What is the biggest Student Loan problems and how to solve them?

Attending college can be a wise financial decision as it has the potential to increase lifetime earnings by a significant amount, especially with advanced degrees. Students seem to agree; in 2015, 40 million high school graduates enrolled in a college or university program across India and this number is expected to increase to 92 million by the financial year 2035.

Regardless of your age, student loans can play a significant role in your finances and shape your perspective on money if you’re considering going to college. While student loans can provide a convenient and accessible way to finance your education without depleting your savings, they also offer several benefits, such as the opportunity to establish a positive credit history. 

Although student loans are generally considered a good investment, there are a few issues that you should be aware of before applying for them to ensure a hassle-free borrowing experience.

Problems with Student Loans that every student faces

This article highlights several of the most prominent issues students face while borrowing student loans and the solution to the student loan problem is simple and straightforward. Explained in more detail below:

Selecting the right lender for your student loan

For those taking out student loans for the first time, it can be a challenging process to navigate. Some students have found that working with loan servicers provided them with the knowledge they needed to understand the loan and repayment system, while others have struggled with the complicated and inconsistent education loan process. Therefore, it is crucial to choose the right lender who can help resolve your student loan issues and guide you through the process.

Student loan often require collateral

While a small student loan may not necessitate collateral or a guarantee, a larger loan typically does, particularly for those attending international colleges and universities. Both secured and unsecured education loans are available, so it is essential to research and select the option that best suits your current financial circumstances. You may also want to contact various banks to learn about the benefits that come with each loan.

Only approved colleges and courses are eligible

A significant issue with student loans is that a college or university’s ranking can influence whether a loan is approved or not. Fortunately, more and more universities are now recognized by lenders, especially Non-Banking Financial Companies (NBFCs) are making it easier for borrowers to obtain a student loan regardless of where they attend school. Before submitting a loan application, it is important to check your university’s status with the lender that will provide the loan.

Also Read: 5 Best Tips To Get The Best Education Loan Interest Rate In India

Student loan default rates are high

Defaulting on a student loan is more likely than defaulting on other types of loans due to the unpredictability of the job market. The ability to secure a well-paying job affects whether or not a student can repay the loan, which can result in increased interest rates. Therefore, it is crucial to explore different loan offers before selecting a lender. Several banks and NBFCs specialize in student loans and offer a variety of options to students seeking to finance their education.

Choosing between student loans or personal loans

Borrowing money for an Indian institution is generally less expensive than for a foreign university. The cost of foreign tuition, accommodation, travel, food, medical expenses, school supplies, and other expenses can exceed the maximum amount of loan that a lender would approve. In such cases, a student can consider taking out a personal loan or combining both types of loans to cover all education-related costs while studying abroad.

Late repayments on student loans

Many students face difficulties when it comes to repaying their student loans, often due to a lack of preparation or understanding of the process. Students who fall behind on their loan repayments may have to speak with their loan providers and may face significant penalties. This is a common problem among college students with student loans.

Thankfully, there are not many significant issues related to student loans that one needs to tackle. This should also not discourage you from pursuing your academic goals.

Related Blog: 8 Mistakes You Should Avoid While Applying for Student Loan

Now that you know all about the generic issues students face while borrowing student loans and the solution to those problems, you should be aware that these loans can be used to pay for tuition, housing, books, and other education-related expenses. Varthana’s non-collateral education loans are a convenient and affordable option for students looking to finance their higher education. 

An education loan from Varthana is a safe option for funding education from dream colleges because it allows you to borrow the money you need to pay for your education without putting too much financial strain on yourself or your family. If you don’t want to miss out on your dream college.