Pursuing higher education has become very expensive these days. With the rising cost of tuition, educational loans have become increasingly important in many people’s lives. Anyone who wishes to pursue higher education will benefit from these loans. They are particularly useful for costly courses at prestigious universities. Parents can afford to send their children to college, and students can pay for their own schooling as well with these loans.
These study loans can be paid back with money gained from jobs received after completing the course. However, if not adequately handled, the loans may become a major burden. Here are some tips that can help in getting and managing an education loan:
Choosing the bank/lender
The final decision of the bank/lender for your education loan can have repercussions on the total amount payable. Make sure to do the required research before deciding on a lender. Make no hasty or emotional decisions, particularly when applying for a study loan. You will be able to grasp the different rates of interest, processing fees, terms and conditions, and so on if you conduct a detailed study. Each bank has its own interest rate, which decides how much you’ll have to pay back.
Do your research
If you plan to study in India or abroad, you should be aware of the specifics of your future studies as well as the education loan you have taken. If you’re traveling to another country, a VISA allows you to enter, but it’s not an all-access pass. At the airport, you can be asked questions about your intent and the specifics of your entry.
Choosing your institution/course
Select the institute for your further studies after prior research. When applying for a course, it is important to perform thorough research on the institution. Some universities may have a strong reputation, but their placement policy may be lacking. The right organization, particularly when applying for courses abroad, can make a big difference.
Also, make sure you select a course that you are interested in and that will add to your career path. So, the repayment of your education loan can be easier when you are pursuing a career path of your interest.
Calculating the total cost over EMI
Some people want to take out a loan for an education loan longer period because the EMI is lower. However, in this case, the loan rate and interest charged would be much higher. You can choose a shorter study loan term if you are confident that you will be able to find a well-paying job after completing the course. Although your EMI will be higher, your loan will be less costly, and you will be able to pay it off earlier.
Take the loan in instalments
The sum of money disbursed for your education loan is subject to interest charges by banks. Typically, you must pay for your course every semester or every year. As a result, it would be wise to take the study loan as required. This will result in a much lower amount of interest being accrued. Rather than approving the entire sum in one go, make sure it is disbursed as needed.
Plan your repayment tenor
Just a few lenders allow customers to choose repayment options. Consider all the variables that could influence your payment plan before deciding on a scheme and repayment option. Different education loans have different grace periods, or how long you have before you must make the first payment after you graduate.
Make sure you understand the grace period, and if you don’t start repaying on time, the bank will start charging you late fees, and in the worst-case scenario, the loan will default. Often, consult with the bank to see if a potential flea market exists.
Check for Tax Benefits
The interest you pay on your educational loan is eligible for tax benefits under Section 80E of the Internal Revenue Code. Your study loan must be from an Indian scheduled bank or a gazetted financial institution to be eligible for this deduction. The deductions are only valid for the first seven years of assessment, or before you pay off all the interest, whichever comes first.
Now that you are aware of how to plan your education loan better, you can opt for an instant personal loan of up to 25 lakh with the Bajaj Finserv app to help plan your finances better. Bajaj Finserv offers instant loans with quick disbursal, minimal documentation, and a digital application process.