Managing education loan becomes a hassle to students who are not well versed in the banking rules regarding loans.
India Today has provided a few good tips that students need to follow to manage their education loans
The important tips highlighted are:
- Do not ever default – Meaning, never fail to repay the loan or monthly installments. This spoils your credibility in the market, along with that of your parents (since they are the co-borrowers). Since banks have computerised record of every lender, failing to pay the installment will be recorded, which may lead to problems in the future while securing further loans from other banks too.
- Strategy to Repay – There should be a good strategy on how to repay loan, once the ‘moratorium period’ ends and you start paying back the loans
- Provisions – Check with the bank for the various provisions / relaxations for loan to students. This will help you make your repayment smoother and better planned. There are lower rate of interest to Women, which the female students can make use of. Likewise, there are schemes for students from economically weaker sections of the society, differently-abled students etc.,
- Interest Rate – Interest rates keep fluctuating and hence care should be taken while opting for the type of interest rate. Floating loan will have fluctuation rates, but is a good option, as when the market rate is lower you will be charged lower rate of interest and vice-versa. This is good for a long-term loan. Then there is Fixed rate, which is better option for students who opt for quick repayment of loan, but the interest rate is fixed and does not come down if the market rates comes down. If students starts earning, and can afford to pay-off a substantial amount at one go, this would lower their monthly installments and create less burden.
- Pre-payment – Pre-payment invovles paying penaly, and hence check out the cost factor and then opt accordingly.
- Extending Loan – In cases where students fail to get a job, it is possible to extend the loan, but banks only go for valid reasons like economic conditions affecting new job in market etc., Bank in such cases extends the loan period.
Students are advised to spare some time and get all the information from the bank so that they can utilise all the benefits a bank provides for students.
For full article on the above with further tips from bank officials, click HERE