How to get an education loan without collateral for MS in the US

How to get an education loan without collateral for MS in the US

Before we get into the nitty-gritty of how to get an education loan without collateral for MS in the US, let us first understand how much the MS will cost your child. How much money do you need? MS in the US is a graduate-level (master) course done over a period of 18 -24 months. These can be fast-tracked or done over a longer period if the student chooses to do this as a part-time course. The average cost of doing an MS degree typically ranges from Rs. 40 lakhs to Rs. 60 lakhs, depending on the course of study and the institution. This amount can go higher if the student opts for a private university in the USA. Once you decide on the child’s course of study and institute, the task is to get a ballpark on the costs and other travel and living expenses that your child will incur over the course duration. Considering the loans While the public sector and some large private sector banks insist on collateral for such large loans, there are several lenders in the banking and non-banking sectors today who issue education loans of large amounts without collateral. Additional read: How to repay education loans faster? Things to note when taking an education loan without collateral When you take an education loan without collateral here are a few aspects of this borrowing you must keep in mind: 1. Recognized Universities Lenders typically have a list of institutions for which they provide education loans. So you will have to ensure that the institute where your child is taking admission is on the list of most of the lenders. 2. Loans cover different parts of the expenses Some cover only tuition fees, while others may cover travel and part of the living expenses too. So when you are asking about the details, check on these facts. Expenses that are not covered in the loan will have to be borne by you. Ensure you have the reserve finances for that. https://www.youtube.com/watch?v=4gTQkdePOWM 3. Credit history matters In loans issued without collateral, the credit history of the cosigner (typically the parent) is considered. So make sure you keep your credit record clean and positive at all times. Most of these loans will also require a guarantor. You must understand that the guarantor is legally bound to make good on the payment if the student / co-borrower defaults. 4. High-interest rates These types of loans also carry a higher rate of interest ranging from 12% to up to 15% per annum. 5. Processing period Processing time in most lending companies for an education loan of this nature is quite short: 2-5 days. So once you have identified the institute and the course, and have an admission offer in hand, you can start the application process for an education loan without collateral for MS in the US. 6. Check on Scholarships You can also consider exploring the scholarships available for students planning to pursue MS in the United States. This can help ease the burden of your loan. Always visit the university website, and check if you are eligible for any monetary compensation, rewards or waivers that can help reduce your loan amount.   7. A collateral loan without property can be tough to pay off FDs, Bonds, mutual funds investments – all of these instruments are also considered as collateral, depending on the policies of the various companies. While a loan without collateral may seem easier to get in the start, it is definitely more expensive and will put a bigger debt burden on your child. Try to borrow an amount you feel comfortable paying off, be regular with your payments, and look for competitive interest rates before deciding on any one loan plan. Why are capital market investments good for you? The benefit of these instruments is that you do not need a large sum of money to invest in these at one go: which deters most families from investing in property. Small investments done regularly can go a long way in building a substantial corpus for your child’s MS in the US. Before deciding on an education loan without collateral for MS in the US for your child, make sure to read the fine print and interest rates to make a wise choice for your child’s future. Consult an expert advisor to get the right plan TALK TO AN EXPERT
What is education loan insurance? Benefits of education loan insurance?

What is education loan insurance? Benefits of education loan insurance?

