Student Loan: As of late 2024, more than 1.33 million students were studying overseas. According to the sources, the Indian parliament was informed some time ago that this represents a significant increase over previous years. It draws attention to the rising number of Indian students seeking opportunities for higher education elsewhere.
This brings up the topic of the importance of student loans, namely their benefits and drawbacks for studying overseas. The discussion of the benefits and drawbacks of taking out student loans to pursue future educational possibilities. Let’s check the advantages and the disadvantages of taking a student loan.
NBFC Massive Growth in Education loans:
According to the reports, India’s Non leading banking financial companies (NBFC’s) are now facing a massive growth in the educational loans category. According to the reports, in the last year almost from 60,000 crores to 43,000 crores exceed in the asset under management (AUM). The main reason for this increase in numbers are because of the growth in foreign education and also increase in inflation. Apart from this the major reason behind this is the increase in education costs.
Present Educational Loan Rates in India:
In India, different banks offer varying interest rates on school loans. State Bank of India is offering rates, which are 9.90% annually. Rates from ICICI Bank range from 9.50% to 14.25% annually. As of April 2025, HDFC Bank is providing loans at a rate of 9.50% annually. To get the most recent position in rates, it is essential to check with individual institutions for updates and changes.
Advantages of Taking a Student Loan:
1. Easy accessibility: Students who typically lack the funds to cover living expenses, tuition fees, book purchases, and other educational costs might benefit financially from student loans.
2. Deferred repayment: To lessen the financial burden of student loans, the majority of them provide the option to begin payments after graduation. This is provided with the explicit understanding that students cannot work and earn money at the same time while they are in school.
3. Improving credit history: Making timely payments regularly contributes to building a positive credit history, which is quite advantageous in the long run. Thus, it guarantees that any future loans would be readily available, smoothly accessible, and have affordable interest rates.
4. Flexibility in repayment: Depending on an individual’s income, lenders offer a variety of reassuring repayment plans and options. The best course of action in this situation is to keep your lender informed.
Disadvantages of Taking a Student Loan:
1. Debt load: Taking out a loan entails the risk of accruing debt. Therefore, those who take out loans when they are young may have trouble paying them back later on, and it may take them decades to do so. Additionally, this may affect your credit score.
2. Interest accumulation: If a loan installment is not properly managed, interest may accrue. Over time, interest accrues, increasing the total amount owed.
3. Financial Pressure: Making monthly EMI repayments can put a strain on finances and emotions. This hinders economic stability and financial freedom.
4. Severe default risk: If you don’t pay back now, you’ll default, which will harm your credit ratings and credit profiles. This will make getting a loan in the future extremely challenging.
Conclusion:
As a result, student loans can be a very important instrument for addressing financial demands, but it is important to balance the benefits and drawbacks of applying for the loans against the potential limitations and challenges.
Therefore, before submitting their loan applications, potential applicants should exercise critical thought, assess their financial situation, and familiarize themselves with the terms and circumstances of the loan.
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