Whenever you talk about inflation and rising prices, the first reference is given to the prices of petrol, diesel, vegetables and everything else that constitutes the monthly ration. But these are the expenses which can be cut or reduced depending upon the depth of your pocket. However, there are some expenses which are inevitable, and rise is the prices of such expenses prick the pocket in the worst way. One such expense that has been continuously disturbing the monthly household budget is the rising school and college fees! Gone are the days when the monthly school fee was in 2-3 digits. These days, even the not-so-elite schools charge a monthly fee in 4 digits, while the 'elite' schools ask for a 5-digit figure as their monthly fee. While most of the middle class households somehow manage to meet the school expenses of their kids, the towering college fees leaves them with no other option but to go for an Education Loan.
- Education loan means Free Money? Wow!
- Beware! It is not free! You would have to pay much more than you take!
While Education loans seem like the best way out for the middle class families to 'send their kid to a good college so that they can boast of in front of their ever jealous relatives', these E-loans can turn out to be a terrible ulcer if you don't take some necessary precautions. Here is a checklist of everything you must know before you decide to opt of the rosy looking education loan "“
- Even if you see big, attractive banners of Private Banks screaming out 'Low interest Education Loans', you must always go for a Public Bank. The logic behind this is simple "“ Private Banks, being privately owned entities, focus majorly on enhancing their profit, and that profit can only come from your pocket!
- At the time of your loan sanction, the Bank would offer you to include the amount for other 'helpful' amenities such as Laptop and Bike! While it seems an extremely tempting idea at first, you must stay away from such traps. Remember, the higher principal you take, the higher interest you end up paying.
- Pay attention to the numbers regarding your loan. The Principal amount, the rate of interest, the re-payment plan, and every other doubt that you have about your loan must be cleared at the very beginning.
- While the interest rate would be close to 8-9%, but to your surprise, by the time you get a job and start repaying the loan, the amount would have become almost 160-180% of the principal. This is majorly due to the compounding of the interest. The best way to avoid it is to start repaying the monthly interest as soon as you get the loan. Since the student won't be earning at that time, this repayment would have to be paid from the side of the parents. This would ensure that the student isn't burdened with a huge loan amount even before he/she gets an offer letter!
Did you face any troubles with your education loan? If yes, please share them here to help others prepare with the requirements.