Myths and Facts about Education Loans in India
There are many myths about Education Loans in India that often leave students very confused and frustrated. They ponder over decisions repeatedly to make sure they have made the right decision. It is, at times, impossible to tell the difference between myths and facts, and it is very important to go through each one and make an informed decision. It is also crucial to explore all the Education Loans offered to choose the right one for you.
What are the myths and facts?
Myth- The terms and conditions for Student Loans are the same no matter what course you choose.
Fact- This is incorrect as the student applications are processed by Education Loan financers who give the loans based on the student’s academic scores, country, university , course, parent , collateral if required and much more. Each loan is unique.
Myth- Education Loans cover only tuition fees.
Fact- This also doesn't seem right. Education Loans to study abroad often cover not only the tuition fees but also living expenses, books, periodicals, and at times, travelling.
Myth- EMIs begin soon after you apply for the loan.
Fact- This is another incorrect statement as EMIs usually start after a grace period, which ends a few months after graduation or when you start your employment.
Myth- I have secured a loan, so I will not be able to apply for a scholarship!
Fact- An Education Loan endorsed by the Bank does not affect any scholarship you may wish to apply for, as they are authorised by universities, private companies, or the Government.
Myth- Self-funding is a better option.
Fact- While choosing whether or not to apply for an Education Loan completely depends upon the student, it may be better to get some financial aid than using the funds that can be saved and used in the future. It helps the students build a good credit score while studying which can help him take other loans for starting up their own business or even a home loan etc plus their parents can enjoy the 80 E tax benefit
Myth- Education Loans do not affect your credit score.
Fact- This is untrue, as your repayment record can help you build a strong credit history for your financial future.
Myth- Loans are more expensive abroad.
Fact- Loans are cheaper while working overseas. This is because students who study abroad have a higher chance of getting a job in the country they have studied in. Thus, they have a chance of earning in foreign currencies, most of which have a higher value than the Indian rupee, lowering the amount to be paid off.
Myth- There are Education Loans free of interest.
Fact- While the Education Loan interest rate varies from one Bank to another, the average rate is 8.68%. While there are no Education Loans free of interest, In India, there is a chance that you can nullify the Education Loan interest rate by applying for 0% interest scholarships or Government financial-aid schemes.
The terms and conditions vary for each student as each has unique requirements and qualifications. Education Loans to study abroad cover not only the tuition fees but also many other aspects. Choosing to apply for an Education Loan helps you save for the future and helps build your credit history for your financial future.
Working abroad after graduation will make paying back your Education Loan cheaper, as you are earning in a foreign currency. The Education Loan interest rate can be cancelled out or reduced by applying for various subsidy schemes and scholarships. To get help, contact us.