To take care of undue financial pressure when it comes to paying back education loans, experts say students should assess their current and near-future financial situation from the job and income point of view.
During mega-crisis times like COVID 19 pandemic, most people are under serious financial pressure when it comes to paying back any type of loan. Even with the 3-month moratorium for loan repayment offered by banks, the interest needs to be paid, and the same goes for education loans.
To take care of undue financial pressure when it comes to paying back education loans, experts say students should assess their current and near-future financial situation from the job and income point of view. Prashant A. Bhonsle, CEO, Student Loans and Head Marketing, Incred, says “If such students expect salary cuts or job loss, they should find ways to reduce the debt by pre-paying full or part of their loan outstanding. This way their monthly outflow in the form of EMI will become more manageable.”
To tackle the situation, borrowers depending on their financial status could explore options like a moratorium, rescheduling of tenure, etc. Experts say reaching out to the family for help allows one to deal with this pressure in a much better fashion.
For students who are currently studying and have taken education loans, they just need to service the simple interest and not the full EMI per month. As this amount is significantly lower than the full EMI thus, it might not be a big challenge. Bhonsle of Incred says, “In case the co-applicant or students are finding it difficult to service even the interest, they can avail the moratorium offered by most lenders, or request the lenders to extend the moratorium.”
On the other hand, students who have passed out and are presently working, the education loan repayment shouldn’t be an issue. However, students who are anticipating job loss or salary cuts, experts say they should find alternate paid internship and/or free-lance short or medium-term projects. They should also continue to upskill themselves through a lot of good quality online courses. Industry experts say they should continue to invest in building and nurturing their network. Bhonsle of Incred says, “Build and keep updating their LinkedIn profile with the new skills, projects they are undertaking.”
Factors to consider while planning to study abroad post COVID-19
Interestingly, during most crisis situations whether because of recession or economic slowdown due to pandemic like COVID 19, the education sector sees more enrollments. Experts say the reason being, people realize that career growth is directly related to their company, industry and economy growth, hence, it is the best time to take a break and upskill themselves. Similarly, for freshers, spending time on campus during a slowdown is much better than passing out at the start of any down cycle of growth. So, this is a good time for students who are planning to complete their higher studies in the next two years or so. They are more likely to come out when the worst has passed.
Prashant A. Bhonsle, of Incred, says “While the financial planning with respect to the cost of education, living expenses, etc. need to be weighed in the context of a slower job market, however, the quality of education from a good institute does not go down because of recession.” Therefore, as students, try to get into the best colleges that offer scholarships, grants, and on-campus job opportunities during the course. Students and parents should also get a loan sanctioned for the full costs. This approval can come in handy during tough times. Anyway, the interest is charged only on the amount disbursed. So, this can become an open option any time during the entire course.