Looking at 4 important things to consider before taking an education loan

Education loans are truly helpful  for students who cannot afford to pay for their own higher education. With several banks and financial institutions offering study loans, students can now easily fund their university degrees and pay back once their course is completed. Despite the easy availability of education loans, students need to keep in mind some important things that will help them get the right loan according to their financial capabilities. Read on to discover 4 things that you must consider before taking an education loan.

1. See if an education loan is available for the course you have chosen

The first thing you should do is find out whether the loan facility is available for the course that you are interested in. Even before deciding on a course or applying to a university, it is better to check whether you can avail of a loan for the course. Usually, banks and financial institutions have a list of courses that they offer funding for. Hence, see if you can get your desired course financed before approaching the concerned university.

1. Decide the loan amount

Before applying for an education loan, students must understand the requirement and analyze their career goals, employment prospects for their chosen course, their financial ability, and repayment capacity. Also consider the course fee and overhead expenses before deciding on the loan amount. Moreover, students must be mindful of how much they can pay from their own savings so that they do not over-borrow unnecessarily.

1. Shop around for the best loan provider

After deciding the loan amount and the course, students must carry out thorough research on study loans offered by various banks and financial institutions. They should compare the interest rates, loan amount, repayment tenures, repayment terms, moratorium period, and other additional charges levied by lenders to sanction the loan amount. Moreover, students must also check whether collateral or co-borrower are required for the loan offered by the lenders. By doing so, you will be able to find a study loan according to your preferences.

1. Have a backup plan for repayment

Remember, it is possible that your future employer or even the industry that you are working in could face some troubles and you could suddenly lose your job or struggle to find another job. But you still need to repay your education loan debt irrespective of the current scenario of the market. Defaulting on your repayments will not only hamper your future credit opportunities but also create problems for the co-borrower and put the collateral at risk. Moreover, you will also have to pay a penalty charge if you default on your payments. That is why you must have a backup plan for repayment in case you are struggling to find a job to avoid unwanted stress. So, to avoid defaulting on your EMIs, build emergency funds that can cover at least 6-8 months of expenses. You can also earn some extra money by working part-time at a restaurant, store, or in a library. This extra money can then be put in a savings account.

Make sure to consider these 4 points by default before taking an education loan. Hope this article has been useful to you.

All the best!

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Natasha Rey Joined: October 29th, 2020