“There is virtue in work and there is virtue in rest. Use both and overlook neither” –…
Does the thought of taking an education loan sound overwhelming? You are not alone!!
College students often look like they are set out to rule the world. These young, driven and relentless minds exude confidence and passion as they are educated and ambitious, until they are hit with the reality of hefty education loans!!
With the cost of education skyrocketing, education loans have come to play a pivotal role. While it is easy to take a student loan, managing and paying it back requires careful planning. If not managed well, it can turn into a burden.
All this, which students see as being imminent, brings to mind many thoughts. It is easy to sit alone and let your mind wander, but what about finding a solution for it?
Start with adequate research
For starters, track down details of the required loan. From the required loan amount to trending market rates of interest, you need to be acquainted with it all. Below are some important pointers to help channelise this research:
- How much are you planning to borrow
- Fixed or variable rate of interest
- The issue date on your loan and whether an upfront fee is to be paid
- First payment date and grace period
- Term of your loan
This research would give you a clear and wider picture of your monthly EMIs.
Track down your loan provider
Besides thorough research, make sure that you know exactly who you are considering taking a loan from. Stay in touch with your loan provider for any related updates and queries. Every time you update your contact details, ensure to share an updated status of the same to your lender. Not doing so can end you up with the risk of missed payments.
Consider paying it off during your course period
Student loans come with a grace period, meaning that you do not have to make payments during this period. A grace period can range from six months to when you finally bag a job. You can utilise this by swinging small or interest-only payments to cut down on your monthly instalments for the future.
If you are able to pay off some part of your loan while studying, perhaps from a part time or freelance job, this will ease out the inevitable burden you might feel paying it off after college.
Be careful about how much you borrow
Avoid being saddled with unneeded debt and only borrow the amount you need. Even if you are offered a certain amount in your financial aid letter which exceeds your requirement, you are not obligated to take the entire amount. By keeping the borrowings to a minimum, you will be out of debts sooner!
Understand the repayment options
The repayment plan you choose for yourself at the initial stage does not have to be the repayment plan for the entire term. There exist multiple options from standard plans, income-driven plans to extended payment plans. This flexibility proves beneficial when you need to lower the monthly instalment amount due to limited income.
However, this part of the entire process requires a lot of research and understanding of how your lender works. It is crucial to understand if your lender provides such facilities or not and if yes, what are the clauses?