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Expenditure on education is increasing day by day, especially on higher education. It is not easy for a middle-class family to raise all the money for higher education. Therefore many people take education loan for the higher education of their children. Nowadays its trend has increased a lot in India.
It is very important to keep some things in mind before taking an education loan for studies. Therefore, education loan (Education Loan Detail) should be taken with utmost care only after thorough investigation. Doing this will not only make it easier for you to repay the loan later but will also save your money. Let us know what things should be kept in mind while taking education loan.
It is important to know how much loan is required
There are many types of expenses involved in taking admission in any course. This mainly includes the amount spent on course fees, hostel or living expenses, books, laptop etc. Therefore, before taking a loan, all these necessary expenses should be assessed thoroughly and only then one should apply for the loan. The loan amount should be such that the entire expense can be covered. A maximum loan of Rs 10 lakh is available for domestic courses and up to Rs 20 lakh for studies abroad. Higher loans are also available for studies in big institutes like IIM, IIT and ISB.
determination of loan repayment period
Apart from the course period, financial institutions also allow an additional moratorium time of one year to repay the loan. EMI will not have to be paid during this period. Generally, when you start paying EMIs, you get a repayment tenure of 15 years. Interest starts from the day the loan is received. The bank can extend the moratorium period by two more years. Keeping all these things in mind, the repayment period for education loan should be chosen very thoughtfully so that there is no problem in repaying the loan in future.
How much interest will be charged?
The interest rate on education loan is an important fact that should be kept in mind while taking a loan. The interest rate depends on factors such as course, institution, previous academic performance, credit score and security of the student/co-applicant. Apart from this, there may also be difference in interest rates of different financial institutions. During the moratorium period, interest is charged at the simple rate and thereafter at the compound interest rate. Therefore, before taking a loan, the interest rates of all banks should be understood thoroughly.
Estimate future earnings
Before taking an education loan it is important to know the placement history of the course and institute in which you have taken admission. By doing this you will get a rough idea whether you will get a job after the course or in between. You will also get an idea of how much salary you will get. Once you have an idea of placement and salary, it will help you estimate your monthly income and EMIs. Apart from this, it will also help in choosing the loan tenure.