Education loan sounds an easy option and also respite in the times of difficult but comes along a lot many challenges that drain your energy to an extent that you find such loans as a burden offering you sleepless nights and poor credit history in case you miss to repay them on time.
Here are some of the challenges you might face with education loan in India.
- The interest rates and repayment process for education loan starts after a year or within 6 months of employment whichever is earlier. But what if the student is still without a job or has no repayment capacity. It sounds as a nightmare but it does happen so be prepared for the worse.
- Even if you have secured a job, the salary might not be sufficient to pay back the loan. In case the student fails to clear his/her course. The repayment again becomes a challenge as the EMIs start on the pre decided date but the student is incapable to pay as there is no source of income.
- Security is another challenge for an education loan, a student struggling for financial arrangement for an education loan would most likely find hard to offer anything as collateral.
- Studying abroad is just like dreaming too high and wanting too much even if the loan amount is high for education loan for studying abroad but accommodation, living expenses, etc do not suffice the actual expenses.
- Any loan comes with lots of money management and expense restriction. You cut short on your living to make the ends meet. Education loan is even challenging because it does not take into account your employment status or course completion. It will only extend help until promised and then the repayment journey begins.
Things you can do to ease your challenges of education loan
- Refinance your loan if possible with favourable terms and conditions lower interest rate and friendly EMIs. An unsecured loan can be helpful to repay a secured loan.
- Look for possible exemptions in case the course doesn’t get completed in the given time. Some might extend the repayment date.
- Restructuring is another option to ease repayment of your education loan. If you can afford to pay high interest with extension in loan tenure, then you can gain the ease of reduced EMIs.
There can be any others ways to ease your burden of education loan. Talk to your bank and find out. Don’t take unnecessary pressure. This too shall pass!
Documents required for Education loan
Make sure you have the following documents before applying for a education loan in India.
- Admission letter from the university or college.
- Attested mark sheets of the courses completed
- Id proof
- Address proof
- Proof of income, salary slips, bank statements and ITR of guarantor or parent
- Passport sized photo
- In case of studying abroad, entry permit, admission letter, visa and passport
If the applicant plans to work in abroad then an employment contract is also required.
Education loan can be difficult to repay but it helps you gain higher education and make you capable enough to repay it. How much responsible are you to repay at the earliest is the real challenge you need to take up.