How to avoid the debt trap by taking an education loan to study abroad? What should students keep in mind

Education Loan Process: Every year lakhs of students go out of the country to study abroad. Some go to America and take admission while others go to study in Britain. Studying abroad is also very expensive, as university fees run into lakhs of rupees. Apart from this, the living expenses also run into lakhs of rupees. This is the reason why many people are not able to study abroad. People who have a little money take education loan to meet the remaining expenses.
However, education loan has to be taken very wisely, because many times people get trapped in the debt trap. Generally, while taking education loan, students assume that after completing their studies, they will get a job and then they will easily repay the loan. But on many occasions this is not possible, due to which students get trapped in the debt trap. In such a situation, let us know about the ways through which one cannot get trapped in debt after taking an education loan.

How does education loan work for students in India?

Education loan is given for higher education. The loan usually covers tuition fees, accommodation, books and related expenses. Applicants or their parents approach a bank or any financial institution for a loan, which gives them money. But the money does not go directly into the account, but is given to the university in installments. After completion of the course, six or one year time is given, after which the student has to repay the loan amount.

What mistakes do students make while taking loan?

Many times, students taking education loan choose universities which have low ranking in order to pay less fees. Many times they go to study in such countries, where there are not many job options after studies. Due to not paying the loan on time, the loan amount also increases. Instead of using personal savings to study, some people take a loan. In many cases, students do not read the documents properly while taking the loan.

What is the biggest risk in taking an education loan?

While taking education loan to study abroad, many times students take unsecured loan, in which the risk of default is high. Many times it also happens that students take loans to study in such countries, where studies are affected due to geopolitical turmoil or war. If this happens, the chances of getting a job also reduce and then it becomes difficult to repay the loan installment. For this reason, one should always study in such countries where there are abundant job opportunities after studies.

What is the disadvantage of not paying the loan on time?

It is very important to make the loan payment on time, because if it is not done, it can damage the credit score. If this happens, it becomes difficult to take a loan in future. Many times, if the loan is not paid on time, one has to face legal action, which only increases the stress of the students. At the same time, it also increases their expenses. In many cases, people have to lose their properties if they do not repay the loan.

The way to avoid getting trapped in debt trap?

Students taking education loan should make regular EMI payments. If they start working then they should repay the loan in higher amount. If a student has got a job after completing the course, then he/she should use the income earned from it to repay the loan instead of investing it in luxuries. Budget should be made carefully. It is better to find a part-time job along with studies, through which money can also be collected to repay the loan.

If students are facing financial difficulties then they should contact the lending bank. One should know from him/her about the schemes which can help him/her. While taking loan, students should keep in mind that they take only that much money as they need. You should look for cheap flats while studying abroad. Minimum expenditure should be incurred on eating out.