unnecessary troubles that might crop up in the future if you are unaware of the loan details.

Interest rates are important but not just the only crucial factor

Usually borrowers consider interest rate as the most important factor for applying for a loan and base their decision solely on this. It is an important aspect but never forget that it’s not just the only factor. There are multiple other parameters that you should look at while opting for an education loan.

Look at the schemes offered, processing fees, if the education loan covers the holistic cost of education or just the tuition fee, turnaround time, flexible repayment options, need for collaterals and a lot more. A holistic view of all such details along with the education loan interest rate will help you make the right choice.

These days’ parents are realizing the multi-fold benefits of taking an education loan and are encouraging their children to opt for the same. Education loan enables you to secure the self-made badge which in turn makes your parents proud. By opting for such a solution, parents help you become financially responsible. Gradually you start realizing the value for money and get into a habit of repaying from early days of your lives and thus, make your credit scores stronger.

Understanding the procedures, processes and benefits of a higher education loan might be complicated. But you need not worry. Please feel free to reach out to us for any query or assistance. All the best!