Education loan has become quite common for students aspiring to study further for their higher education. But what happens when the loan applicant cannot pay the amount back? The burden of repaying then falls on the co-applicants.  Education loan insurance minimizes the financial risk of the education loan significantly. It provides the necessary backup in case things go south and the loan applicant is unable to pay the loan amount. In some cases, like terminal illness, the entire amount is paid by the insurance company instead of the co-applicants, if the primary applicant has taken the loan insurance.  What is education loan insurance? As the name suggests, it refers to the insurance taken by an applicant on their education loan. The current job market conditions, limited career opportunities, poor campus placements, local economy slowdown, and uncertainty in global economic conditions have resulted in a negative impact on the employment market.  The education loan insurance comes to the rescue if the primary loan applicant fails to repay the loan in dire situations like death, terminal illness or unemployment, etc. It also ensures that the burden of repayment does not fall on the co-applicants.  Finding the right education loan that fits your needs, as well as affordability, is confusing but not when you do it on the Edufund App. The financial team with the app provides the right guidance so that the co-applicants do not have to suffer if any misfortune falls on the primary applicant.  Is it compulsory to buy education loan insurance?  It is not compulsory to opt for education loan insurance as the requirement to do so varies from one lender to another. For loans taken from govt banks, it is not necessary for you to get insurance. However, for some private banks or organizations, you may have to get insurance as a condition to take out the loan.  Most government banks let the applicant decide on the necessity of purchasing insurance on secured education loans.  Applicants applying for abroad education loans processed by private banks and NBFCs without collateral have to buy education loan insurance. It is a mandatory requirement as the lender has not asked the applicant to pledge collateral security against the loan.  Additional read: Debt mutual fund vs FDs What is the amount charged as a loan insurance fee? The amount charged as a loan insurance fee varies from lender to lender as private lenders and government banks have different terms and conditions for the borrowers.  Government banks charge 0.5% to 1% of the entire education loan amount as an insurance fee for secured education loans. They offer loan insurance schemes via in-house loan insurance lenders.  Private banks and NBFCs charge 1.5% and 2% respectively of the entire education loan amount as insurance fees for unsecured education loans. If you are misguided or confused about the education loan insurance terms and conditions reach out to the financial advisors at the Edufund App for a consult at the earliest.  https://www.youtube.com/watch?v=4gTQkdePOWM What is the payment process for education loan insurance? Once the education loan insurance is secured, the first question that comes to mind is whether the applicant will have to pay the required loan insurance fees to the lender immediately.  The best part about the insurance is that it is not required to make a separate payment for the education loan insurance fees as the due amount is adjusted with the total amount of the education loan. For example, if the applicant has applied for an education loan of INR 30 lakhs and the insurance amount is INR 30,000 then the approved loan amount is INR 30 lakhs + INR 30,000 = INR 30.3 lakhs instead of INR 30 lakhs. The burden of paying the insurance amount does not immediately fall on the applicant. The loan insurance fees depend upon the length of the loan tenure and if the applicant wants to lower the loan insurance fees he will have to lower the loan tenure.  Benefits of education loan insurance Education loan puts a significant burden on the applicant because the financial responsibility of repayment is on him. The co-applicant is equally responsible for the total amount if any misfortune befalls the primary applicant. The benefit of purchasing education loan insurance is that the co-applicant will not have to pay the loan amount in case of non-repayment as the burden now falls on the insurance company.  Students who purchase education loan insurance get an additional 0.5% waiver on the loan interest rate. It is a relief for the applicant as the overall interest rates are reduced.  Conclusion The education loan insurance acts as a protection for the co-applicant who will not have to bear the financial burden of paying the loan amount in case of non-repayment.  Applicants who do not have comprehensive knowledge about the education loan process and the related education loan insurance can consult our team of experts on the Edufund App and know about the whole process in detail. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Education loan process for Germany

Education loan process for Germany

An education loan is borrowed to cover the costs of post-secondary or higher education costs of students. Education loans cover tuition fees, textbooks and supplies, and daily costs while the borrower pursues a degree. Germany - A world-class education system Germany is home to brilliant minds such as physicist Albert Einstein and philosopher Karl Marx. International students who decide to pursue their studies can expect to encounter cultural diversity, friendly natives, and a high level of education.  Students would be relieved to learn that the vast majority of public colleges in Germany have now had their tuition costs waived. Students would only be needed to pay an administrative charge at the start of each term. The cost of living in Germany is deemed reasonable, putting less financial strain on Indian students interested in studying abroad. Overseas students will also be allowed to work part-time to help with living expenses, making life even more affordable. Overseas students may work up to 20 hours per week. This part-time work opportunity will help students reduce their living expenditures and provide them with important job experience in their subject of interest. Like most other universities, international students can take advantage of the many scholarship programs mentioned on university websites.  Germany's world-class education system, excellent industrial interface, innovative and research-based environment, and multicultural opportunities make it an outstanding choice for students studying abroad. Student loan for study in Germany Low tuition costs, a high standard of living, quality education, secure and safe environment are just a few of the features that make Germany an appealing study destination for students from all over the world. Germany has something for everyone. International students who want to further their studies may expect to encounter cultural variety, friendly natives, and a high level of education in Germany. Students would be relieved to learn that the majority of public colleges in Germany have already had their tuition costs eliminated. Students would only be needed to pay an administrative charge at the start of each term. https://www.youtube.com/watch?v=4gTQkdePOWM Expenses covered under the education loan During registration, the university will provide you with documentation that clearly states the cost and the total amount required to complete the selected course. Please keep in mind that, while institutions in Germany do not impose a tuition price, students incur other expenditures during their residence in the country that are covered by the loan amount. However, an institution's loan would be purely for educational purposes and would not support personal expenses. The loan amount approved would cover: Tuition costs (if any) Spending on lodging Caution with deposit funds (security) Expenses for travel Study visits and project work. Purchase of books, a laptop, and office supplies Other required costs associated with completing the course Documents needed for an education loan to Germany Education Loans are given to deserving students who want to study in Germany. However, even before the bank can execute the loan amount, the borrower must provide several documents. These are some examples: Admission letter from the college/university A completely updated application form Documents about the cost of study Identification evidence, proof of residence, and the borrower's PAN number Bank records of the student/guarantor/co-borrower Statement of assets for the student/guarantor/co-borrower Proof of income from the student/guarantor/co-borrower Additional read: Best ELSS Funds for child’s higher education Student loans in Germany from 1991 to 2020 From 1991 to 2020, this statistic illustrates the number of students in Germany who received a student loan. In 2020, 465,543 students received student loans, a reduction from 489,313 the previous year. The German academic year is generally split into two semesters: winter and summer.  The actual start and end dates of classes may vary depending on the institution or university attended, along with the nature of the course. In recent years, the number of first-year students has decreased in the winter semesters, possibly due to factors such as altering education laws and specific course acceptability rules or electing to pursue an apprenticeship instead of a degree. In 2020, German institutions issued 236,472 bachelor's degrees. This was a reduction from 2019. The average age of German first-degree university graduates has decreased in recent years, indicating that students are starting and finishing their studies earlier rather than later. The current average age is 23.6 years old. College expenses comparison Here is a list of nations based on the number of students, tuition costs, and average student loan debt. Germany is one of the countries where college tuition is not charged, albeit this varies depending on whether you are a local or an international student. Conclusion German universities provide a diverse range of courses and degrees. In terms of topic areas, law, economics, and sciences had the most students enrolled, followed by engineering.  Managing your expenses is a critical obstacle you must overcome as an international student. It's advisable to start planning your money and how you'll fund your living cost and educational expenses in Germany. Parental income, financial assets, part-time employment, scholarships, and student loans are all options for funding your studies in Germany. Consult an expert advisor to get the right plan TALK TO AN EXPERT
What are Top up education loans? All you need to know

