An Education loan is the money borrowed from banks and financial institutions to manage education-related expenses. This type of loan helps bridge the gap between the required amount and the shortfall, thus helping you pursue and achieve your educational goals. An education loan can be availed by students who want to pursue higher education either in India or abroad.
The primary borrower of the education loan is the student along with his parent or guardian as co-borrower. An education loan can be availed to fund full time, part time and vocational courses. An education loan can not only help fund your education, but also helps you save on taxes as well as reduce the financial burden on families.
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Educational loans need not be repaid during the course period. The loan can be repaid after the course is over. Some financial institutions provide a moratorium period of 6 months to a year to secure a job and make the repayment process easier. The full repayment period ranges from 5-7 years. Throughout the period, the bank charges a simple interest rate on the loan. The payment of simple interest during the course period lowers the EMI burden on the student for future repayments.
SEE ALSO: Education Loan Procedure
A badly managed education loan can lead to cash crunch and economic misery. Education loan helps students across economic backgrounds avail funds and strive for quality education which helps achieve career goals. In the past students who were able to secure scholarships could finance their education. With the increase in prices of different courses and up gradation in bank policies, a student loan has become popular among the masses. However, a borrower must also have the necessary information on the education loan repayment and must know how to manage it.
Remember never to misuse the moratorium period. The moratorium period is not an interest-free period and so the interest keeps on accruing for this period along with the already existing loan. Therefore it is wise to start repaying the education loan as soon as possible and build a good credit score.
Given below are some useful tips for education loan repayment:
SEE ALSO: Paying off Education Loan in India
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