With ever increasing fees and expenses of educational institutions today, funding the higher education only through savings and income hasbecome an impossible task. Borrowing from friends, relatives or private lenders does not seem to be a good option as the private lenders may charge a higher interest and if there is a failure in repayment it may affect the personal bond and the family relationships as well. Thus, majority of students go for education loan which not only gives a financial backing but also helps a student to keep his respect.
Education loan are offered to students by banks, private finance companies and financial institutions to enable them to meet the costs of a professional programs or higher education. These loans cover the entire cost of education, the living expenses, tuition fees and almost all the expenses that are required by the students. These loans are become a popular option among the students due to the extensive advantages and benefits that they provide.A student has to be very careful and choose the right loan option which exactly suits his or her needs. And to choose the right option an individual should consider some critical factors like the loan amount, education loan interest rate and the loan tenure to consider each of which are described below:
Loan amount: the loan amount is the principle amount which a student wants to avail for pursuing his higher education. It is very crucial that the student should avail a loan amount which he can repay without any stress and worry as this amount has to be paid in monthly installments he should be prepared for the EMI’s that he would have to pay. Although banks and private finance firms provide a good moratorium period and flexible repayment options. However, even if the lenders provides various repayment options the borrower has to pay the principal amount along with the interest charged so It is advisable that a student takes this factor into consideration.
Education loan interest rate: the interest refers to the amount charged by the lender for availing the education loan. Education loan interest rate is expressed as a percentage of the principal amount provided by the banks or private institutions. A student can avail the amount based on the education loan interest rate charged by the bank. This rate of interest can either be fixed or floating. The fixed rate of interest remains fixed over the loan tenure. Whereas the floating rate of interest varies according to the market conditions. However there is private finance firms which offer a low education loan interest rate of 12.75 percent on the study loan so that every student who wishes to pursue higher education can accomplish his or her dream.
Loan tenure: the loan tenure refers to the term or duration for which the student avails the loan. Many private financial firms today provide a grace period on the repayment. They offer a good moratorium period of about 6 months after the completion of the job. However it is important for a student to make the full repayment of the loan to maintain a good credit score and credit history. This is because every banks or financial institution or a private financial firm does a check of the borrower’s credit history and credit rating score while granting a loan to the borrower.
Education loan enables a student to cross boundaries and overcome the financial hurdles which come in their way. Since it is the foundation on which his or her entire future journey of success and new opportunities depends, it is advisable for every student to consider and take proper decisions for each of these factorsas all of them are extremely important and crucial.