Things you should know before getting an education loan

Higher education is the peak of a student’s life. However, pursuing higher education abroad is a dream for many as there are a number of challenges involved. In this case, going abroad and studying is not always possible. More often, it is due to the fees that deter students from achieving their dream of studying overseas.

With this in mind, many new and innovative educational loans have been introduced in an attempt to help students to fulfil their dreams. A degree from a world-class institution could be your ticket to the big leagues.

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However, not all the education loans are safe. It is also important to note that one needs to check a few boxes when choosing the right kind of education loan.

Here’s a list of things you need to keep in mind while, picking your education loan:

Duration of your studies:

To minimise the risk of burden, you need to be sure that your subject of interest is locked down. A loan for higher education is not a small amount. With this, it would be wise to carefully consider the duration of your studies. Ask yourself if you see this as the career path for the rest of your life.

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Break down the loan process for a long run:

By now, you might be aware that if you go for a loan of around Rs 4 lakh, you can receive it without setting up collateral such as a house or a car. But, if the amount is between 4 to 7.5 lakhs, then the story changes. The bank will most likely need you to have a co-applicant who can help pay off the loan.

For higher amounts such as for Rs 7.5 lakhs there is most likely collateral needed. The bank will only provide the loan after the collateral is inspected and authorization is given.

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The rate of interest and moratorium

It is advisable to know all the options and banks for the ideal rate of interest to suit your method of income. It can be seen that each bank has different interest rates on the loans, but they generally tend to be between 6 to 15 per cent.

Know more about government schemes

Students who are willing to go abroad should ensure to know more about government schemes and the bank schemes. For instance, the Indian government launched the Credit Guarantee Fund Scheme (CGFSEL) for education loans under which students can avail loans up to Rs 7.5 lakh without co-applicants.