Simplify Child Education Loans: Expert Tips
Today’s expanding world of opportunity benefits greatly from an education loan. Your child has so many educational courses to choose from.
A decent education is essential for your child’s growth and development, and several institutions throughout the world provide student loans with low-interest rates to those who cannot rely on their savings.
Banks and other financial organizations provide outstanding education loans with a reasonable interest rate and loan payback time.
An education from a reputable university is the first step to a prosperous profession. The cost of college expenses is rising quickly, though, and for parents who might not have enough money, taking out an education loan sounds like a perfect alternative for their child.
In reality, the cost of higher education overseas and for Indian parents has increased enormously due to the rise of the dollar value versus the rupee.
This pattern is also observed in TransUnion CIBIL data, where the average ticket size of a newly issued student loan increased by 48 percent from INR 5.73 lakhs in 2015 to INR 8.5 lakhs in 2018.
So, here are the five best ways if you are planning to get a student loan for your kid and help them to pursue higher studies easily.
Tips to Consider Before Taking an Education Loan
Choose the right course
Let your child choose a subject that fascinates them enough to make it their career. Don’t allow your child to do what the majority of others are doing to deter them from following a passion of yours.
For example, a student who is required to study engineering could not do well or even finish the course if they are least interested in the subject
However, if the student in question were interested in law, he would make a brilliant attorney and have a successful profession as well as a happier life.
Therefore, a wise piece of advice for parents is to let their kids discover their passion by researching the course’s requirements before making a choice.
After completing their education, you should consider your child’s career possibilities and see if they can find employment to help you pay off the debt.
Ways to Tell Your Child about Education Loan
Research about banks
Make sure to do your thorough research before choosing a bank. Avoid making rash or emotional decisions when applying for a loan.
By conducting an extensive study, you can comprehend the varied interest rates, processing costs, terms, and conditions, etc.
The amount you must repay varies depending on each bank’s interest rate. You will need to spend and repay a certain amount of money for every point in the interest rate.
Verify if your loan’s interest rate is fixed or fluctuating. Making a choice between these rates is crucial since it significantly impacts how you intend to repay your loan and how much your EMI will be.
Borrow only what you need
If you want to take out an education loan for your child, resist the urge to request the utmost amount permitted. If your child has any financial awards, such as scholarships, you should constantly assess how much you have or how much you can afford to support your child’s education.
Decide how much you want to borrow from the bank as an education loan after doing the math for the amount you have.
As a parent, you must help your kids understand that every amount they take will have a specific interest rate levied on it. Hence, it is essential to borrow only the amount they can repay.
Educate your child about the loan
Whether you want your kid to continue their education in India or overseas, you should be aware of the specifics of their current coursework and any loans you have taken out.
A VISA will allow your child to enter a foreign nation but does not give them access to everything. They could be questioned about their intentions and entry procedures at the airport.
Your child should be ready to answer any queries about their course, organization, teachers, tuition costs, loan amounts, repayment terms, interest rates, etc.
Your kid should also be aware of their personal information and information about their families, such as names, birthdates, residences, levels of education, and jobs.
Plan for repayment
Even though interest starts to accumulate from the first month, students may occasionally be given a moratorium or one-year grace period before they must begin making loan payments.
One advantage of this time frame is that, even if your child can pay the EMI after this grace period, you can start repaying the EMIs early and assist your child in paying off the loan more quickly by doing so.
Early investment and saving can help reduce the financial burden that a high-quality education places on families, but some parents may not have the opportunity to do so since they are already dealing with admissions. An education loan could be the best option in such situations.
However, choosing the correct course, university, and financial institution may assist enhance the possibilities of simple loan payback, making the student debt-free sooner rather than later. This is in addition to creating a decent repayment plan.
What is an education loan?
An education loan is a type of loan used for educational expenses such as tuition fees and education-related expenses like books, accommodation, living expenses, and much more. Education loans can be availed for studying only and one of the requirements is an offer letter from a reputed university/college.
Who can apply for an education loan?
The primary creditor is a student. A co-applicant may be a parent, partner, or sibling.
How can I apply for an education loan?
You can visit the Education Loans page on the EduFund website and fill up a simple form. You will get all the details, along with guidance from experts in the field.