How Not to Make Educational Loan a Nightmare?

By siliconindia  |  Tuesday, November 29, 2011

Bangalore: Many students hesitate to continue their further studies fearing that their family won’t be able to afford the expenses. But, with the availability of educational loans, students find it easier to make their dreams realistic. Almost all the banks offer educational loans to students who aspire to continue their studies. But the repayment of the loan immediately after the completion of the course leaves a heavy burden on their shoulders. Even if you don’t complete your degree or doesn’t get placed, you are bound to pay back the money. Otherwise the consequence will be serious.

Tips to reduce the burden of education loan

  • Apply for a loan to meet the essential requirements only instead of taking a huge amount unnecessarily. Try to meet the hostel fees from your personal account. As the amount of your loan increases, so does its interest.
  • The interest rates on education loan vary from bank to bank. Gain maximum information on the interest rates of different banks and choose the one with the lowest rates.
  • Before signing the loan application form, go through the terms and conditions carefully. Sign it, only if you are confident that you will be able to pay back.
  • Pay your interests regularly without any delay. Otherwise the amount will start to accumulate.
  • Apply for scholarships. If you are able to find a sponsor who can pay for your tuition and hostel fees, that is the best option.

Ways to postpone your repayment

Deferments: In deferments you are exempted from repaying for a specific period of time. This is granted in cases of unemployment or other economic problems. You have to apply for a deferment to your loan provider and continue paying the interest until deferment is granted.

Forbearance: In cases when you are ineligible to get deferments, you can apply for forbearance. The lender allows postponing or reducing your payments, but you will have to pay the interest. They are granted in 12 month intervals.

Other options like economic hardship deferment, military service deferment and post-active duty student deferment are also available.

 

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