3 myths about study loans debunked

Higher studies pave the way for a fulfilling professional career. Higher degrees help students learn the tactics of their chosen field, apply them in their professions and thus, nudge the human society forward in its quest of progress. But higher studies cost a lot of money. To solve the problem of funding higher studies, lenders offer education loans. In the last decade, education loans have penetrated into the lower strata of the Indian society. But they are still shrouded in myths and misconceptions. In this article, we will debunk 3 study loan myths that students hold rigidly in their minds.

1. The student has to pay margin money while getting a study loan

Many students believe that they would have to pay a little amount of money from their pockets to finance their higher studies if they are taking an education loan. This is true, but only partially. Some banks do ask students to gather this margin money.

But other financial lenders, like NBFCs, offer to cover all the expenses of a student’s education. They offer funds to pay the course tuition fees. They also offer to finance the travel expenses of the student, his or her lodging and boarding expenses in the foreign city, the exam fees, the library fees, the stationery expenses, the laptop expenses and so on.

In short, the student does not have to pay margin money while getting an education loan. NBFCs will cover those costs.

1. Anyone can get an unsecured study loan

Some students believe that they can get an unsecured education loan easily. They can just opt for an unsecured study loan in the loan application form and they will be given that loan. This is not true.

Many lenders have 3 essential criteria to judge whether the student should be given such a loan. Those criteria are the student’s academic record, the reputation of the university and the course he or she has selected and the creditworthiness of the co-borrower. To improve the chances of getting an education loan the student has to perform well in his or her academic life, choose a reputed college and a course that has high earning potential, and get a co-borrower who has a good financial status, credit score and credit history.

Scoring good on these 3 conditions will pave a strong path to acquire an unsecured education loan.

1. The interest is levied on a study loan as soon as it is sanctioned

Students believe that the interest clock starts ticking when the education loan amount is sanctioned. This is false.

The interest is levied on the education loan when the loan amount is disbursed to the university and/or the student. Also, the interest is levied only on the total instalment of the education loan that is disbursed until that time, and not on the whole education loan amount that is sanctioned.

So, these are the 3 myths about study loans and the truth behind them. We hope that after reading this article, you know a bit more about your study loan. All the best!

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