How to Choose a Student Loan? 5 Solid Tipsby Ankit Shrivastava Blogger
Education has become the most complicated aspect of a young individual’s life not to mention the rising cost of education in India and investment value being extremely high. The average aspiring young individual has access and exposure to all education formats available throughout the world easily accessible information such as online blogs, comparative websites, chat forums etc. The dilemma most students in India are faced with is between choosing an education here in a reputed institution vs. going abroad to fulfil their educational ambitions. While disbursing educational funds to students is perhaps the most lucrative business for lending institutions, it is also the most competitive landscape as these loans are available by the dozen. It is common practice for most lending institutions employ a gamut of marketing strategies and gimmicks to lure potential students in order to convert them into customers.
Most students seek to graduate from a top educational institution and that requires financial grit in the form of fees and the ability to match a particular standard of living. An average engineering course requires you to pay up to INR 1 lakh per semester, whereas, if you opt for an MBA course from a private institution, you will have to shell out as much as INR 10-15 lakh rupees. The price is way beyond the limit of what a struggling middle class student can or would want to afford. In fact, a member of the upper middle class finds it pretty daunting to arrange funds for educational expenses all at once. In most of the cases, a family’s savings simply are not just enough to cope up with increasing fees that are levied by top schools and colleges.
Today's there are many new age Fin-tech lenders which provides the various types of finnacing option like home finance, car finance, bike finance etc. However, majority of educational institutions offer loans through their affiliations with banks and NBFCs keeping in mind two goals – 1) So as to help the student fulfil his/her education dream and 2) To earn a decent amount of money through the high rate of interest.
Aspiring students who are inclined towards taking a school loan or loan for private school need to know that it is they who will create a massive impact on the economy and shape our country’s future. However, they must secure their future first. A student loan may have an impact on the first few years of the young individual’s career or on family funds and therefore it is important for parents, joint family members or individuals seeking a student loan to look into repayment terms and conditions of the student loan.
Having understood that, let us look at how one would go about choosing a student loan. In order to take the best student loan deal, there are five steps that you need to follow to choose the right loan for yourself:
1. Comparing Financial Offers
To minimise the amount of money you owe to a financial institution, it is essential that you compare financial packages offered by your choice of schools. Consider all the components – financial aid package, merit-based awards, need-based financial assistance, and scholarship. Do everything you can to bring down the initial amount so that repayment becomes favourable. Even a small comparative study of the financial aid and tuition cost will help you save thousands of Rupees through school loans.
2. Be Mindful While Borrowing
When you take a school loan, it is important that you borrow only what is needed to avoid overborrowing. Remember, the amount of loan that you borrow is to be repaid with a higher rate of interest, and so it is not a wise choice to borrow an amount which is not really needed. Thus, note down all the expenses from the cost of attending college, fees and stationary cost and only borrow the amount that is absolutely needed. You can even work part-time so to improve your living style and aid yourself in your quest to repay the loan in future. It is not uncommon for most students to work part-time at the university or nearby businesses in order to support their lifestyle and acquire valuable work experience at the same time.
3. Do Not Rule Out Private Loans
No two loan products are same and thus when you take a school loan privately, it is important that you check out different private loans that are available and shop for the best option. You can do so by comparing different features of the available private student loans. These loans might differ concerning loans, fees, discounts and scheduled repayments. Do not just think about the short-term gains but also look into the long-term picture. Choose a lender after much research.
4. Stay Active Throughout the Loan Process
Many students tend to borrow a loan and forget about it. Always remember that when you take a student loan, the lender is bound to offer you several resources to help you stay informed about the lending process. Keep in touch with the lender and keep a look out for re-financing or a favourable change in the interest rate. Ask them about estimated repayment options and so on. Thus, stay knowledgeable and up-to-date about the loan process.
5. Opt for Interest-Only Repayments During the College Days
Most of the lenders tend to accrue interest while you are attending school. This creates an impact on your loan balance and you might have to pay a higher principal balance. In such a case, if you go for the interest-only option, you can help to keep the principal balance from increasing and over time you will realize that you have saved thousands by doing so.
Student loans are valuable to those students who are looking to fulfil their educational dream but don’t have the resources available at hand. Student loans can be helpful with the planning of a family’s financials while their child is securing the best education available. Some points to consider in order to save on a student loan are low-interest student loans for females, benefits of educational loans like caution deposits, library fees, building deposits, laboratory fees, tuition, examination fees, hostel fees, money for buying books, instruments and uniform, travel expenses for studies abroad, and repayment terms that allow the student 5-7 years after completing the course.
Having understood how to choose the right student loan, let us review the documents required to avail education loan in India:
1. Letter of Admission
2. Break up of all the cost in the course in-detail
3. Duly filled loan application form and photographs
4. Know Your Customer (KYC) Document
5. Mark sheets of SSC, HSC, Degree Courses as Academic qualification
6. Pan Card of student along with Parent or Guardian
7. Aadhar Card of student along with Parent or Guardian
8. Identity Proof – Driving License or Passport
9. Residence Proof – Electricity Bill or Telephone bill
10. Bank account statement for past 6 months
11. Statement of assets and liabilities of Parent or Guardian
12. Income proof of Parent or Guardian
Education loans are not the last resort but an early one. A student loan is an investment for the student and his/her family. You may want to select a loan with the low-interest rate from a student-friendly lending organization that caters specifically to the needs of the student. Some lenders provide an extension of repayment term in case of unforeseen circumstances, so keep a look out for those as well. If finance is holding you back from your educational dream, then do not hesitate to take a school loan.
Created on Dec 28th 2017 00:40. Viewed 411 times.