The nationwide lockdown due to the current pandemic situation has severely disrupted the Indian economy, causing job and salary cuts across various sectors. Moreover, experts foresee a sharp dip in new jobs, as most companies are in no position to hire. In this scenario, students who have availed loans for higher studies and are waiting for placements to start repaying their loans find themselves on a sticky wicket.
If you have taken an education loan and are anxious about the impact of the lockdown, or are in two minds about applying for a new loan to continue your education, here’s a look at the options available to you:
Is it advisable to take a new loan for higher education in the current situation?
Typically, enrollments increase in the education sector whenever the economy is adversely affected. The reason behind this is that upskilling can be an effective way to survive a recession. Hence, instead of fearing for your job stability when the economy is spiraling downward, you should focus more on pursuing a course while the financial system recovers.
Recession cannot reduce the value of education from a reputable institute. Thus, the current pandemic might be the best time to apply for student loan and hone your skills to succeed in a slow job market.
How do you repay a student loan while facing an income crunch?
If you apply for the loan from a lender offering a flexible EMI scheme, you can repay your monthly installments as per your financial condition. While your income is low, you can opt to pay a smaller sum and increase your repayment amount when your economic situation stabilizes.
To find out how much you might have to pay monthly towards your loan, you can use an online education loan calculator and plan your repayment schedule accordingly.
Will the suspension on loan repayments announced by the Reserve Bank of India (RBI) help with education loans?
RBI has provided interim relief from income losses due to the lockdown in the form of a three-month moratorium on all term loans. Student loans are extended as term loans, and the moratorium applies to all repayments falling between March 1, 2020, and May 31, 2020. If you are facing a financial crunch due to the ongoing economic slowdown, you could consider taking advantage of this.
However, you should keep in mind that the moratorium is not a waiver. Your lender will continue levying interest on the outstanding amount for the deferred period. You will have to pay the accrued interest when your payments resume, and in effect, the cost of your education loan will increase. Hence, unless strictly unavoidable, you should try to continue paying your monthly installments throughout the lockdown period.
Additional Read:- How To Save Tax On Education Loans
If you want your career to be recession-proof, you can consider opting for a loan and upgrade your aptitude with quality education. Tata Capital offers education loan to pursue higher studies in India or abroad at affordable interest rates. You can apply online and acquire the funds for improving your chances of finding employment when the economy rebounds.