What should you be aware of student education loanby Kanika Shelatkar Insurance Consultant
Education loan offers you the possibility of pursuing your dream education but do comprehensive research on course, college and return on investment before you go for it.
Sheetal Rawat, a physiotherapy student from Hyderabad, recently completed her four-year course but is now apprehensive about repayment of a 4-lakh education loan, which she took five years ago to finance her studies. She is in desperate need of a job as repayment of the loan will start in a few months.
There are a lot of students facing the same problem of repaying loans in India, and there are several reasons behind this crisis, including wrong college choice, low performance, a crisis of jobs, useless degrees etc.
The amount of defaulting education loans in India has risen over the past four years and is one of the causes of increasing bank NPAs. Banks are the only source of capital when the parents are unable to finance the higher studies, but one should look at the return on investment before selecting a course.
So, if you plan to take a student education loan, here is what you should know.
Benefits of education loan
Education is an investment for a middle-class family, and students get more serious about learning when they have to manage the education loan interest. Education loan also provides tax benefits under 80E Income Tax Act. Many of us take a loan for better education and decent employment. Some even take out loans because they do not want to place a financial strain on the family. Therefore, if you can prove yourself and be able to repay on time, then a loan for education is the best way to help you get a better education. Education loan EMI calculator helps you to calculate the interest amount to be paid. Loans are usually repaid within three to 10 years. It also depends on the bank and the course you have selected.
Research about the college and course
Before taking an education loan, it is essential to look at the job prospects. One major issue with today's education system is a meagre return on investment for various higher education courses. It is prudent to do some industry-oriented courses alongside conventional education to make you more competitive in the job market. Do a fair assessment of the course before taking out a loan. Think about the return on investment before enrolling for a class.
Default on EMIIf you do not repay your education loan on time, the bank will put your name in the CIBIL list as a defaulter. Sometimes, they will verify with CIBIL when you go for a job, and if your name is in a default list, you find it challenging to get a job. The credit score gets severely affected on default in EMI, thereby rendering you disqualified for future loans. An education loan interest calculator will help you to calculate how much investment do you require and what interest will you have to pay. This will prevent you from defaulting.
Created on Apr 2nd 2020 03:35. Viewed 250 times.