3 Things to Consider for Timely Student Loan Payment

3 Things to Consider for Timely Student Loan Payment

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We live in a world of globalization, industrialization, and technology, where knowledge and skills are essential for a successful career. Every parent dreams of providing quality education and opportunities to their children for their future success. However, not all parents and students can fulfill these dreams, as many academic and skill-based courses are expensive and can sometimes deplete one’s life savings. For some parents, education can pose a significant financial burden, and borrowing from family and friends may not always be feasible. In many regions of India, financial constraints force students to drop out of school and abandon their dreams.

Student loans can be the best and most convenient option to embark on a promising academic career without depleting your parents’ hard-earned savings.

Different types of student loans in India:

Let’s explore the various types of students loans available. Based on location, there are two types: domestic and overseas education loans. Domestic loans are provided to students pursuing education in Indian institutes, while overseas education loans cater to those studying abroad in foreign institutions. These loans cover expenses such as airfare, accommodation, and tuition fees, subject to meeting eligibility criteria. 

Based on the course, there are three types of student loans available in India: undergraduate, postgraduate, and career development loans. These loans support students in completing their graduation and post-graduation degrees. Career development loans are designed for working professionals who seek to upgrade their knowledge through professional courses to enhance their careers.

Also Read: How To Get the Best Student Loan Rates In 2023?

Apply for a student loan:

While obtaining a student loan may present challenges, following certain guidelines can make the process easier. In India, students can secure education loans from various banks or Non-Banking Financial Companies (NBFCs) for higher education. These organizations offer both secured and unsecured loans, with some NBFCs dominating the Indian market. The Reserve Bank of India (RBI) has instructed commercial banks to establish student loan programs. Education loans assist deserving students in pursuing their desired education in India or abroad.

What to consider before applying for a student loan?

Before applying for education loan, there are several factors to consider. Evaluate the expenses associated with your desired educational course. Extensive research is crucial. Conduct online research, consult with family and friends, and review eligibility criteria, the application process, and required documents. Gain knowledge on financial institutions partnering with universities and select the right lender. Repayment is a vital aspect of a smooth educational loan experience, so it’s important to carefully consider and choose the right repayment strategy.

What happens when an individual doesn’t pay off the loan on time?

dreams of securing a job right after graduation to begin repaying their student loans. However, this isn’t always the case. Uncertain situations such as unemployment, job loss, or failure to complete the course can impede loan repayment. Failing to pay student loans on time can have several negative repercussions. It can damage your credit score, making it difficult to secure future loans unless you settle the outstanding amount and penalties. If you obtained the loan with a guarantor, not paying it on time can affect both of your future borrowing capabilities. Additionally, in cases where collateral is involved, you may risk losing your asset.

Also Read: Checkpoints to consider while applying for Unsecured Education Loan

Which 3 things should you consider for timely loan payment?

Repayment and EMI calculations:

To ensure a smooth student loan repayment, it is important to plan ahead even before taking out the loan. Planning repayment requires careful consideration to avoid future financial constraints. Those who plan repayment after taking the loan or completing their education are more likely to face financial difficulties.

Giving more thought to EMI calculation can help you repay the loan on time. You can easily calculate your EMI online, which can also save you from financial constraints. Online calculators are user-friendly and require simple details. You can try different combinations of principal amount and tenure to see how your EMI will look. Adjusting your EMI can help you pay less interest and close the loan earlier than planned, or you can choose a longer tenure to keep your EMI affordable.

Repayment Methods:

Understanding different methods of loan repayment is equally important. Many students are unaware of the early repayment option, resulting in higher interest payments. The most common method used to ensure timely and organized repayment is through EMI. EMI is a fixed amount deducted from your account every month. The principal loan amount component in the EMI helps reduce the borrowed amount.

The interest rate component in the EMI remains constant, so higher EMIs enable faster loan repayment. Students can also make lump sum payments, which helps in repaying the loan more quickly and reduces interest liability. Some institutions allow for part payments with certain processing charges, so students should inquire carefully. Students who wish to repay all their loans at once can opt for education loan pre-payment or foreclosure, making the loans less expensive.

Repayment mode:

Students have multiple modes of repaying their education loans. Repayment by cheque is accepted in almost all banks and NBFCs (Non-Banking Financial Companies). Many organizations provide the provision of post-dated cheques. EMIs can also be paid in cash by visiting the branch, although this method may incur a standard service fee.

Students can opt for Electronic Clearance Services (ECS) or National Automated Clearing House (NACH) to deduct the EMI amount from their savings account. In this mode, students need to verify and sign the NACH mandate so that the loan provider can request and receive automated payments from the applicant’s savings account. In case of insufficient balance, students can pause a particular EMI, but the default EMI is subject to penalty charges.


Student loans offer numerous advantages, making higher education more affordable. The cost of education and various courses has significantly risen, making it unaffordable for many. Student loans cover not only the cost of the course but also expenses such as tuition fees, hostel expenses, exam fees, library and lab fees (if applicable), refundable fees paid to the institute, cost of uniforms, books, and other essentials, as well as travel expenses. Instead of viewing it merely as a consumable expense, students can see student loans as an investment in themselves, providing them with better career opportunities and helping them achieve their goals and desired lifestyle in the long run.


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