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How to Choose a Student Loan? 5 Solid Tips
by Ankit Shrivastava BloggerEducation
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.
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About Ankit Shrivastava 
Blogger
6 connections, 0 recommendations, 30 honor points.Joined APSense since, May 17th, 2017, From Delhi, India.
Created on Dec 28th 2017 00:40. Viewed 556 times.
Choosing a student loan is tough task for student for their career and professional education. As you have mentioned some points on choosing the right school loan like Comparing Financial Offers, Be Mindful While Borrowing, Do Not Rule Out Private Loans, Stay Active Throughout the Loan Process, and Opt for Interest-Only Repayments During the College Days. These important points on student loan are really helpful and important for their professional career.
Feb 6th 2018 12:14 1 Likes