Facts About Education Loans You Need To Be Aware Of

The cost of education has increased dramatically over the years forcing students to opt for education loans to supplement their college fees. There are a variety of sources from where a student can obtain an education loan. However a student needs to be careful when signing the agreement with any financial institution. Though education loans require one to start repayment once they begin earning, it can still be a burden on the student. It is extremely important for a student to financials beforehand to ensure they can repay the loan on time with ease. Here are a few facts about education loans that one needs to be aware of:

1. Education Loan Interest Rate
It is extremely important for a student to try and get a lower rate of interest on their education loan. This reduces the burden during the repayment process and most students are not able to land a high paying job right after graduation. A lower rate of interest can ease their monthly burden. There are some financial institutions which provide interest free education loans to students. One must apply to these institutions first. Interest plays a huge role in the repayment process. Sometimes a student cannot afford the education loan interest charged. So first try to find an interest free loan, if that fails try to ensure that the education loan you get is at an affordable interest rate.

2. Down Payment
All banks require the student pay a certain amount as down payment on the loan. This money has to come from the student’s own finances as banks usually only provide about 70 to 80 percent of the actual fees charged. This needs to be taken into consideration when a student is applying for an education loan.

3. Earning Potential After Course
Try to find an estimate package of how much you will be earning once you graduate. This will help you plan out your finances better. Also, your earning potential decides whether or not you will be able to meet your monthly EMIs. The EMI you are charged is dependent on the amount of interest the bank has set on your loan. Try to negotiate with the bank to bring down the education loan interest being charged.

Applying for an education loan is a huge step and should be taken with care. A student needs to be confident that they will be able to get a job immediately after graduation so that they can start repaying the loan. It is advised that student s work part time during their course to start saving up for the repayment. This will help them be prepared for situations in which they are not able to meet the month’s EMI. As long as a student plans their finances well, an education loan can be a big benefit.