High-quality education comes at a premium. This is true both in India and abroad. Fortunately, most of the Indian banks and other NBFCs offer a student loan with a tenure as high as 15 years. But a question occurs – when does the student loan repayment start? Knowing this information is vital to properly plan expenses and understand the monthly financial strain it will pose in the form of loan repayment EMIs.
Here is the key information you need about a student loan and its repayment terms.
With an abundance of student loan providers, the onus lies on you – the borrower – to carry out thorough due diligence before applying for a loan. Evaluate lenders on the basis of interest rates, repayment options, eligibility criteria, flexibility and convenience of applying, reputation, overhead expenses, and customer service. Naturally, the ideal lender will offer low-interest rates, customisable EMIs, a longer moratorium period, and lower administrative costs and charges. Options of a loan top-up can come in handy while studying abroad and in need of urgent funds. Another useful feature is charge-free prepayment or pre-closure of the loan. This way, you get the option to clear your student loan earlier than expected and save on the interest.
Yes, most lenders do not levy a pre-closure charge allowing you to repay the student loan before its closure date. However, since this benefit is specific to each lender’s policies, it cannot be generalised. Hence, it is recommended you consult your loan advisor or relationship manager to know if any charges are applicable for prepayment, and if yes, then request the breakdown of the costs.
Most lenders expect you to start repaying the loan upon getting a job. They provide a moratorium period of 6 months to 1 year upon the completion of the course. Within this period, it is expected that you will get a job and start paying the loan back over the course of the subsequent 5-7 years (as mentioned in the loan agreement. Leading banks such as the Federal Bank offer a 15-year window to repay the loan.