Education all around the world is becoming more and more expensive. While primary and secondary education is government aided in many parts of the world, college education and higher studies is quite expensive. So much so, that many parents can only opt to send their children to college or university, if they have planned much beforehand and saved enough cash or if they can obtain a loan from a rich relative.
Today, the loan market has become quite competitive, and a number of education loans are offered by various banks to help youngsters pursue higher studies and obtain their dreams. But while getting hold of an education loan is very easy, one has to be careful when repaying the debt.
Here are 4 mistakes that one should avoid when repaying an education loan –
1. One should not borrow more than they can afford to repay- Be extremely realistic when calculating the loan amount that is required. It is quite easy to opt for an education loan, but sooner or later it has to be repaid along with interest. One may not need to pay the loan when in college, but it needs to be cleared afterwards. Keep this in mind, especially before opting for multiple student loans.
2. Do not wait to pay the interest after school is done- Most college students opt to work as well as purse their studies, there is a steady cash inflow. Thus, it is best that one starts paying the interest on the loan as soon as possible. This will reduce the pressure of re-payment later.
3. Do not be carless with monthly payments- While most individuals are aware of the total loan amount they have borrowed and the interest they need to pay, what they fail to estimate is the EMI. The monthly payment can be a great expense if not calculated beforehand. To calculate the EMI on your education loan, use a loan calculator and formulate a repayment plan carefully.
4. Do not loose contact with the loan servicer- In order to stay up-to-date with the timeline of your education loan repayment, always stay in touch with the loan servicer. Make sure that emails, letters and messages from your loan servicer reach you on time. In case of a change of address or phone number, keep the loan servicer in loop to avoid any communication gaps.
While keeping a tab on an education loan may seem overwhelming at first, it should be done in order to prevent any repayment stress in the future.