Education has become expensive, if one aims for a premium institution or an international degree. Student loans can be a big help. Education loans are part of the priority lending category (along with housing loans). Government insists the facility should not be denied to any student who meets the parameters. While taking an education loan is easy, paying back requires careful planning.
1) LOAN DEFAULT - A BIG ISSUE: EMI bounce, outstanding on credit card leads to bad credit score. Education loans come even before. It originates a bureau score for students. Since education loan is on rise over the years, there has been a sharp rise in the number of defaults. Default spoils the bureau score of both students and their parents (usually co-borrower). If EMIs, are overdue for more than 90 days, the bank classifies the loan as a non-performing asset. Borrowers will not only come in the bad books of banks, if the loan amount is higher than lenders secure properties as collateral will be at risk as well.
2) TIMELY REPAYMENT HELPS: To maintain healthy credit score, it is always advisable to make payment on a timely basis. In most of the loan options, one of repayment types for students is moratorium, one can make the most of moratorium by creating an emergency fund for EMIs. Students should have at least 6-12 months EMIs in reserve for recession, unemployment or any political/ economical instability in the country. If one gets good income then it's always advisable to repay loans before time.
3) REPAYMENT STRATEGY: Repayment strategy comprises of many elements such as in-school repayment, working part time, by keep paying interest element of loan. Saving from living expenses, or aim for scholarships, one should know his/her repayment and borrowing capacity.. Timely repayment helps to maintain good credit score which helps students to borrow further in future.
4) IMPORTANCE OF PREPAYMENT:Bureau score is nothing but a goodwill measurement tool of an individuals. It simply tells what one has borrowed and how timely repair.Moreover, Bureau agencies also give positive score in prepayments of borrowing before stipulated timelines. Same imply to students. Student loans if borrowed and timely paid or paid prior to given time, it positively impacts to credit history. And same students plan to borrow in future all loan will be given at a much lower rate of interest and with much fairer terms to them.
Nomad Credit being a marketplace at times struggled to get student loans sanctioned from lenders because of poor or bad bureau score of co-borrower. That had cost to many students their admission to their dream universities. Same has been written in a context so that any aspirational student should never suffer in pursuit of their dream education.