Getting higher education in global universities abroad is a dream that many students aspire to live. Be it because of the unique opportunity it offers in terms of global exposure, diverse cultures or a chance to expand horizons. It's an investment for the future, but one that often poses significant challenges in terms of funding. This is where education loans come into the picture.
Education loans in India have become a source of comfort for many students and their families. They are offered by many institutions, banks and NBFCs and have a number of benefits. However, it is important to consider certain factors when it comes to choosing the right loan for studying abroad.
Types of Education Loan One can Apply for
Before setting off to a bank or NBFC to apply for an education loan, it is important to understand its various types. Typically, all loans fall into 2 categories, secured and unsecured.
Secured loans are backed by collateral in the forms of property, FDs or any valuable asset. These loans often come with a low-interest rates and extended repayment plans. Unsecured, on the other hand, do not require collateral but may have high or floating interest rates.
Research and Compare Interest Rates
Interest rates for education loans can vary from lender to lender. This is why it is important to research and compare rates before settling on one. Low-interest rates can significantly impact the overall cost of your education loan. Some lenders offer floating rates that can be beneficial in many circumstances. These rates are typically tied to a fixed interest rate and may increase or decrease based on market conditions.
What is the Moratorium Period?
The moratorium period is the period that follows right after the education is completed and offers a financial breathing space for borrowers before they can begin repaying their loans. Understanding the terms and conditions involved in the moratorium and repayment terms will help you plan better.
Evaluate Loan Amount and Estimate a Repayment
Studying abroad is an expensive affair and one that will require careful financial planning. Your education loan should be able to cover every aspect of your education, from college fees to books, equipment, travel and accommodation. Start by calculating these costs and ensure that the amount you request is sufficient to cover these expenses.
For better financial planning, an educational loan calculator can be an indispensable tool that can help you in estimating your EMI, total interest rates and loan tenure. By calculating in advance, you can make sure that the loan you are applying for aligns with your long-term financial capabilities.
Education loans have become a catalyst in fulfilling the dreams of many students. By ensuring that you are equipped with the right knowledge and tools, you can make informed decisions.
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