Introduction
In earlier times, parents used to save their earnings each year and keep it safe, so that they could put their kids through college. In today’s world, higher education still is expensive like the older days. However, there is the option of education loans, enabling the parents to send their children to the university even if they have little or nothing in terms of savings.
Here is an explanation for people who do not understand the term education loans. It is a loan usually taken by the parents towards paying their children’s tuition fees. It is a big aid to families and students who otherwise might find higher education beyond their financial reach. As per the system, any individual with valid proof of admission into a recognized university by the government is eligible for such loan.
Step 1
Education loans can either be taken by the student or the parents. If taken by the student, the limits are lower but the repayment starts after the student is successfully done with school. This way, the student can repay after graduating and finding a job. The limits of the loan are much higher however, if taken by the parents, but the installments of repayment start immediately.
Step 2
Education loans not only cover tuition fees but also cover the boarding expenses, cost of books and stationary and even the day to day expenses of a student. Many times, the loans even include money for buying laptops or desktop computers that might be required in successfully completing the curriculum. There are a lot of benefits attached to taking such a loan as well. Yes, you read it right;,it might be beneficial in the longer run to study on a loan rather than affording it on your own. The education loans come with much lower interest rates as compared to other loans and thus many times is considered a good debt to have. Also, there are tax concessions offered to parents who take such loan. So, in a way the interest one pays on taking the loan is compensated on some part by the tax savings one might make.
Step 3
For students who pursue education by taking education loans, repayment begins after passing out of the college. There are some strategies that you can implement towards the repayment. You can either choose to repay your debt as quickly as possible or you can consolidate your loan to make the instalments easier. There are both advantages and disadvantages associated with the two techniques. A fast repayment enables you to be debt free at the earliest. However, a fast repayment would mean higher instalments, which might not be a convenient thing considering that graduates fresh out of college might not be making a ton of money to enable them the larger size of instalments. A slower approach is an easy approach and with the lower interest rates, it might not be a bad option to exercise. However, be careful in calculating the total interest you end up paying on such education loans.\
Tips
Thus, keep these things in mind if you are in future planning to take such a loan. These education loans are indeed a very noble method enabling all bright students with an opportunity to achieve higher learning.