What are Top up education loans? All you need to know

Top-up loans are available for parents/students who have already taken out an education loan. Top-up loans can be obtained from the same bank where you previously obtained an educational loan.  What are Top up loans? The amount supplied to the borrower by a lending institution in addition to the current loan is referred to as a top-up education loan. When a borrower approaches a lender for financial aid to fund, say, higher education overseas, a specific amount is approved based on various parameters. If a borrower applies for a secured loan,' the lending institution will authorize the amount of the loan based on the value of the collateral, which could be land, property, or a fixed deposit, for example. This loan would receive a top-up loan based on the same/different property.  In the event of an unsecured loan, the sanctioned amount is determined by factors such as academic profile, particularly GRE Score, credit worthiness depending on the applicant's and co-credit applicant's history, sources of income, career prospects after completing higher education, and so on. Money is given to the borrower from this sanctioned amount when the borrower needs it. After reevaluating all previously analyzed elements, a top-up loan on this loan would be offered. https://www.youtube.com/watch?v=4gTQkdePOWM Need for Top-up loans With life returning to normalcy post the pandemic, students who'd already put off traveling abroad for further education are now continuing their plans. Currently, the expense of such an education is out of this world. People who have children studying abroad or who want to send their children abroad for studies generally take out education loans to cover the costs of their studies. As a result, if you need extra cash, you could consider taking out a top-up loan to pay for your study abroad. With rising costs, it is common to see parents/students struggling financially. In this case, you can take out a top-up loan, over and above the loan already taken. Furthermore, because the bank already has your information, you will have an easier time getting loan approval. However, authorizing an additional top-up loan depends on the higher loan eligibility. The bank also considers the outstanding amount you may have as a borrower. Additional read: How education inflation can affect a child's future? The calculation for Top Up Education Loan  Let’s see this example, as a borrower when you were qualified for Rs 50 lakhs but chose a credit of only Rs 35 lakhs, you also had Rs 15 lakhs available to you. Furthermore, if you've already paid Rs 5 lakhs from the Rs 35 lakhs, your overall eligibility increases - and you are now eligible to obtain a loan of Rs 20 lakhs more. Institutions offering top-up education loan  Instead of going with your bank, you might check into other choices, including other banks, non-banking finance companies, and education financing firms, which may be able to provide you with a loan at a lower interest rate. If your current bank refuses to approve the increased money requirement, you could check into alternative banks, NBFCs, and education finance businesses. Furthermore, if your present bank declines your additional loan application, you could try to transfer your existing loan to a new loan company instead of accepting a new loan from the new bank. Remember that additional loan approval is subject to the bank's policies, and not all banks offer top-up loans. Conclusion Applying for an education loan to help pay for higher education abroad necessitates careful planning. It requires the borrower to arrive at a precise approximation of the tuition fee and a determined prediction of other expenses, such as the cost of living. However, a student may need to borrow more funds from a bank to make up the difference due to currency rate fluctuations or fee increases. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Personal loan vs Education loan: Which is better for the future?

Personal loan vs Education loan: Which is better for the future?

Higher education has become a necessity in today's competitive environment. And the cost of quality education is increasing every year gradually. Many of us don't plan for such high college fees, and some of us cannot anticipate it. So, to pursue higher education, we need external funds, which can be funded by a loan from a financial institution. Now, the question arises of which loan we should go for, either a personal or education loan. Education loan is not so popular, whereas personal is known by most of the population. An education loan is best suited to meet the expenses of higher education as it is designed to meet the requirements of educational expenses. 1. Interest rates Education loan comes with lower interest rates. Generally, education loans have comparatively lower interest rates than personal loans. The interest on an education loan ranges from 6.85 - 11% annually, depending on various factors like the course you are applying for, college, etc. The interest rates on personal loans range from 10 - 17% annually. Please note that the range mentioned may change, subject to the change in interest rates. 2. Tax benefit When you pay the interest on an education loan, you can claim the deduction for the amount you are paying as interest and get the tax benefit under Sec 80 E of the Indian Income Tax Act. There is no upper limit for claiming the deduction. You can claim as high as you are paying. And you can claim it for a maximum of 8 years. There is no tax benefit on personal loan interest paid to the lender. Additional read: Private school vs Public school 3. Loan amount You take an educational loan for as low as Rs 50,000 and as high as Rs 1.5 Crores, depending on the vendor. But the personal loan amount ranges from Rs 50,000 to Rs 50 Lac. But personal loan amount will wholly depend on the borrower's credit score. 4. Moratorium period This is the period when the borrower is temporarily exempted from paying the installments. The aim is to give students sufficient time to complete the course and find a job. This period is extended from 6 -12 months after completing the degree. The interest is charged on the loan amount as simple interest. In a personal loan, no moratorium period is applied (under normal circumstances). Conclusion Education loans have multiple benefits like a moratorium period, lower interest rates, etc., which personal loan does not possess. Considering an education loan over a personal loan could be the right choice Consult an expert advisor to get the right plan TALK TO AN EXPERT
Collateral vs. non-collateral education loans

