Planning to take a loan for higher education? These 9 tips could help

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9 tips for higher education

Higher education loan in India

The great Benjamin Franklin once said, “An investment in knowledge pays the best interest.” It is now time for you to invest in knowledge by applying for admissions to your dream university in India. It has also been observed that completing higher education has become the most valuable asset in today’s world. However, the cost of education has risen dramatically in recent years. For most students, the best option is to avail a higher education loan to obtain a professional degree. So, don’t let financial concerns keep you from attending your dream college; instead, get a guaranteed educational loan from a bank, NBFC, or other financial institution.

Higher education loans aren’t that different from other types of loans. Tuition fees, hostel fees, transportation, utilities, and various activities are the most crucial aspects that will influence the expense of your higher education. 

But, before we get to the tips, let’s talk about whether it’s really worth the investment in higher education.

One of the most important benefits of higher education is the opportunity to study in top universities and colleges of your choice. You’ll receive top-quality education experience, technical skills, language skills, industrial visits, and practical projects to supplement classroom training. Higher education loan in India covers the most crucial aspects of your education. They are truly a boon to the developing world of opportunities today. They not only help you fulfill any shortfalls that occur in funding your education, but also give you an alternative to using your parents’ retirement savings to pay for college fees. They are most useful when it comes to covering expensive courses at prestigious universities. Parents can’t always afford to send their children to college but students can take out higher education loans and pay for their own education. So yes, it is worthwhile to take the risk of investing in education. With NBFCs or any financial institutions, your tuition is paid in full before you begin your higher studies. Generally, you do not need to work during your education to repay the loan. You might instead concentrate on your academics. 

Also Read: How to Choose the Right College

You will graduate with new and enhanced critical thinking, analytics, written and spoken communication, and group problem-solving skills in addition to the degree. Consider this: if you study and grow, the Indian economy grows with you. 

These loans can be paid back with money earned from jobs that you will get after completing the course. However, higher education loans can be a considerable burden if not planned and managed properly. If you’re considering taking a loan for your higher studies or are struggling to pay your existing loan EMIs, just check out these 9 important tips before you proceed. These tips will help you manage your future studies, get the best higher education loan in 2022 and pay them off with ease:

Choose course with best job security

Before deciding about a higher education loan, it is important to research whether the course you wish to pursue will provide job opportunities at the earliest. No one would want to spend money unless they could earn it back. Taking out an education loan is an investment. You should choose a course that interests you and make it your career. But make sure you choose the right course that will offer maximum Return on Investment. 

Don’t let what the rest of the world is doing prevent you from pursuing something you’d excel at. A student who is forced to study engineering, for example, may not perform well or even complete the course. However, if the same student is interested in Journalism, he or she can become a great Journalist, leading to a successful career and a more content life. So, pick a course in a field that has a high scope of growth in the future and this will help you in repaying your loan as quickly as possible while not burning a hole in your pocket.

Also Read: Best Courses After 10th in India

The loan amount you actually need

Based on your course fee, you should first decide how much amount you can pay from savings and how much you can borrow from a bank as a higher education loan. The benefits are that you will have a lower loan burden. Make a plan and list down all of your expenses and the coverage you need. Once you’ve devised a strategy, you’ll be able to determine how much money you’ll need to fund your education. This will help you in applying to the best bank or financial institution that can avail the loan in the most convenient manner.

Keep paperwork ready

When you submit your higher education Loan application, provide all the required documents. Add any information you feel will support your case and speed up the process. For example, if you have a scholarship, submit a copy of it as proof as it increases your chances of being approved for a loan.

Must put up collateral

Pledging collateral mitigates the risk of taking out a higher education loan. It’s known as Secured Education Loans and the interest rates on such loans are lower. You can use moveable and immoveable assets as Collateral. Fixed deposits are considered as Moveable Collateral, while property is considered immovable collateral. Flats, houses, non-agricultural lands and shops are all acceptable types of property. If you pledge collateral, you must provide the lender with the necessary paperwork.

Have a co-borrower on your application

The student must include the name of a co-borrower on the higher education loan application form. Family members are usually eligible as co-borrowers.

The co-borrower’s profile as in their tax returns, proof of steady income and good credit history are essential to get the loan. A co-borrower pays the interest amount during the course, preventing interest from piling up on the interest amount. It lessens the student’s EMI burden.

Finally, borrow as little as possible. After all, owing money is a liability.

Choose longer repayment tenure

Higher education loans usually have a longer repayment period because EMIs typically start after you have completed the course. Education loans tenures in India can go up to 15 years. In addition, lenders also provide a moratorium period ranging from six months to a year during which you should ideally look for work.

However, if you’re not able to find a job in that period, you can request an extension from your lender. They may extend this period based on your relationship with them and the reasons you provide. By taking a loan that has a longer repayment tenure, parents can pay low EMIs. Moreover, parents can also take the benefit of tax savings.

Find a part-time job.

If you can’t find work and your EMIs are piling up, you can take on a part-time job. This will ease off some of the burden of your education loan debt. Not only that, but working part-time may allow you to improve your skills, making it easier to find the right full-time job.

Restructure your loan

If you’re having a hard time paying the EMI payments, you can renegotiate the loan terms with your lender. If you explain your financial situation to your lender, they may be willing to relax the rules. This is also known as restructuring a loan.

However, in the long run, one should avoid becoming a defaulter, especially in the case of educational loans. If you fail to repay the loan on time, no bank will give you another loan in the future.

Check coverage 

It is important to make a list of the things that will require funding. Tuition fees, lab and equipment fees, living costs, and other expenses are the most important to consider when deciding on a higher education loan. Check the college’s placement record and instructor credentials before enrolling. This will increase your job prospects in the future and ensure that you have a steady source of income to repay the loan.

Choosing the best higher education loan is the most important decision you will make for the growth of your professional career. Make sure you do all the research about every aspect so that you can enjoy the thrill of new opportunities and a new life on campus. Read all the necessary terms and conditions laid out by banks and make the right choice.

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