Education Loans: The Key to Unlocking Your Future Success

Education Loans: The Key to Unlocking Your Future Success

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Obtaining a degree from a reputable university can be a valuable asset for securing a desired job. However, recent data suggests that there has been a decrease in the number of students taking out education loans to fund their education. Specifically, the number of students seeking education loans dropped from 34 lakh to 27.8 lakh over a four-year period ending in mid-2019. 

Despite this decrease in the number of students taking out loans, the average loan size has increased significantly during this same period, going from 5.3 lakhs to 9 lakhs. This implies that while fewer students may be taking out education loans, those who are borrowing are borrowing larger amounts. 

It could be caused by the increasing cost of education or students opting for higher education in more expensive universities. Because in today’s competitive environment, it is crucial for you to attend prestigious universities and continually enhance your skills (or upskill) in order to thrive in the professional realm.

An education loan is an easy and accessible way for you to pursue higher education without the burden of financial constraints. Even students like you who belong to underprivileged communities and are currently unable to afford the costs of education can complete your studies with the aid of an education loan. 

These loans take into consideration your (or the individual’s) future earning potential, allowing you to reach your full potential through education. In other words, an education loan can bridge the gap between the financial resources you have and the cost of education and also help you to invest in your future. 

This is a great way to ensure that students like you with potential but lacking in financial resources can still access the education you need to unlock your future success.

Benefits of taking an Education Loan

Taking out an education loan can provide many benefits for funding your studies. Let’s take a look at a few:

1. Continue your education without financial strain 

One of the main benefits is that it allows you to continue your higher education without the added stress of financial burden. A post-graduate degree from a prestigious institution can serve as a solid foundation for a thriving career and life, but given the high costs and rising expenses, it may be difficult for you to fund your own education. An education loan can provide financial assistance to help you reach your academic goals without the added stress of financial burden.

2. Take advantage of the comprehensive coverage

Another benefit of an education loan is that it covers almost all expenses related to your education. Education loans are easily accessible to a majority of the population due to their availability from multiple sources. These loans cover both academic and non-academic fees such as tuition fees, living expenses including hostel fees, exam fees, library charges, lab fees etc. The loan also covers the cost of books and travel.

3. Make use of cost-effective financing option

One of the main benefits of education loans is their affordability. These loans tend to have lower interest rates than other loan types, making them a more cost-effective choice for paying for your college. Additionally, lenders typically provide a range of co-borrower and collateral options to make your loan repayment as easy and convenient as possible. This gives you more freedom in how you repay the loan, making it simpler to fulfil your financial obligations.

4. Get a loan easily

Another advantage of education loans is the ease of obtaining them. For loans up to a certain amount, it is often not necessary to provide collateral (such as Rs 5 lakh in India). Additionally, banks might not even require collateral for loans of greater amounts for students accepted to prestigious institutions like the IITs or the IIMs. Students from all backgrounds now have easier access to the funding they need to continue their education. 

In other cases, depending on the fee structure and requirements, lenders may disburse the loan amount at once or in installments, either to the borrower or directly to the institution.

5. Realize your aspirations of studying at a premier University

Education loans can help you achieve your dream of studying at a premier university. These loans are available to people of all socioeconomic backgrounds, regardless of their source of income. This means that even if you are from a lower-income family, you can still access the funding you need to attend a prestigious university. Additionally, having a good credit score can be beneficial when applying for an education loan, as it can help you secure a better deal with the lender.

6. Develop financial responsibility through loan repayment

In addition to helping you finance your studies, an education loan can also help you develop financial discipline. Repaying the loan on time and regularly is a way of building a good credit score, which can have long-term benefits. For example, if you or your parents need to take out a loan later in life, such as a credit card, auto loan, or home loan, a good credit score can help you qualify for better terms and lower interest rates. This can ultimately save you money over the long-term and help you achieve your financial goals.

Eligibility criteria for an education loan

Most lenders will require you to meet some general requirements,  though the eligibility criteria for an education loan varies among lenders. For example, the majority of lenders demand that borrowers reside in India, and those enrolling in full-time courses need a co-applicant with good credit. Further requirements may be set by some banks based on the student’s age, the field of study, and type of institution they will be attending.

It’s important to keep in mind that taking out an education loan is one of the first major financial decisions that a person makes, one that will last for nearly six to seven years of their working lives. Therefore, it’s critical for borrowers to be aware of a number of key loan components, including course fees, documentation requirements, scholarships, interest rates, and any processing fees. It’s also important to keep in mind that the best preparation for adult life is for students to pay for their own higher education.

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