Ways to fund higher education (Representational image)

— Written by Jayesh Sule

Today, in this fiercely competitive job market, educational qualifications hold a lot of importance while determining career prospects. Specialisations and upskilling are the aspirations – however, this advancement comes with monetary baggage. Courses from top colleges and university need more than just talent.

Selecting the right course, the right university is as crucial as selecting the right mode of funding education. As one begins the journey for exploring academic opportunities, students look for guidance on how to fund their higher education.

Get your prerequisites right: Probably the most important step, getting your research right is a must. There must be a to-do checklist enlisting all the documents that you will need, the colleges you want to apply for – a dream list and an achievable list, the eligibility criteria, tuition fees of the colleges, etc. These will help in accurate comparisons, help you make sound decisions, and save you from getting stressed in time-bound situations.

Calculate your expenses beforehand: There are multiple tools available online which help you gauge your expenses beforehand. There are at least 10 different sources of expenditure involved in education financing. Moreover, there are the tuition fees, library fees, books/material, accommodation/rent, travel, food expenses, extra educational spends and many more unexpected expenses that you must account for while creating a budget for yourself. An overall money map will not only help you in identifying the right kind of financing but also help you in identifying the low-hanging fruits when it comes to cutting costs.

Education Loans: An education loan is the most sought after option for monetary assistance. Depending on your preferences and capacity to repay these loans, you can choose the student loan that suits your requirement. There are, however, some things that you must compare before making the decision: banks offer different rates, repayment options and moratorium period. Look for options where you can prepay a loan without additional charges.

Also, find out the service charges, EMI options and worst-case scenarios for each of the options. Finding out everything about the loan might just help you save money. Visit an aggregator website like that of Vidya Lakshmi which is a portal set up under Pradhan Mantri Vidya Lakshmi Karyakram to identify the parameters and choose the best suitable out of the ocean of schemes.

What to consider while finalising a loan?

Moratorium period: It is the time for which you have availed the loan but do not have to start repaying your loan. However, the interest on your principal keeps adding on with every passing month. A way to avoid paying the extra amount is to keep paying the interest amount from the first month itself. This way, your principal amount remains the same by the time you start paying the EMIs.

Duration of repayment: Evaluate the option of shorter duration loans even though they come with heavier instalments. Since loan repayment is calculated on compound interest, a longer tenure will cost you two-three times the interest you would have paid for a shorter duration.

Plan for repayment: The default rate in repayment of education loan is very high. Plan your repayment in advance so that, in case your personal expenses shoot up, you do not default on the EMIs and consequently pay a penalty. Defaulting on repayment will also affect your credit score.

Scholarships

In most developed countries, over 70 per cent of the education is funded through various government as well as private funding schemes. In India, however, only three per cent of the higher education is funded through external mechanisms. In an attempt to fund more Indian students, the government and various corporates have been offering scholarships to Indian students studying across careers.

These scholarships consider various parameters like academic eligibility, family income, course fees, and college status among others to determine the top applicants for the scholarships.

Part-time work

This is where the pre-empted expenses will help. There are now many internships/part-time work opportunities available which provide with stipends to at least cover basic expenses. If you apply for a foreign university, the best time to apply for this is just after you finalize your admission and if you apply for a domestic university, this can be done even after you reach the new city.

Good financing can make or break students’ careers, especially if they do not have access to financing education either by parents or through external sources. Carry a thorough research and ask help from experts, it will help you save money and efforts later.

— The author is whole time director and chief operating officer (COO), NSDL e-Governance Infrastructure Limited