Many parents find themselves burdened by higher education costs, more so when their kid wishes to study abroad. What's more, the cost of studies has shot through the roof over the last few years. In the US, an MBA from a premier institution or an Ivy league school can cost up to Rs 1.5 crore! Parents find themselves torn when it comes to finances and this critical financial goal. However, youngsters now are also becoming independent and want to fund their higher education even if their parents have the money.
The Cost of Education
Since student loans do not come with any benefits, if one does not want to be indebted to the bank, he/she needs to use personal finances wisely to ensure that he/she can afford it. Being completely honest and practical, here are some tips that are required before one starts getting an education loan. Examine Your Earnings One must have worked hard at school to get into a prestigious institute. Before you opt for a loan, it is important that you assess the kind of job you wish to get, and get a reliable and detailed job offer from your current company. If you are pursuing a degree from a reputed university or college, you must get the internship/work experience from your current company so that you can land a highly competitive job once you complete your studies.
International Education Loans
International education loans are one of the best financing options for youngsters who want to study overseas. This is true because international education loans can provide considerable financial relief to both parents and kids. While the college fees has to be paid upfront, the money taken as the loans remains unsecured and there is no initial deposit. The only condition is that the loan should be repaid over a specific period of time, typically eight to ten years. The interest rate varies from bank to bank, but at a conservative rate of 11 per cent, this can prove to be a very lucrative alternative to fund your child's higher education.
How to get an Education Loan
So what's the best option? The answer lies in an education loan that is given by the financial institution you plan to avail the loan from. As is the case with most financial products, education loans can be quite complex. However, it is easy to understand them and for the purpose of this guide, we will explain a few common terms and you can use this knowledge to your advantage. The Borrower A borrower is someone who takes an education loan. The borrower takes this loan in his or her own name. As a matter of fact, the borrower has to prove that they are the one to whom the loan is being taken. The Lender The lender is the financial institution that provides the education loan. They are the entity that will provide the money to pay the loan installments over the life of the loan.
What are the Benefits of an Education Loan?
For many youngsters who choose to pursue a higher education, the time it takes to get it done, as well as the cost of the same, puts stress on their parents. But, if they can help financially by availing a loan, the burden of the same can be eased. Education loans are being offered in several ways and here are the major reasons why students should avail education loans to fund their higher education. Borrowing Costs are Minimised When you take out an education loan, you are required to repay the money back in a very fixed time, often within a specified period of time. This ensures that the amount to be repaid is not very high and you also benefit from reduced interest rates. Another plus point of taking a loan is that the interest rate is not high as it is for other sources of finance.
Conclusion
Student loans are more than just a bank loan, as long as you repay, you keep the loan and if you do not, you will have to repay the principal amount after 30 years. For most universities, the student loans are free of cost, while it is the loans of hostel fees and food which have an interest rate of around 15%. Generally, these loans are available in 5-10 year terms. Loans of up to Rs 15 lakhs can be taken by post, online, or through mutual funds, according to your financial capacity. Moreover, you can also get Education Loans at very affordable interest rates through ADF.
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