Collateral vs. non-collateral education loans

There is collateral vs non-collateral education loans in India. If you have decided to take a loan to fund your child’s further studies securing one is important to advance your child's future. As you do your research and try to figure out which loan is better for your child, it is important for you to keep several parameters related to collateral in mind What is a collateral education loan? Collateral is typically property that you give to the lending bank as security against the loan you are taking. The larger the education loan, the greater has to be the value of the collateral. This works as a reassurance to the bank in case the borrower is unable to repay the loan. What is a non-collateral education loan? When the lender issues an education loan without any security, it is known as a non-collateral loan. In this kind of loan, the bank considers the student’s academic track record and the financial track record of the co-borrowers. Now a lot of parents debate over which of these is a better loan format. The fact is both types of loans serve a purpose. As a co-borrower, you will need to analyze the features of both loan types and choose the one that works better for your situation. ParticularsCollateralNon-CollateralCost of loan7-9% per annum11-14% per annumHow much loan can you getUp to 90% of collateral value, can even go up to Rs. 1.5 crUsually limited toRs.50 lakhsTenure of RepaymentUp to 15 yearsLimited to 10 yearsRepayment periodUsually after 1 year, of course, completion/start of the jobAfter 6 months of job completion, immaterial whether the student has got a jobFlexibilityThe interim grace period before the loan is to be repaid can be extended on request if the student is unable to find employmentThe interim grace period before the loan is to be repaid can be extended on request if the student is unable to find employmentDocumentationExtensive paperwork, with a confirmation of admission to the institute of your choiceMinimal paperwork and admission confirmation requiredProcessing feesA percentage of the loan amountA percentage of the loan amount, but these can be negotiatedProcessing timeAnywhere from 30 to 45 days depending on the documents submitted. The due diligence done to verify the ownership of the collateral is quite stringent10-15 days if all your documents are in order: admission confirmation, the credit history of co-borrowers, credit scores, etcWhat can be offered as collateralProperty with no liabilities, fixed deposits, stocks, bonds, etc- Additional read: Tips to arrange study abroad funding Both collateral v/s non-collateral loans have much to offer the customer. And while on paper, a collateral loan definitely makes a lot of financial sense, everyone may not be able to manage the collateral of large properties or other instruments that the bank may require as security. So it helps to review all the options in the market and pick the one that works best for your specific situation. Whether you opt for one or the other, there are a few thumb rules you absolutely must keep in mind when applying for an education loan.  If you have plans to take an education loan to fund your child’s higher studies, start saving from the early years. Borrowing money should be your backup for the shortfall in your funds. Do not make overseas education plans with the money you can borrow. Financial conditions can change at any point in time, and having your own funds will give you the confidence you need to guide your child to the career option of their own choice. Once you have taken an education loan, your priority should be to save money and pay back the amount as the earliest. Interest rates and rising inflation rates make the amount of your loan repayment variable, and it is easy to get stuck in the debt trap if you do not have a clear repayment strategy. Help your child enter the adult world with as little debt as possible and encourage good financial discipline from the early days. This will stand him/her in good stead in adult years. Last but not least, once you have identified the loan that works for you, do due diligence, read the small print, ask questions and then go ahead and take it. Let this loan be just the stepping stone to a great life that is planned for your child as he/she steps into a whole new world of global studies and learning.  Do not let a lack of funds hold your child back. With a little planning and discipline, you will find several tips to plan your finances well and secure a future for your child’s higher education. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Taking an education loan? Ask these Questions!

Taking an education loan? Ask these Questions!

