Four options to initiate your education loan repayment

Many financial institutions in India offer education loans for students to pursue higher studies either within India or abroad. Most of these loans are designed to cover 100 per cent of the students’ cost of education. The costs they cover include the students’ full tuition fees as designed by the college or the university; around 75 per cent of his living expenses including the cost of his books, laptop and other study material, etc., his caution deposit, building fund and refundable deposit as supported by the university.

Students can repay these loans within 1-10 years. They are also granted a grace period of 6 months after completing their course and 3 months after landing a job to initiate the education loan repayment process. They have the following four options to repay their education loans in India.

Interest servicing during the course

One of the first ways for students to initiate their education loan repayment is by beginning to pay the loan EMI immediately after receiving the first instalment of the loan amount. In this option, the EMIs change after the receipt of every instalment and are calculated on the basis of the total amount disbursed till the last date.

Partial interest servicing during the course

The second option for students to initiate their education loan repayment is to pay a part of the simple interest on their loan immediately after receiving the first loan instalment. In this option too, the payable interest changes after every instalment and is based on the total loan amount disbursed. The balance interest is added to the principal loan amount after starting the EMI payment.

EMI repayment during course

Students can also repay their education loans by beginning to pay their EMIs immediately after receiving the first instalment of the loan. In this process, the payable EMIs change after receiving each subsequent instalments of the loan.

Step-up EMI facility

In this facility, a student begins his education loan repayment by initially paying a lower EMI in the first few years of his loan duration and gradually increasing the EMI as per the progression of the loan tenure. Repayment in this facility is divided in two three phases; primary, secondary and tertiary. The EMI amount in the primary and secondary phases can be chosen by the student, while the EMI in the tertiary phase is auto-calculated by the lender.

These four methods to repay their education loans are offered to students by all leading financial institutes in India. Students can repay their education loans in India by using any one of their preferred modes of payment including issuing a post-dated cheque, issuing a cheque of the current draft, issuing a demand draft, transferring the EMI through NEFT or RTGS, etc. They can pay the EMIs of their Education Loans in India either by taking up a part-time job during their course or study or by getting an internship during their summer vacations.

Repaying an education loan can become bothersome if students are not aware of the ways to repay it. We hope the above information enlightens them on the options they have to repay their education loans.