Education Loan Re-Finance – A smart strategy?

The immense opportunities and exposure offered by the universities abroad entice a lot of Indian students. A lot of students choose to go abroad for their higher studies, even if it takes taking an education loan to fund it. An easily available education loan interest calculator on the internet helps them make a wise choice while taking an education loan. Once the student passes out of college, he/she has to start repaying the loan amount.

To facilitate study abroad loan repayment, education loan re-finance comes into the picture. Refinancing helps you repay your existing education loan in one go and switch to a new loan on new terms. Let’s have a look at how refinancing the education loan can help students.

1. Lower Interest Rates-

At the time of taking an education loan, the student is not an earning member and hence lending institutions carry risk while disbursing the loan. The risk associated with the study abroad loan attracts higher interest rates. When a student passes out and gets a decent-paying job, the risk of loan default decreases. Hence, education loan refinancing is offered at a lower interest rate. This is beneficial for the student as a lower interest rate will further lower the financial burden on the student.

2. Adjusting Loan Tenure-

Loan tenure is a factor that determines your loan installment amount. The lesser your tenure is, the higher your installment amount would be. Once the student gets a new credit profile after getting a decent paying job, lending institutions offer a study abroad loan refinancing options for a longer tenure. Students can rework the repayment roadmap and further ease the financial burden. Depending upon the amount of education loan taken, it becomes easy for the student to negotiate the loan tenure and finalize a more feasible installment amount.

3. Removing a Co-Signer-

At the time of taking an education loan, it is necessary for the student to get a co-signer. A Co-signer is a person who guarantees that the loan will be repaid by the student and if not, the co-signer will be liable to pay the loan amount. In most cases, it is the parent of the student who co-signs the loan. However, when the students become eligible to pay the loan, they choose to take off the loan burden from their parents. It is possible for a student to remove the co-signer from the loan agreement when their study abroad loan is re-financed.

4. Consolidated Payment-

Suppose a student has more than one loan. As the installment period comes into the picture, it becomes a tedious job to track and pay every installment on time. Since a delayed payment attracts late fees, it becomes important to make sure the installment amount is paid on time. This process can be made easier by consolidating all the loans under one umbrella loan. This consolidates all the installments and thus, makes it a hassle-free process.

As more and more students are opting for study abroad loans to fund their education in their desired college, it is important for them to make sure that the loan amount is not a financial burden on them in a long run. Education loan refinancing has helped many students to lower their financial burden.

Auxilo Finserve Pvt. Ltd. is a pro-education Nbfc registered with the Reserve Bank of India. Auxilo believes that it’s the right of every student to avail of quality education.