If your child is planning to pursue higher studies in any professional sphere, you will have to be financially ready to shell out anywhere from Rs. 4-5 lakhs to Rs. 70-80 lakhs, depending on the course, institution, and country of study.  You also need to keep in mind that the banks will discuss the loan amount only after your child’s admission has been confirmed by the institute. Hence it becomes important to have rough estimates to work with, to do your homework well in advance, and understand what your loan eligibility is. List of questions you should ask before taking an education loan 1. Understand your costs Compare the various institutes and their fees, hostel fees, and additional charges, if any. Step One is having a thorough grasp of the total expenses that you are likely to incur across the entire duration of the course. If you are looking at international universities, remember to add travel costs as well. So get that number, and allow for a 5% - 10% buffer for any unexpected expenses. Compare the costs of the few institutes that your child is considering. This will help you arrive at the right estimate while working out your expenses. 2. Check with the bank on what components of the total expenses the loan will cover Different banks have different parameters. Some loans will cover only tuition fees, others cover tuition and hostel fees. Some may even include your travel costs. Make sure you are well aware of what is being covered when discussing the loan amount. 3. Find out what percentage of the total cost will be given as a loan That means the loan will not fund your full expense. Usually, a bank will fund 80% of the tuition fees / total expenses. You will have to fund the other 20% as a down payment. Additional read: Financial mistakes to avoid 4. Check which courses and institutions are eligible for education loans This is an important consideration, as if your institute is not on the list, getting an education loan will be a challenge. 5. Check if your bank needs collateral Most nationalized banks in India and large private banks will require collateral that is 3-4 times in value of the loan you plan to take. Check what your bank is expecting. Additional read: Does education loan impact student loan interest rates? 6. Will the loan require a guarantor? This is a common practice, especially for overseas education loans. It is the bank’s way of assuring the loan is paid back. 7. Find out the loan repayment policy Education loans typically start repayment only after the course ends and the candidate starts work. Banks usually provide a grace of 6 months to one year post the course completion or till the time the candidate gets a job. Do note that this time period cannot be indefinitely extended even if the student is unable to find employment. https://www.youtube.com/watch?v=4gTQkdePOWM 8. What is the loan tenure? The smaller the loan amount, the shorter the tenure.  And this tenure will change subject to the changing interest rate of the loan, so you must track the rates on a regular basis. 9. Is there a processing fee? This fee is usually a percentage of the loan amount. Check on this and see if you can get a waiver. If your loan amount is large, your processing fee will be large too, and you will have to arrange for this along with the down payment that you will have to make towards your part of the loan. Additional read: What are blue-chip stocks? 10. How much of this education loan can I self-fund? If you start investing and planning well in advance, you can actually partially fund the cost of education. This is important as no loan is free money, you have to pay it back, and interest rates keep going up year after year. Check out the College Cost Calculator to see how much you need to spend and how you can save for the future cost of your child’s education.  With some smart planning and investment, you can actually reduce the education loan burden on your family. To know how you can do this, check out our link on savings and investments here. While you ask these questions before you take the education loan, you must also check out if your child is eligible for scholarships. Applying for these well in time and winning the scholarship will mean you will have to borrow that much less. After all, every rupee saved is a rupee earned. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Can you repay your education loans before time?

Can you repay your education loans before time?

For parents who desire to send their children to continue higher education but cannot financially do so on their own, an education loan is certainly a blessing. Many people eventually sell off family belongings, including gold, to pay for their children's further education. With the aid of an education loan, you may preserve these priceless possessions while paying for your child’s education. Few loans for higher education may need collateral, and few won’t. Many education loans from the country’s top lenders are available to pay for different courses. Whatever form of student loan you decide to take out, you must have a reliable repayment schedule in place. By doing this, you or your child will be able to pay the monthly payments without going into default. You've come to the right place if you need assistance managing student loans. Tips to repay education loans faster 1. Advice for managing student loan debt Are you soon to take out a student loan? Continue reading for some practical advice on managing student loans. 2. Select a loan with a shorter term A brief tenure is a fantastic choice for managing student loans. While a shorter loan term can result in higher EMI payments, it will also enable you to save significantly on interest payments. Now, this does not imply that you choose EMIs that are too expensive for you to afford. Instead, go with the shortest tenure you can handle. To figure out how much you can afford to pay each month for your student loan, use an EMI calculator. 3. Pick a suitable repayment strategy Choosing the appropriate repayment option is the best method to manage student loans. You will have several repayment choices from your lender. Pick the option that fits your budget the best. You must be mindful of the duration of your moratorium. You will then be aware of how much time your child has left to obtain employment and save funds before the first EMI is due. Do not forget to consider how much they can expect to make in their first job. You can determine the appropriate tenure and EMI with the help of all of this. Without such careful planning, you can end up selecting an EMI that would be very expensive for both of you. Additional read: How hard is it to get an education loan? 4. Set up automatic payments Missing loan installments might seriously harm your child's financial situation. Their credit score may be impacted, and they may incur late fees as a result. Just ask them to set up automatic withdrawals from their savings account so you won't have to worry about missing payments. They won't incur any missed EMI charges because these payments will be made on time. They will be able to retain a good credit score with regular payments. In turn, a good credit score is beneficial for making future loan applications. 5. Pay off interest during the moratorium Your payments don't start right away when you take out an education loan. They start after the moratorium has ended. The moratorium is a six-month or one-year period that starts when you finish your course. The interest on your child’s school loan starts to build the instant they receive the funding, even if your payments won't start until the moratorium is over. Therefore, it would be good to begin paying this interest while your child is still attending school. The best student loan advice you will likely receive is this. While still in college, your child might want to think about having a part-time job. The money they make from this job can be used to pay off their student loans. Either of you will significantly reduce the total amount that must be paid if you pay off this simple interest before it accumulates. https://www.youtube.com/watch?v=4gTQkdePOWM 6. Make additional loan repayments Did you get a pay raise at work? Or perhaps your relatives gave you some cash as a gift. You might want to think about increasing your student loan payments if you get some extra money. This is a fantastic strategy to reduce the overall payback burden. Making larger payments on your student loan may enable you to pay it off earlier. One of the best pieces of advice for properly managing student loans is this. Check with your lender to see if there are any prepayment charges, though. Before going through your loan application process, you can check the fine print or ask your lender whether there are any penalties. Conclusion The repayments of a loan can be very stressful. You and your child should do whatever you can to make it easier. These points will help reduce the burden on them and help them go through the process. If after this there are any questions, advice, or information you need, EduFund’s team of financial advisors is available to talk to you Consult an expert advisor to get the right plan TALK TO AN EXPERT
Financial mistakes to avoid as a parent

