College education is one of the most significant investments a person can make in their lifetime. It provides students with the opportunity to develop skills and knowledge that are critical to their future success.
However, the high cost of tuition and other expenses associated with college can make it challenging for many students to achieve their goals. This is where student loans come into play, and they can play a crucial role in helping students afford a college education, especially in times of high inflation.
The Importance of Student Loans and Making the Most of It
Student loans are a type of financial aid that allows you to borrow money to pay for your education. The loan amount can be used to cover tuition and fees, books and supplies, room and board, and other related expenses. They are often considered to be a necessary investment in your future and can make college more accessible and affordable in case you might not otherwise have the means to attend.
One of the key benefits of student loans is that they provide you with the opportunity to invest in your future. The investment can pay off in the long run, as college graduates tend to earn more money over the course of their careers compared to those who do not have a college degree. Studies show that having a higher education is often associated with higher earnings.
A survey conducted by the Centre for Monitoring Indian Economy (CMIE) in 2020 found that the median monthly salary of tertiary graduates was ₹26,000, compared to ₹18,000 for those with a secondary school education in India. This represents an increase of 44%.
Additionally, the CMIE survey found that those with postgraduate qualifications earn a median monthly salary of ₹33,000, which is an increase of 83% when compared to those possessing only a secondary school education.
Similarly, a 2019 report by the All-India Council for Technical Education (AICTE) revealed that those with a postgraduate degree earned an average monthly salary of ₹45,000, which is more than double the median salary of those with secondary school education.
Another advantage of student loans is that they offer flexible repayment options. Many student loan providers offer a variety of repayment plans, including standard, graduated, income-driven, and extended repayment plans, to help you find a repayment option that best fits your needs and financial situation. This flexibility allows you to choose a repayment plan that works for you or your family, even if the income or financial situation changes over time.
Also Read: 5 Best Tips To Get The Best Education Loan Interest Rate In India
Why Student Loans Matter
Taking out a student loan for higher education has numerous advantages. They are:
1. Accessibility for All:
A loan for higher education is available to anyone regardless of their income source. Banks and other public or private organizations have made the process of obtaining a student loan very simple and straightforward. In most cases, the loan can be provided within a week of submitting the required documents.
For example, Sumathi, a single mother, was able to get a student loan for her daughter’s university fees within a week after submitting all the required documents. All thanks to the loan availability for all classes of people.
2. Financial Security:
Taking out a student loan allows you to keep your personal savings intact. This is especially beneficial for parents who do not have to liquidate valuable assets to cover education costs and maintain their long-term financial goals like buying a house or saving for their children’s marriage.
For example, Sachin, who was saving for his daughter’s wedding, didn’t have to liquidate his assets after opting for a student loan. This allowed him to maintain their long-term financial goals and keep the family’s finances secure.
3. Comprehensive Coverage :
A student loan covers 100% of the costs associated with completing your education, including tuition fees, travel expenses, housing costs, university fees, food expenses, and any equipment required for your education such as a laptop.
For example, Dev’s education loan covered all of his education-related expenses, including his tuition fees, housing costs, and even the cost of a laptop, allowing him to focus solely on his studies.
4. Financial Discipline:
Taking out a student loan for higher education instills a sense of responsibility in students from a young age. On-time repayment of the loan helps you establish a credit history, making it easier for you and your family to obtain loans in the future.
For example, Rachita, who was a co-borrower for her sister’s education loan, learnt the importance of timely repayment and financial discipline. She made timely repayments, establishing a positive credit history that will benefit her in future.
5. Competitive Interest Rates:
Lenders offer a variety of loans with competitive interest rates, making it easier to repay the loan. In some cases, preferential rates may be available for students like you studying at top-ranked universities and institutes.
For example, Tara was able to find a loan with a comparatively low interest rate, which made it easier for her to repay the loan and maintain financial stability.
6. Customization:
The student loan market has expanded in recent years, resulting in financial institutions offering specific and customized loans to you. Whether you are looking for a post graduation or a vocational course, you will find a loan product that suits your needs.
For example, Manjunath, who was looking for a loan to pursue an executive MBA program, was able to find a customized loan offered by an NBFC that suited his needs.
7. Easy Repayment Terms:
For a hassle-free loan repayment experience, both banks and Non-Banking Finance Companies (NBFCs) offer easy collateral and co-borrower terms.
For example, James, who was worried about repaying his loan, was pleased to know that his lender offered easy repayment terms, which made the repayment process stress-free.
It’s important to note that student loans should not be taken lightly. They are a serious financial obligation that must be repaid, and failure to do so can result in damaging consequences, such as poor credit, wage garnishment, and even legal action. Read more about what happens when you default in details here.
In conclusion, taking out a student loan is a great option for students looking to pursue a degree or academic program. It allows them to keep their personal savings intact, while still having access to the funding they need to complete their education. Not only does a loan for higher education cover 100% of the costs associated with completing the education, but it also helps build financial discipline in students and gives them the opportunity to find the best interest rates available.
Varthana offers education loan options specifically designed for students looking to pursue higher education. It not only covers the tuition fees, but also additional costs such as the cost of books, equipment, and other expenses related to education. Moreover, it provides students with the best interest rates and flexible repayment options. Read more about Varthana’s guide to applying for a student loan online.