Tips to opt educational loan

Education sector is growing day by day. Students are finding difficulties to manage the increased fee structure of the the universities. Many students sometimes need to opt for education loan to cover their college costs..

Check out these tips which will help you opt for better loans.

1. Compare financial aid offers: Once you get your financial aid award letters, compare the offers and read the entire document related to the loan.
2. Borrow only what you need: You don't need to apply for the whole amount from the bank. Go through your contribution as well as your financial award to reduce the amount ofeducational loan.
3. Ask questions and follow instructions: Contact a financial aid officer to confirm all your queries. Also, make sure you know the rules and requirements for applying for loans.
4. Look around for more option: If you have decided to opt for private loan, look for other banks such as City Union Bank, HDFC bank, Indian Overseas bank, Axis bank, Oriental Bank of Commerce and others. Compare interest rates, fees and repayment options.
5. Be aware of what you're signing: To make sure you understand loan's terms, conditions and repayment requirements, ask questions like:

                                          How much will this loan cost in total?
                                          What will my monthly payments be?
                                           Is the interest rate fixed or variable?
                                          Can I get a lower interest rate?
                                          What fees do I have to pay?

Benefits of educational loan:

1. It helps student to get admission in the university of his/her choice.
2. Student can pay back the amount in installments, after completing the course.
3. It can be availed in any or all the banks worldwide, via online application facility.
4. The repayment process is pretty attractive as the student can repay after he/she finishes the course and starts working.
5. It helps in saving income tax during the time of repayment.
6. As the interest rates are reasonable, students can get the basic amount as agreed at the time of sanctioning the loan.

Few challenges of educational loan:

1. Students should be given proper knowledge of the loan. Usually, banks promote the loan by talking about its benefits, but don't mention the long-run consequences.
2. Education loan can result in financial stress if he/she does not get a proper job after studies.
3. Usually, due to lack of appropriate knowledge, students get into unsuitable educational loans. Therefore, those applying for loan, should plan the suitability of the loan.