Financial mistakes to avoid as a parent

Financial planning is extremely important so that you have great fortunes in the latter half of your life. If an individual plans his or her finances well enough, then a good corpus can be generated out of it. However, some financial mistakes can make financial planning harder. These mistakes may not be intentional but can be harmful! 5 financial mistakes to avoid at all costs 1. Spending unnecessarily  Most people do not plan their budgets well. It is a thumb rule that everyone should do their monthly budget planning as soon as they get their monthly income. You can keep aside money for necessities like school fees, ration, electricity bills, rent, and so on.   Apart from these things, there are certain miscellaneous costs that are also extremely important. You should keep a tentative amount for that as well. Make sure that you do not spend unnecessarily. If you do go overboard, try to cut off funds in different domains of requirement. 2. Paying off debt through savings  This is considered to be one of the biggest blunders committed in the finance domain. People get a mortgage of 15%, and the return of the savings plan is just 7%. So, people think that it is a good plan to pay off all the debts from the interests that are recovered through savings. You should never be doing that because if an individual takes money from their savings account, then they will tend to lose the interest that is earned by compounding. Furthermore, they will also incur a penalty for taking out money from a retirement fund or fixed deposit. Additional read: Expenses covered under education loan 3. Ignoring the credit score  Ignoring the credit score is the next big mistake that people tend to commit. If you maintain a good credit score, it can help you save a lot of money on interest rates. Furthermore, maintaining a good credit score makes it easier to get a loan, and can fetch better rates of interest when you are buying a personal asset or getting a personal loan.   Inculcate a habit of checking your credit score every six months so that you can have a stable and progressive portfolio. Make changes according to the credit scores which are being offered. 4. Not saving for child education  With the growing rate of education inflation, if you miss out on saving and investing properly for your child’s education, then it might prove to be a heavy burden for you later. Hence, you should make sure that you are setting aside a certain amount every month that is invested in your child’s higher education. Moreover, the pandemic has also led to an increase in tuition fees of colleges in India and abroad.   If you start investing early enough, you will be able to generate a good corpus for your child’s higher education which will ensure no financial burden on him or her. 5. No savings plan for retirement  Retirement is a phase of a person’s life where he or she lives on what has been earned and invested until now. Hence, it is crucial thing to plan and save wisely for retirement. It is best to start saving as early as possible. If you are still young and earn less income, then start small but be consistent and disciplined. Start a SIP for Rs. 100 or a PPF account. The earlier you start, the huge the amount that you will be able to generate.   Furthermore, 15% to 20% of your annual income should go to retirement. This will make sure that you have a good future once you retire and you do not have to work anymore.  These are some financial mistakes to avoid if you want to secure a fine future for your family!   Consult an expert advisor to get the right plan TALK TO AN EXPERT
How tough is it to get an education loan?

How tough is it to get an education loan?

As you look to plan your child’s career and consider their higher studies in a good institute in India or overseas, the question that most parents ask themselves is, how hard is it to get an education loan? Today, education in India has become quite expensive from the school level onwards. Given the rising inflation rate, fees across the board for higher education in reputed Indian and international universities are going up yearly. In this scenario, if you are serious about sending your child to an excellent Indian institute or abroad for higher studies, chances are high that you will be required to take an education loan. https://www.youtube.com/watch?v=4gTQkdePOWM Taking an education loan for a four-year undergrad engineering course from a private institute in India can cost you upwards of Rs. 12 lakhs in tuition fees. The same course in an international university can go up to Rs. 60-70 lakhs, with travel and stay extra. Most parents today opt for an education loan to fulfill their child’s educational and career aspirations. That brings us to the topic of this article: how hard is it to get an education loan? To understand the challenges, you must understand what the lenders look for in an education loan application. What lenders look for while reviewing education loan applications There are several education loans available, as RBI promotes these extensively. So most nationalized banks will offer you these loans. Here is the list of factors they consider when reviewing an education loan application: 1. Financial track record of the borrower and co-borrowers Especially in the case of undergraduate courses, parents as co-borrowers must have an excellent credit rating and must show the financial capability to meet the need for repayment, should the need arise. 2. Guarantor While private lenders may not ask for a guarantor, most public sector/govt lenders do. They require a guarantor, especially if the loan is for a significant amount. Again, the guarantor's credit history will be scrutinized while sanctioning the loan. 3. Collateral Public sector/nationalized banks and several private lenders need collateral to issue an education loan. The value of the collateral is worked out in light of the loan required and varies depending on the lender, but collateral is a must. Additional read: Should you opt for a personal loan for an online Master’s degree? 4. Institution of study This is another crucial aspect for lenders. Most leading lenders have their preferred list of universities and courses for which they will issue loans. So, you must ensure that the institute your child is shortlisting is on that list. 5. The academic record of the student An excellent academic record goes a long way in assuring the lender of the child’s seriousness toward education and career. It works as an indicator for them that the student will complete the course for which the loan is being given and will be able to repay the same by building a promising career. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Does education inflation impact student loan interest rates?

