Is the Education Loan debt worth it?


Education Loan Debt, Student Loan Debt, Education Loan India

We’re not going to explain to you what education loan debt is – the term needs no introduction.

Instead, today we would try to throw light on whether the education loan debt is actually worth all that money? In today’s generation, no teenager is aloof from the escalating college fees in India, and abroad.

Earlier, the students needed to work hard to grab one of the top-notch colleges and then, all they needed to do was study and get a decent job. The things are quite the same still, with just an additional baggage of “education loan” on the student’s head.

Ten years down the line, when that baggage still doesn’t fall off, the person questions himself – WAS THIS REALLY WORTH IT?


do i need education loan

Why do people need Education Loans?

A good college, nonetheless, is necessary.

Most of the jobs in India still require a professional degree. Moreover, attending a good college secures your future financially. It provides you with enriching benefits and nourishing experiences beyond an education, which help you get through the hurdles of life in the long run.

These are pretty valid reasons to join college, right? The statistics are going to prove you wrong. The whopping sum of the education loan overshadows all the positive aspects, and 53 percent of those with student loans would change their past borrowing decisions if they could.

Education loans become a necessity if people decide to go abroad for their studies, or the high fees of colleges in India as well. Even government colleges in India are increasing their fess structures.

This leaves a major chunk of population with no other option than to look for financial lenders to help complete their education.


education loan process, how to process education loan

Should I take an Education Loan?

Here are a few pointers that you might want to consider before filling in the “education loan” form:

1. Assess your Repayment Capacity

The most significant point that you need to keep in mind is that you shouldn’t borrow more in education loans for your undergraduate degree than what you expect to make your first year out of college.

Remember, going beyond that amount directly means debt payments that will take up a huge sum out of your monthly budget after graduation. This specially implies for the professions with low starting salaries in India – writers, artists, teachers, social workers, etc.

Going beyond the expected-starting-salary figure could mean taking on private loans in addition to the federal loans you’re already paying, which does not sound to be a very good idea.

2. Start Repayment Early

If you do plan on going to a college beyond your means, think through it. You shouldn’t wait for the graduation to end for you to finally start clearing off the debt in such cases.

Utilize your summer/winter breaks looking out for internships that pay you, and you should strictly save it up to ward off your debts.

Even when you’re placed, you could look out for other sources of money, like freelancing, that could fetch you money and help you be free from debts as early as possible.

3. Do Thorough Research on College

Make it a point to research well about your college. Name recognition probably is somewhat worthwhile, because employers can be unsophisticated in their hiring.

Going to a college where a lot of reputed MNCs come to fetch students during placements is a good idea. However, paying a lot of money to go to a private college that no one’s heard of is probably not the greatest investment.

4. Do the math before you leap

Do the math regarding your monthly payment after graduation. Borrowing money for college is the easy part. All you have to do is read through a few pamphlets of paperwork, sign your name a few times, and you’re the proud owner of a student loan.

Here lies the main problem.

Few borrowers actually have no idea what their monthly payment might be in the future – at least, they don’t know until they get the bill in the mail. That is the kind of mistake you should thoroughly avoid. With the rising interest rates every year, be very clear about the consequences of the papers you’re going to sign.

5. Plan your Repayment Strategy

Calculate how much time it will take you to totally repay the loan.

We agree that loans can be tempting, you get a lot of free money (for some time) and you can do whatever you want, without worrying about the bills.

Sometimes it takes around 30 years for people to repay their education loan. All those dreams of “own house”, “own car” and other luxuries become mere bitter fantasies. So it’s better you know what is coming your way and be prepared for it, no?

Find other inexpensive options. There are so many websites and YouTube channels that have so much educational content for those who’re willing to learn.

Instead of spending Rs. 10,000 – Rs. 25,000 on training that’s a mandatory part of the curriculum, learn these skills on the internet and find suitable internships to implement them. This way, you would make money instead of losing it! Internship certificates matter way more than the training ones.

Also, keep searching for various scholarships and plans that are rolled out by the government and other NGOs from time to time for the needy students.

7. Save Costs

Try and find a college in your surroundings. This would save you the cost of hostel and mess, which unbelievably is an average of Rs. 1.5 lacs of the top colleges in India.

8. Pick an appropriate Loan Provider

And finally, if you do decide to go for a loan, research well about the banks. There are hundreds of banks at your doorstep, ready to provide you with education loans on one call. However, these are the same banks that would shoot up the interest rates and recover almost double of what they paid you initially. Search for the best education loan schemes, investigate about their interest rates, and then select the bank. You could also seek guidance from other debt-holders in this context.


College is one of the best phases of life!

You wouldn’t regret the time you spent there, because it would give you the mentors and community, you have always wanted. However, you shouldn’t underestimate the debt, financially and otherwise. Remember that

“the fantasy of debt is very easy, because the reality of debt is very absurd.”

In the end, you will be accountable for whatever decision you make. It is totally in your hands to remain indebted for most of the years of your life or be smart, research well, toil hard and clear all your debts. College might be an enriching experience, but do not forget to consult your pockets before jumping to any conclusion!


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Written by

Vedant Kaushik