You know the drill when it comes to arranging finances. If you are planning on taking a student loan, this read will make it easier for you. As per the Reserve Bank of India report, education loans have escalated from Rs. 2,986 Crores in 2003 to over Rs. 48,400 in 2012, with public sector hosting 90% of the loans â€“ Rs. 46,740 . While you are eagerly working towards making it to a good college, you need to be prepared to pay for the education itself. Here is a definitive guide to help you apply for a student loan.
Quantify how much you really need
Before applying for a student loan, be sure to review the financial aid award letter from the school. There are several net price calculators available online which offer a clearer picture about your exact requirement.
Identify who would be a cosigner for your loan application
A cosigner is a person who equally shares the responsibility with the Â to repay the student loan. This could be your guardian too. Whoever the lender is, if you are applying for a loan from a private bank you may need a cosigner, especially for undergraduates or students without a stable credit history. Having a cosigner can improve your chances of getting the loan approved and may even enable you to secure a lower interest rate and speed up the decision process.
Start with the end in mind â€“ borrow as little as possible
Before applying for a loan, keep the end in mind. There are several ways to minimize and repay your debt â€“ working part time, finding employers that pay for education, looking for scholarships or grants etc.
Federal VS private student loan â€“ know your requirement
The common public opinion suggests that government loans are better than private. But another large group of individuals would still prefer a private bank for their loan requirements because of a hassle free treatment and services that such banks offer. Making an extra effort and picking a government bank for your loan will involve a lot of running around, but it will definitely pay off monetarily in the long run.
Pick the right repayment method
Before applying for a student loan, research well about the payment method that suits your requirement. There are several options like income-driver repayment plans or graduated repayment and rushing into a decision will only make it harder later. It can be quite tricky deciding the repayment period. Remember, the longer the time period, the lesser the monthly repayment but that also means youâ€™ll end up paying more in interest.