Does education inflation impact student loan interest rates?

Education inflation impacts student loan interest rates, however, this impact is not direct or uniform. In inflationary times, the chances of high-interest rates are feasible because the need to cut demand in the market is high.  1. Education inflation rises faster than the standard economic inflation This means that if the standard inflation in the country of your choice is at say, 5% - 6%, in the education segment it can easily go up to 8-9%. This is observed extensively in the education costs in western countries. The reason: excessive growing demand v/s fixed supply. With this trend here to stay at least for the next decade, you would do well to consider its impact on the education loan that you are planning for your child. 2. Understanding the variables in student loans There are two factors to be considered for student loans: a. whom are you taking the loan from; b. What kind of a loan are you taking? Whom are you taking the loan from You can take an education loan from government organizations or nationalized banks in India, or you get one from private organizations: private banks or private funding/finance companies. With interest rates in the first category being lower, these loans are usually more difficult to obtain, as they are several eligibility criteria, including a pre-selected list of institutions for which they will issue the loans. These are the top-rung institutes of any country and not every international student will qualify for the same. Also, they have extensive paperwork. So the application and approval processes in these lenders are comparatively slower. On the other hand, the private players have a larger pool of institutions for whom they will grant loans, and often their eligibility criteria are less stringent. But their interest rates are higher and over the long tenure of the education loans, even small differences in the interest rates can compound and snowball into large amounts. What kind of interest rate are you opting for: you can choose between fixed interest rates and variable interest rates. It is important to note that in India, fixed rates rise slower than variable rates; but they definitely rise. So do not be misled by the term ‘fixed’. Additional read: How education inflation can hurt a child's future? 3. How does all of this impact your child’s education loan? Inflation means less purchasing power: Well, as inflation grows, and interest rates go up, your child’s purchasing power gets limited as salaries do not keep pace with inflation. This puts stress on repayment funds. Missing education loan payments affect the individual’s credit score: This is a serious implication and must be explained well to the child. While the temptation to miss the monthly payments is high, the young adult must be disciplined to make the necessary payments on time. Refinance the education loan: This is a good way to revise the loan terms, especially as most lenders offer waivers when education loans are transferred. This allows the student to negotiate payment terms that are more suitable to his / her current financial situation. And yes, these loans can be refinanced several times.  Start a side hustle: If the primary salary is not enough to cover the loan payments and expenses comfortably, the student should consider taking up a side hustle. This will help ease the pressure, and ensure the loan is being regularly paid up. https://www.youtube.com/watch?v=4gTQkdePOWM 4. Save during the study years and pay up the loan at the earliest While this may seem contrary to the idea of taking a loan, this really is the financially smart thing to do. If you are taking the education loan for your child’s undergrad studies, you will typically have these four years of grace before repayment starts. As a family, you must plan your savings and investment in such a way that by the time your child graduates, a considerable corpus is ready to pay up. This may mean foregoing luxuries and living on a budget for your child during the college years, but it is the fastest way to get your child out of debt. Additional read: Tax benefits of child education fees Why do block payments help? Changing market dynamics and growing inflation pushes your loan repayment amounts ever higher with increased interest rates, extended tenures, and so on. Starting your life with so much liability puts a lot of restrictions on your child’s early career. Instead, putting money away, investing in mutual funds or the stock market, and building a solid corpus with expert guidance from EduFund can give your child a confident start in their career. Choose well, and don’t let the education inflation turn your child’s future into a whirlwind of merely getting out of education loan debt. Plan the finances well, and let your child really fly up to the skies of success. DisclaimerIf you are taking an education loan from a lender in another country, make sure you are aware of the rules and regulations that apply to student loans in that country. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Should you opt for a personal loan for an online Master’s degree? 

Should you opt for a personal loan for an online Master’s degree? 

