The birth of a child of course is a cause for joy in your life. But with that joy comes expenses and a whole lot of responsibilities.
It is one of your life’s tasks to save up money for your child’s education. That’s all well and good, but with the rising costs of education for children, sometimes you may need an education loan, especially if it is for college. When taking such a loan, it is important to make a judicious choice and decision. To that extent, here are some things you should do and should not do when taking an education loan.
The thing about saving money for your child’s education on your own is that you have to factor in inflation, your changing lifestyle costs, shifting career goals, and much more. Because of this, and especially when it comes to college tuition, many parents need to take education loans. Here’s what to do before getting them, and what not to do.
Here’s a gold nugget for you: even if your child gets that additional degree, it does not guarantee a dream job or even a better job. What you need to do is to think before making the loan. Think whether your child’s course is in line with his/her future interests and prospects. STEM courses may give your child better prospects and job openings, but the same job is something the child has to keep for 30 years or more. So ensure that this is the career field he or she wants to go in for. Many colleges now offer the best of science and arts subjects, and even joint degrees.
It will be a big mistake to take the maximum loan amount without factoring in your repayment capacity. If you won’t know when your child shall get a job, it’ll be risky to pick huge loans.
If you are a student opting for student loans or education loans, pick one which you are more or less certain you can pay off with your future salary. In such cases, your co-applicant can be your parent, but always try to repay on your own. So do keep a realistic salary expectation.
Here’s a big mistake people make, and more people make this mistake than you think. They pick courses because they see the college or institute being tied up with banks giving cheaper and easily-available loans. This is a bad choice because there are many institutions which hide their poor education quality by tying up with lenders. You should pick courses you like after scrutiny instead.
Many students take this facility to complete their PG courses. But this is not a good practice since it only increases your debt. It’s far better to repay an existing loan first before taking another.
So there you have it: the Do’s and Don’ts for taking an education loan!