Qualifying for a college through an acceptance letter is far easier than organizing requisite money to have it sealed. Attending a college/university will come alive when you’re fully equipped with resources including financials. With a huge chunk of Indians taking on education loans
, paying off college fees has become simpler now! Before taking an education loan, the below points must be given more importance:
- Your loan will be either from Government or Private sources
Different loans come with different terms and conditions, along with sources whether govt or private. Government based initiatives can be pre-defined based on the interest rates and restructuring schedule. This is also based on the income bracket and willingness to spend. However, private companies are bettering their services to deliver. It is also advised to touch upon government options before exploring private offerings.
- Short tenures mean manageable interest components
When you’re repaying personal loans, it’s better to pay off at the earliest instance. The more you delay it, the worse it gets. The faster you repay your loan, the better it is to save on heavy interest. Whereas if you decide to pay in smaller installments, then more will be deducted as interest from your pocket.
- Identify your grace period
Grace period is the broad waiting period before the first installment is paid. However, all personal loans do not come with a set grace period which can put your first payment under scanner. A grace period helps if your need time to get a job and prefer to have saved money when required. It is also okay if you do not want to wait for the first payment. An on or before time payment can balance your interest component.
- Deferment when required
As its already clear that every loan is different and installments can be broken down with time. A deferment clause can really be helpful here. Deferment allows you to postpone the principle and interest amount. Understand if you have this option available with you, according to the situations at hand.
- Figure the difference between refinancing & consolidation
Apart from turning debt free, you probably wish to pay lesser every month. So how do we make it possible? Either avail consolidation or refinancing. Consolidation could mean merging all loans and paying just one interest component. Consolidation may or may not result in debt reduction. Refinancing ensures a brand new loan and finish off the existing one. One lumpsum payment towards the newer loan. Conduct a deep research to know what works best for you.
- Is it even worthwhile to have an education loan?
It is not even relevant to dive deep into this chain of questions. However, you must know whether investment through a loan will meet your salary expectations atleast. Let’s say, even before you get paid for a job, its important to understand the return from it. So when you sign the loan contract, do your calculations for better results. Also estimate whether you are joining hands to accept payments for a lifetime! Read More: Pay off your education loan before your 30s