Post-pandemic online master’s degrees have become extremely popular. If you have applied for an online degree and are finding it hard to pay the fees, then here are some merits and demerits of opting for a personal loan for an online master’s degree!  From top universities like Harvard University, Oxford University, the University of Edinburgh, and Johns Hopkins University to online platforms like Coursera and SkillShare made accessibility to quality education easier and a great way to upskill. While some are free, there are some that charge a heavy fee. Depending upon the course, the average cost of an online master’s degree can go up to $29,000 (Rs. 23-24 lakhs).   This can be tough to finance independently as most banks do not offer education loans are not offered for online degrees. Some banks like Axis Bank do offer education loans for an online master’s degree. But space is still limited. Maximum banks and financial institutions only sanction education loans that require students to study on campus, and online degrees are not covered by them. Thus, if you are short on expenses, then you can opt for a personal loan for your online master's degree.   What are the merits of opting for a personal loan for online master’s degrees?  1. Zero Collateral   Personal loans are called unsecured loans and they do not require collateral from the borrower to sanction their claims. It is easier to get a personal loan as banks do not need you to give land, shares, or other bonds as collateral to claim. The approval largely depends on your credit scores, income history, and general eligibility or worthiness in terms of repayment. If the bank feels that you are not capable of repaying the loan, they are likely to reject the application.   2. Easy Sanctions  Personal loans verify the candidate’s worthiness, credit history, and financial stability. If you can provide an assurance to the bank that you are able and willing to repay then the banks are likely to sanction your loan faster. In terms of personal loans without collateral, your relationship with the bank, income stability, and financial background comes in handy for easy sanctions.   3. Easy Disbursals  Some banks disburse funds within seconds! Once your loan is approved and accepted, the banks can wire the money to your account immediately. Most personal loans and their lenders pride themselves on immediate and easy disbursements so that the borrower can finance their immediate needs faster. It may not be the case for all types of loans as each has its own processing period.   What are the demerits of opting for a personal loan for online master’s degrees?  https://www.youtube.com/watch?v=4gTQkdePOWM 4. High-Interest Rates  Interest rates vary from bank to bank and to lender. Personal loans are by nature unsecured which means the chances of getting a high-interest rate may be higher. Beware of the interest rates, try to consult multiple banks before starting the application process. Having a good relationship with a bank and a financial history can help you.  5. Stress of Repayment   The stress of repayment is associated with every loan and is not exclusive to personal loans. Most borrowers struggle with repayment and may find it overwhelming at times. Having a stable income or savings that can help you with the process of repayment. The cumulative interest rates and rising prices can make the job tougher but not impossible.  6. Eligibility Rigidity  Since most personal loans are unsecured, they focus largely on your credit score and financial history to sanction it. This can be a merit and demerit because a low credit score could jeopardize your application approval and make it tougher for you to gain the amount you want. Applicants are scrutinized more closely and any flaw could delay the process.    These are some merits and demerits of opting for a personal loan for an online master’s degree! An informed and well-rounded decision can help you pick the right path and help you secure a brighter future. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Benefits of refinancing an education loan. All you need to know

Benefits of refinancing an education loan. All you need to know

What does refinancing a loan mean?   Refinancing an education loan lets a new lender take over the existing loan and pay out the old lender. The new lender typically offers a lower interest rate on your loan, may offer a refinancing bonus, and provide better pay-back terms and service, making the shift attractive.    https://www.youtube.com/watch?v=4gTQkdePOWM Why do students refinance education loans?   Most education loans have a tenure ranging from 5 years to 20 years. During this tenure, the loan rates may change in the market, and the current lender may not pass on the benefits of lower interest rates to the borrowers.    To ensure your education loan has the lowest interest rates, you can monitor the education loan market closely after taking the loan. Even a slight lowering of interest rates can impact the repayment tenure or per month EMI. As your child starts their career and begins to repay the loan, every small amount saved will enable them or them to repay the loan faster.    There are usually three main reasons to refinance an education loan:    To optimize the monthly pay-outs   Lower the interest rate   To change the loan tenure   Additional read: 5 ways to make getting an education loan easier for your child What are the eligibility criteria to refinance an education loan?   To refinance an education loan in India, the student should have taken the loan to pursue graduation or post-graduation degrees from well-known institutes and colleges.      The repayment process of the education loan usually begins once the student has already started earning.   Accordingly, the student should have completed the course and either could have begun the repayment process or be in the process of starting repayment.    The borrower must have good credit history and score, with financial resources in terms of a regular salary to pay back the EMI month after month. Most lenders will also check on the other debt that the borrower may have.    Dos and don’ts of refinancing an education loan   While refinancing an education loan, ensure you do the following:   Do due diligence before rushing in to shift the loan to a new vendor. In India, refinancing a loan may invite charges from the old and the new lender. The Old Lender typically charges a foreclosure penalty, and the New Lender has processing charges upfront that will add to the overall payout. Before deciding to shift your lender, check on the additional costs that the refinancing will invite.   Monitor the education loan market carefully. Changing rates can impact the total amount payable by you considerably. When you find the market rates dropping, you can speak to your existing lender to refinance your existing loan at the current rate or connect with a new lender for the same.    Opt for a fixed interest rate, and explore the possibility of a student loan refinancing bonus. These amounts can considerably impact young students starting out in their careers.    If your child’s refinancing application has been rejected initially due to low salary / insufficient funds, a promotion or salary increase can make them eligible later. Ensure your child uses these career developments smartly to refinance the education loan.    Instruct your child not to default on the student loan as it impacts the individual’s credit score in the long run. Poor loan repayment habits will affect their chances of getting a refinance and even new loans in the future.    To see how a change in interest rates will affect the monthly pay-out and tenure of your education loan, check out our Loan Calculator. This will help you understand the benefits of having the education loan refinanced.    If your refinance application is rejected for any reason, you will do well to start saving monies through our various investment options and build your own corpus to settle the education loan at the earliest. Early loan repayment helps you minimize the interest you are paying and keeps your overall payout under control. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT
whatsapp