new Delhi. Education Loan: Expenditure on education is increasing day by day, especially on higher education. It is not easy for a middle-class family to add up all the money for higher education. That’s why many people take education loan for higher education of their children. Nowadays its trend has increased a lot in India.
It is very important to take care of some things before taking loan for studies. Therefore, education loan should be taken only after thorough investigation with utmost care. Doing this will not only make it easier for you to repay the loan later but will also save you money. Let us know what things should be kept in mind while taking an education loan.
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It is important to know how much loan is required
There are many types of expenses involved in taking admission in any course. The main in this is the cost of course fees, hostel or living expenses, the amount spent on books, laptops etc. Therefore, before taking a loan, all these important expenses should be properly assessed and apply for the loan only later. The loan amount should be such that it can cover the entire expenditure. Loan up to Rs 10 lakh is available for domestic courses and up to Rs 20 lakh for studies abroad. Large institutions like IIMs, IITs and ISBs also get more loans for studies.
Determining loan repayment period
In addition to the duration of the course, financial institutions also offer an additional moratorium of one year to repay the loan. No EMI is to be paid during this period. Usually, when you start paying EMIs, you get a repayment period of 15 years. The interest starts from the day the loan is availed. The bank can extend the moratorium period by two more years. Considering all these things, one should choose the repayment period of education loan very carefully so that there is no problem in repaying the loan further.
how much interest will be charged
The interest rate of education loan is an important factor which must be taken care of while taking the loan. The rate of interest depends on factors like course, institute, past academic performance, credit score and security of the student/co-applicant. Apart from this, the interest rates of different financial institutions may also differ. During the moratorium period, interest is charged at simple rate and thereafter at compound interest rate. Therefore, before taking a loan, the information about the interest rates of all the banks should be taken well.
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Calculate future earnings
Knowing the placement history of the course and institute you are taking admission in is a must before taking an education loan. By doing this you will get a rough idea whether you will get a job after the course or in the middle. Along with this, it will also be known that how much salary will be received. Once you have an idea of placement and salary, it will help you calculate your monthly income and EMI accordingly. Apart from this, choosing the loan tenure will also help.
Tags: Education Loan, Personal finance
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