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Published on May 8, 2020 | Study Abroad
5 Myths About Repaying A Study Abroad Education Loan


Securing an education loan has become an integral part of a student’s study abroad process. Gone are the days when securing an education loan was a nightmare.

While certainly, the process of acquiring a loan has become relatively simpler, there are still some common misconceptions about repaying an education loan.

Here are 5 popular myths about repaying a study abroad education loan:

“I can completely pay off my loan through part-time jobs”

This is usually an overly optimistic view that most people have when it comes to paying off a student loan.

While there’s nothing wrong with being optimistic, it’s necessary to be rational about such issues.

Let’s consider an example to understand how much money you can earn by working part-time.

The below table represents the national minimum wage per hour in the UK for part-time jobs.

National minimum wage per hour in the United Kingdom - Education loan - Navigus

For someone in the age group of 21-24, you earn an average amount of 738£.  However, this amount is usually used to pay off your monthly expenses.

Part-time jobs help you minimize your debt and pay off your capitalized interest. But repaying a loan through part-time jobs is not always feasible.

“I can easily work over the part-time working limit, and earn some extra bucks!”

Absolutely not!

If you work over the permitted part-time working hours limit the authorities have all the rights to send you back to your home country.

Some countries have strict policies against such issues and might go as far as banning you from entering the country again.

Remember, working over the allowed limit is illegal and can get you deported on the grounds of violation of immigration laws.

“My bank provides a moratorium period so I don’t have to worry about repaying my loan”

A common misconception among loan borrowers is that the moratorium period is a complete relaxation period.

A moratorium period is a period during the loan term in which the borrower does not have to make any repayment. It is a waiting period before your EMIs begin.

Despite the fact that you’re not repaying any loan during this period, you will still earn a regular interest income which will accumulate throughout this period.

Therefore, a moratorium is not a loan waiver. It is just a moratorium, which means a pause to your existing EMI payments for a specified duration.

“A delay in paying the EMI will not affect my credit score”

Banks generally charge a percentage of the due amount as a penalty for the delay or missed payments if it remains unpaid after 30 days of the due date.

Further delay in payments will be reported to CIBIL. This will eventually affect your CIBIL score as well as your co-borrower’s CIBIL to some extent.

“After I graduate, I can count on landing a job that will make repaying my student loans a relatively easy and painless process.”

At present, the job market is quite unpredictable and is subject to change beyond your control.

Therefore, make sure you take calculated risks and begin repaying your student loan as early as possible. Even repaying a small amount will reduce your burden in the long run.

So be smart and take measures to minimize your debt from day one.

With this, we come to the end of this blog.

If you wish to learn more about the finances required to study abroad or if you have any other queries, register for a free, online counseling session

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