Education Loan: What Are The Things To Consider For Repaying Education Loan?

Education Loan Repayment

Students view education loans as a liability. But they ignore the fact that all these worries can be overcome if a little thought and planning are done before choosing a loan.

Education Loan Repayment


Education loan repayment: Education loan is taken for higher education from India or abroad. The primary criteria for obtaining an education loan are the student's scholarly history, ability to pay, and future prospects for employment and earnings. Loans reduce the burden on parents for their children's education. But loan repayment can be a concern if they are not smartly planned for repayment. Many Indian students see education loans as a liability. But they ignore the fact that all these worries can be overcome with a little thought and planning before choosing a loan.


Loan repayment period

After knowing the number of EMIs to be paid to repay the education loan, the next question in the mind of the student is, do I have to repay the loan while studying? Students who take education loans are entitled to a moratorium period. The borrower is not required to repay any loan during this period.

The loan repayment period usually starts from 6-12 months after you complete your course or when you get a job. Different Banks - Institutions give different periods to the applicants to repay the loan. You have to repay your loan through EMI.


How can a loan be repaid?

  1. Internet Banking: Payments can be made online through the lender's website or mobile application.
  2. Check: Payment can be made by check at any branch.
  3. Direct Debit: Recurring debit payment can be set up directly from your bank account for your EMI on the due date of payment.
  4. Demand Draft: Payment can also be made through DD.


The process of repaying an educational loan

Paying an education loan is not a complicated process. All you have to do is contact your bank manager. Which will take note of your account details and start paying on auto deduction mode. The process of repaying an education loan depends on the policies set by the various lenders.


Period of repayment of education loan in government banks

Almost all government banks offer a period of 12 to 15 years from the end of your moratorium period to repay the education loan. This time begins once your loan repayment moratorium is complete.


Procedure for loan repayment in NBFC

NBFC (Non-Banking Finance Company) is the largest lender of unsecured education loans. As NBFCs are private lenders, their payment process is slightly different from that of government banks. However, their mode of operation is based on RBI directives. NBFC has customized the method of processing education loans.

NBFC offers a moratorium period on repayment of education loans like government banks. However, this relief is not available to unsecured education loan borrowers for studying abroad. So the unsecured loan taken from the top NBFC starts repaying immediately. Students have to pay interest to NBFC during the moratorium period. Of course, NBFC accepts partial payment of interest during the moratorium period.


Is there any benefit in paying interest on early payment of education loans?

Two years ago, the education loan repayment support scheme was running in government banks. Candidates were entitled to a 1% discount on full interest payments during the moratorium period. However, the scheme was discontinued. However, if the applicant can repay the loan amount early, he can repay it. However, there are some fees involved.


Part-payment of education loan

Beneficiaries of education loans can pay part of their education loan. You can repay the amount together to make a partial repayment of the loan.

It is worth mentioning here that it is necessary to analyze one's financial condition while making part or prepayment. Can you pay full or partial interest during the moratorium period? It should be accounted for. With this in mind, they will get a clear picture of their financial responsibility and ability to pay.


Consider education loan subsidy schemes

The Ministry of Education provides Education Loan Subsidy Scheme to the economically weaker class (EWS) students. Students whose family's total annual income does not exceed Rs. 4.5 lakhs are eligible for these schemes. The central government and many state governments also offer subsidy schemes to make education loans more affordable.



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