Outlook Money
Education loans help people fund their studies, but poor planning can create stress and financial losses, as well. Understanding these common mistakes can help students borrow wisely and manage repayment better.
Many students accept the first loan offer without comparing other options. Different banks offer different interest rates, benefits, and repayment terms.
Students often overlook whether the rate of interest is fixed or floating, mostly as an oversight. Floating rates can increase over time, which can make future repayment amounts higher.
Taking a loan that is larger than your actual requirement can be a burden on your long-term financial planning and results in higher EMIs.
Some students misunderstand the moratorium period, and assume that no interest is applicable. In many loans, interest applicable still accumulates during the grace period.
Processing fees, insurance costs, and administrative charges are sometimes ignored, which increases the total borrowing cost.
Students sometimes ignore the repayment flexibility, such as prepayment options or EMI structures. Taking these into account could help them manage their finances better.