Education can be expensive. More often than not, parents or guardians cannot afford to cover the cost of the whole stretch of schooling fees, especially after high school. That is when education loans come to the rescue. It is also common for students from well-off families to take loans to fund their studies.
With the current rising cost of education, enrolling in prestigious colleges and universities has become a nightmare to many deserving students. Educational loans help those who secure entry to pay their tuition fees and pay for their upkeep while in college.
The real trouble though is the repayment. You do not want to graduate with massive debts that would cripple you even before you begin your long walk into your professional career.
Keep in mind the following seven things before you apply for an education loan. They would guide the amount you quote, your expenditure and the repayment procedure afterward.
1. Be ready for an interview.
You might be required to appear for an interview so that a bank representative might interrogate your need for the loan.
It would mostly be informed of a discussion and part verification of your identity and academic qualifications. You need to be presentable and eloquent. Have a clear focus on the educational path you want to pursue and how you expect to pay for the education loan after complete your studies.
2. Avoid being extravagant.
Moving to a foreign country for education can carry one away. Do not let this excitement break your bank. Be watchful of the difference in exchange rates.
If the exchange rates are high, research on ways to cut cost. For example, opt to borrow books from the library. This method will aid in lessening out your loan settlement burden at the end.
3. Do you need all that money?
Private Banks let students take massive loans. Lending more is mainly because private lenders create the most profit on delayed payments and defaulted student debts.
Before you borrow more than you need, consider getting a part-time job. Cautiously assess what you need. If the lender is offering you more than that, know that you have can quote less with valid reasons. It won’t pose a problem at all.
Just remember, everything that is lent to you must be paid back, and with interest I might add. Try to secure only what you need, at a favorable interest rate. This may eliminate the need to refinance your student loan down the road.
4. Lengthy means more, and Short means less.
After you finish your studies, you will need to pay your education loan.
The earlier you start paying off your debt, the faster you will finish paying it.
A more rapid settlement of education loans means spending a smaller amount of interest. However, many people prefer making small payments of their debt over a longer period. You have to pay considerably less interest over the years and save the extra cash for something fruitful.
5. Is the Loan really necessary?
Do you need a loan? Will the amount of money you expect to make from your career be sufficient to repay your student loan?
For instance, some lesser paying jobs may make you regret taking a huge loan.
Before you borrow an education loan, do the math to establish how long it will take you to settle that loan. Also, think about the regular salary you are meant to make in your occupation.
Finally, resolve whether or not you are prepared to pay back the loan in arrears for that period. There are many sites online such as elcloans.com that can give you great insight on why you should seek a loan and what amount to quote for your needs.
6. Is the interest charge variable or fixed?
In most cases, fixed interest rates are higher than variable interest rates. But there is a reason for this: you end up taking all of the interest rate risks.
In many situations, we know that interest rates will go up, but we don’t know when. So this is an opinion call. Just bear in mind, when the rates get high, so does your payments. And, in a high rate setting, you will not be capable of refinancing to a better option (since all rates will be escalating).
It is advised to fix the price as much as feasible, if not, make sure that you can pay off your loan in a short period.
If you imagine it will take you ten years to pay off your debt, you don’t want to rely on the next ten years of interest charge. However, if you think you will pay it off in 5 years, you may want to take the bet.
Some providers with up-and-down rates will limit them, which can help curb the risk.
7. What are the job opportunities after school?
When one goes to school, they expect a better salary package, right? Therefore, one ought to consider the chances of securing a good job after completing their course.
A student should know the lowest amount of salary remuneration they are likely to get after finishing their studies. This will give you a realistic picture of how you will repay your loan.
Most institutions promise highs salary jobs to entice students. In the real sense, these figures are often exaggerated, representing only the best job packages and not average opportunities that are more abundant.
Moreover, some college degrees such as humanities courses do not offer high salary packages for new guys in the industry. Therefore, one might have trouble in repaying their loan installments if they apply for these courses.
In conclusion, we can all agree that education loans are the most sought after means of supporting one’s education.
Clearly, it is important to think through the process of taking an education loan. Students could benefit a lot from the steps we have discussed above. Do not get caught up in difficulties in spending and repayment.