The ultimate goal of every student is to build a successful career. Higher education accelerates the road to success by honing skills, developing expert knowledge, and carving a better personality in career-ready aspirants. Hence, it has always been seen as the natural next step in a student’s life, guaranteed to cement a stable future for them. Nowadays, students strive for financial independence and therefore prefer educational loans to financial help from parents or family savings to finance their higher education.
“Financial independence is the ability to live off the income of one’s own personal resources.” — Jim Rohn, entrepreneur, author, and motivational speaker.
In its simplest terms, financial independence means being self-reliant and paying your bills. Put simply, it means having enough wealth to pay for your expenses without depending on anyone else. By the time students reach the age when they are eligible for a student loan, they are often old enough to understand the finer nuances of financial independence and what it actually means for their financial health. However, this independence comes with its own responsibilities, as it is imperative to repay the student loan responsibly.
Still, the education loan is gaining tremendous popularity among young students as it is a prudent choice given the rising cost of higher education. According to the All India Survey on Higher Education, an increase in enrollments for higher studies coupled with educational inflation has led to an increase in demand for student loans.
The following encourages young learners to opt for education loans to be financially independent.
Ability-Based Lending: There are several preset parameters used by lenders to assess an individual’s ability to repay. Many New Age lenders prioritize the student’s employment potential over the co-borrower’s financial background. To determine a student’s employment potential, financial institutions evaluate various elements such as previous academic performance, entrance test results, the pedigree of the university or institute where they studied, and other parameters. This helps them decide on the student’s future ability to repay.
Prudent Choices: Taking responsibility for paying off a loan develops financially prudent habits early in life. They tend to control their frivolous spending to maintain liquidity aside from maintaining a corpus for emergencies. Therefore, students adopt healthy financial habits from an early age.
Build credit: Students are at a crucial point in life and need other financial products. After completing the student’s academic journey, they may need additional funding in the form of a car loan, home loan, or credit card. By paying off the education loan responsibly, students can build a healthy credit score and increase their chances of getting future loans on better terms.
Access to Quality Education: Many students are sometimes forced to give up their dreams of further study – be it in India or abroad – due to lack of financial resources. Rising inflation and the cost of living are adding to the monetary pressure. An education loan covers the holistic costs of education, including airfare, tuition, accommodation, study materials, living expenses, study equipment costs, and other education-related expenses, ensuring that they don’t have to compromise on their quest for quality education .
Maintain Family Savings: With easy access to education loans, students and their families don’t have to dig into their family savings, sell family gold, liquidate assets, or close FDs. Instead, these savings can help immensely in the event of a health or other emergency.
Career boost: Access to top-class education at a first-class institute opens up a wide range of opportunities for students. They have the chance to practice the profession of their choice and have access to opportunities to work for some of the best brands in the world or even become successful entrepreneurs.
The easy availability of education financing solutions allows for easy access to quality education. New Age lenders have prepared to bridge the gap between aspirants and their academic aspirations to ensure deserving students receive the educational loans to fund their higher education. Using technology and insightful data, they are well-equipped to create hyper-personalized solutions for each candidate. With the education loan, students receive the coveted “Selfmade” badge.
(The author is Chief Business Officer – Education Loans, Avanse Financial Services)