Education Loans for Higher Studies in India and Abroad have been in large demand in the past few years as the college fees have significantly increased. However, many parents still believe that it’s better to fund their child’s education on their own rather than availing the burden of an education loan.
Contrary to this, researches have shown that students who take an education loan get more details on financial know-how and tend to show better money management skills in future. Students who don’t have a financial burden on their shoulders often tend to ignore the importance of money and end up spending money extravagantly. These students don’t just waste money but also their time as they don’t need to worry about getting a job to repay the money.
These researchers believe that getting an education loan helps in instilling some self-discipline among students and makes them understand the value of money. Most of the banks like ICICI Bank and NBFCs like Fullerton India charge interest rates in the range of 9-15%. With such high rates of interest, students tend to value money more and start saving it for later on.
Education Loans for Higher Studies help students in many ways apart from just funding their education. Some of the major benefits are:
For most of the students, education loan is the first instance when they indulge in any kind of financial dealing. Students get to know about the process of submitting an EMI and how they need to maintain a minimum amount of balance in their savings account. They understand the various dynamics in financial planning and what is the best way to choose a low or high EMI plan.
Education loan also introduces students to the concept of credit score and why it matters. Most of the lenders in the market consider a person’s credit score before disbursing any kind of loan or money in any form. Thus, with an aim to maintain a good credit score, students plan proper repayment plans for their education loan and pay back money on time. This also helps them in an easy ascent of the financial ladder.
Students will learn money management easily only when it comes totally upon them. In cases where parents fund their child’s education, students ignore this important factor and miss out the opportunity to learn the finances. Students who have an education loan to repay, learn to manage their daily expenditure, savings and repayments efficiently.
Education loans maintain a provision to hold the student responsible for the recovery of money. This gives students a feeling of independence as they don’t need to trouble their parents anymore. They know they are the one solely responsible to get rid of this debt and thus they work in that direction.
The Education Loan industry has grown quite strong in India and is supporting the higher education dreams of thousands of students. With multiple benefits to offer, education loans build a spirit of responsibility in the students.