Every year, many students who have obtained their High School Certificate or Undergraduate Degrees are hoping to join and pursue their higher studies in India or abroad. As the higher education expenses are steeping steadily, education loans are becoming one of the most selling products in the banking sector. In order to help students achieve their dreams of higher education, the central government has made it mandatory for banks to grant education loans to any student who is in need of financial assistance. After this announcement, the number of students who are approaching for bank loans to finance their education has increased tremendously. While the students are able to complete their studies, they fail to come up with a plan to repay the loan and hence are forced to carry a huge burden on their backs.

Students and family members who take an education loan should be aware that the process to repay the loan amount does not start immediately. Students are given a moratorium period or repayment holiday immediately after they complete their course or six months after getting a job. While this is the case, most students fail to understand the fact that the banks will start enforcing the interest on the loan amount as soon as it is disbursed.

In order to avoid a heavy burden when paying back the loan, it is advised that students and/ or their families begin to pay the interest amounts during the moratorium period. If interest is paid sooner, there will be a decrease in the amount to be paid through the EMIs and therefore they will be able to gain a concession in the percent of interest. Students, who are studying abroad, can utilize their spare hours to obtain part time work, which they can utilize to reduce their living expenses and therefore reduce the amount of loan on which they have taken. They can also start paying their loan as soon as they start earning, which will benefit them.

A loan becomes a burden when it is unpaid. Therefore, it is extremely important that they also set aside a part of their salary in order to repay the loans. Students can also gain a tax relaxation from Section 80E of the Income Tax Act by taking the loan on their name's rather than their parent's name. A key advice to all the students who decide to take an education loan is to calmly do an extensive research about it and plan the entire process to the pay it back in order to escape the vicious traps that the loans will layout if not paid on time.