An education loan is a very useful financial tool for students who wish to pursue higher education. Whether you want to study at a premier Indian institution or at a foreign university, you will have to pay a lot of money to complete your course. To pay for this, students commonly opt for education loans.
A common question students have is - how to pay off an education loan without interest. Is it really possible to pay off an education loan without interest? The answer is no, but fortunately, there are some ways in which the interest burden can be reduced. Read on to know more.
Here are the ways to reduce the burden of Education Loan Interest:
Paying off the education loan in the moratorium period
When you take a loan for higher studies, your EMIs start later. This is the benefit of education loans. They offer a moratorium period, which is equal to the duration of your course plus one year. The idea behind this is to allow you to secure a job, become financially independent and then repay the loan you took. However, the question remains - how to pay an education loan without interest?
The smart repayment of education loans plays an important role here. By repaying the entire loan within the moratorium period, you can effectively avoid paying a lot of interest. This is mainly because only simple interest is charged during this period. And, since there is no prepayment charge associated with education loans, you can pay off an education loan and close it at any time without having to worry about a penalty.
Try for scholarships
When looking for a student loan without interest, explore all the different financing options. There are many scholarships available for meritorious students. These scholarships are available in almost every institution globally. If you manage to get a scholarship, the financial burden will be reduced.
Also, you can effectively use the scholarship money (or a part of it) to clear off the interest component of your education loan. Then, rework the schedule for repaying the education loan. This, therefore, works as another very handy way in which you can have a practically interest-free education loan.
Apply for subsidies
The next effective answer to your question is how to pay off an education loan without interest. There is an interesting way in which you can lower the interest burden on your education loan simply by opting for government schemes and subsidies. Though you can't really get an education loan without interest, there are many subsidies available on education loans. These are facilitated by the Government of India, so they are fairly transparent and safe.
If your family has an annual income of under Rs 5 lakhs or if you fall in a Minority or Backward Class, you can apply for these subsidies. The subsidies come in handy and allow you to save a lot of interest money, which proves to be very useful in the long run. Technically, there may not be a student loan without interest. However, you can save money by using a subsidy.
Increase the EMI volume
If you want to know how to pay an education loan without interest, here is a tip for you. If you land a good and high-paying job after you graduate, speak to your lender and change the schedule of repayment of education loan. Opt for a higher volume of EMI so that the loan tenure gets shortened.
The interest component of the student loan is added to your monthly EMIs, so when you reduce the total number of EMIs, you also reduce the total interest amount. This is another good way in which you can reduce the interest burden on your education loan and effectively have a loan without interest for students.
Opting for a personal loan
You can check for personal loan options for education from Tata Capital if the rate of interest is low enough, which can be used to set off the education loan. Personal loans are also beneficial tools that allow you to pursue your dream of studying at a top university.
Listed below are the top benefits you get when you opt for a personal loan to pay for your higher studies:
A personal loan is very flexible. You can borrow the amount that you require without being bound by any rules. Also, you can choose the duration, have a say in the interest rate and fix the EMIs yourself. The flexibility factor in a personal loan makes it a much sought-after financial tool.
- Low interest if the high credit score
You can't get a student loan without interest. In fact, the interest rate on an education loan is fixed. You cannot do anything to change the interest rate that the bank offers. However, the case is quite different for a personal loan. If you have a good credit score, you can get the loan at a lower rate of interest. Therefore, if you have been financially disciplined and have a high and healthy credit score to boast of, make use of it by getting a lower personal loan interest rate.
The process to get a personal loan is much easier than that of getting a loan for students without interest. You can get the loan approved instantly if you match the eligibility criteria. Then, the loan amount will reach your bank account in just a few hours. Additionally, you can apply for the loan online in just a few minutes while comfortably sitting at home. This is very different from applying for an education loan, where you have to make several trips to the bank and submit many documents and then wait for the loan to get approved.
- Convenient repayment structures
As mentioned above, personal loan are very flexible. You can decide on a repayment schedule that suits you. There are many flexible EMI schemes available, and you can go for the one that matches your requirements. Hence, it works as a great substitute for a student loan without interest.
- No need for co-applicants
Last but not least, you can apply for a personal loan without any co-applicant if you meet the financial eligibility requirements. This is a big benefit, as in an education loan, in most cases, a co-applicant is required. Arranging for a co-applicant can be a challenge, and because of this, many students fail to get the education loan they apply for.
Consider taking a personal loan to clear off your education loan or to even finance your course if that is a viable option. This will help if you can't find an education loan without interest.
Conclusion
An education loan is a boon for many students. If you are a youngster looking to pursue a course in India or abroad, you may consider taking an education loan from a good lender. Also, you can repay an education loan after you start earning.
Choose a good structure for the repayment of education loans. Else, you can opt for a personal loan from a reputed loan provider like Tata Capital and pay off all the dues in a quick, easy and convenient manner.
30 August 2022
7 mins read
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