Yes, an education loan offers a quick and easy way to kickstart a rewarding academic career without digging into your hard-earned savings. Besides, you collect tax benefits and cement a solid credit history.
All these benefits make it a worthy and affordable investment, but there are also a few challenges to taking a loan for education. Before applying, it is wise to be aware of these education loan challenges to take proper steps and ensure a comfortable borrowing experience.
Let us have a look.
Education finance is often security-backed
While a small amount of loan for education might not require you to pledge collateral or guarantee, a large amount will likely do. This is especially true for loans for studying in international universities and colleges.
Since both secured and unsecured loans for education are available, make sure you conduct proper research and choose the one best suited to your present financial situation.
Mostly approved colleges and courses are eligible
A significant education loan problem is that ranking of an institute can play a role in getting one sanctioned. Fortunately, a host of universities are now acknowledged by lenders, which makes it easier for borrowers to get a study loan, regardless of where they study. However, you must check the status of your college with a lending institution before filling out an application form.
Additional Read: How Has COVID Impacted the Education Industry Worldwide?
High risk for lenders means high rates
The chances of facing default on a study loan are relatively higher than other types of finance. Simply because the job market is uncertain, and the repayment of such a loan is often dependent on whether a student gets a well-paying job or not.
This can often translate into higher interest rates for students. That’s why you must compare multiple loan offers before choosing a lender. With Tata Capital, you can get lucrative interest rates for education finance, starting at 10.99%.
The choice between education or personal finance
Taking a study loan for an Indian college is cheaper than borrowing one for studying abroad. Sometimes, the international tuition fee, housing costs, airfare, food expenses, commuting charges, medical bills, school supplies, and more exceed the maximum amount of loan a lender might offer.
In such a case, you can opt for a personal loan or take both together to cover all your education costs abroad comfortably. With Tata Capital, you can avail of collateral-free personal financing of up to Rs. 25 lakhs.
Additional Read: Can You Take a Personal Loan and Education Loan Simultaneously?
To sum up
Fortunately, the list of problems faced by students for education loans is not that long. And, it should not deter you from opting for finance to pursue your study goals.
If you are already looking for education finance- turn to India’s leading lending institution Tata Capital. We offer personal finance for education at attractive personal loan interest rates and flexible repayment terms.
Get customised loan solutions at relaxed personal loan eligibility. Before applying for a loan to fund your education, click here to calculate your interest payable and potential EMIs.
For more information, reach out to us today!