7 Things To Keep In Mind While Financing Your Education

If you’re an aspiring graduate, or an experienced professional enrolling into a professional MBA program or higher studies, chances are you might need to fund your university education. It also might be one of the biggest financial decisions you make that will impact your earnings potential and financial goals in the long-term.

While securing educational loans has become pretty commonplace with all major financial institutions following standard practices in granting these loans, here are some tips to keep in mind before you sign up for one.

 

Finding funds

In India, most major financial institutions — from public banks to private institutions including NBFCs such as Credai — offer student loans. As per government mandate, banks can disburse up to Rs 4 lakhs without requiring collateral; anything above that amount typically requires a co-applicant and proof of security that will form the collateral backing the loan. Banks typically lend up to Rs 10 lakh for higher studies at Indian institutes and up to Rs 20 lakh for programs abroad.

You may also need to pay your bank 5 per cent of your loan amount in the form of margin money for domestic programs, and up to 15 per cent for studies abroad that typically require higher loan amounts.

While most banks follow a standard interest rates offering 1.35 to 3 percentage points above the Marginal Cost of Funds based Lending Rate (MCLR), some banks can give out cheaper interest rates depending on specific criteria. For instance, State Bank of India (SBI) has recently launched an 8.5 per cent interest rate on education loans for certain business schools such as Indian Institute of Management (IIM)-Ahmedabad and Indian School of Business-Hyderabad.

Unconventional avenues

There are also a number of emerging fin-tech players that have also begun offering loans to students with less onerous requirements than traditional banks. For example, P2P lending platform, Faircent.com, has teamed up with Bangalore-based micro-lending startups to offer student loans that require only part of the collateral. Another fin-tech startup Quiklo provides loans and financing to students to help them purchase study accessories including phones and laptops. Quiklo says its education finance platform will lend to students who have been declined loans in the past.

Govt push

To facilitate student loans, the Indian government’s Vidya Lakshmi Portal also provides a platform where people can apply and compare educational loans from different institutions. The website connects students with multiple banks, providing updates on the loan process and links to other government financial aid and scholarships. Of course, approaching your existing financial institution where you or your family already have a banking relationship, could make the process faster.

Use a loan calculator

It’s a good idea to use an online loan calculator to estimate how your repayment plan will look like along with details on expected EMIs. Most loans have a 5-7 year repayment period, but larger loans can offer longer repayment periods, depending on your financial institution. These loan calculators can also help assess the eligibility criteria for these loans.

Avoid the debt trap

Experts recommend paying down your student debt early before the interest rates compound prolonging your loan repayment. There are reports of some banks slapping interest rates even on the moratorium period– the grace period during which a loan does not become due which is usually six months after getting employment or one year after completing a course. Always factor in any processing fees or hidden penalties such as prepayment penalties or higher interest rates while signing up for loans that could compound overtime and eat away at your hard earned income.

Tax benefits

You can claim deductions on your annual taxes if you’re paying down student debt under the Section 80E of the I-T Act. These benefits will bring down your tax liability so it’s important to keep track of the necessary paperwork to claim these tax breaks on the interest payments. These tax deductions can be claimed by individuals as well as family members who are funding the education of their children or spouse.

Ask your employer

If you’re an experienced professional pursuing a part-time program, or taking a study leave, some employers can fund part of your higher studies. It’s a good idea to check with your employer on their employee education and training benefits programs before applying for expensive bank loans.

Why lying is a sign of a powerful mind

Everybody lies. That’s a settled point and anyone who claims they don’t can be sent up the stage as `Exhibit A’. The question is, why do we lie? Donald Trump claiming his inauguration crowd was bigger than Barack Obama’s may be a case of inflating one’s image; Bill Clinton denying an affair with Monica Lewinsky was clearly a cover-up; but we lieeven when nothing as big as the presidency is at stake. Experiments by University of California social psychologist Bella DePaulo in the 1990s showed people lied, on average, one or two times a day. Are human beings compulsive liars? Are we programmed to lie?
It appears that our ancestors learnt to lie as soon as they mastered complex communication through language. It was a wonderful accomplishment because it allowed liars to acquire resources and mates without resorting to physical violence. “Lying is so easy compared to other ways of gaining power,” Harvard Universityethicist Sissela Bok says in an article in National Geographic.

In fact, lying is an indicator of smartness. Instead of greeting their children’s first lies with alarm, parents should heave sighs of relief at this sure sign of mental development, psychologists say.Babies don’t lie, but 30% of two-year-olds do, and they are ahead of their peers on the intelligence curve. By the time they turn three, 50% of children are expert liars, and by eight, the number rises to 80%. “On the other hand, kids on the autism spectrum–known to be delayed in developing a robust theory of mind–are not very good at lying.”

Lying might seem like a base thing but it involves some high-level mental processing. You can’t lie successfully without being able to read your victim’s mind.”Known as theory of mind, this is the facility we acquire for understanding the beliefs, intentions, and knowledge of others.Also fundamental to lying is the brain’s executive function: the abilities required for planning, attention, and self-control.”

So, why don’t we lie limitlessly? Dan Ariely , a psychologist and one of the top experts on the subject, found that when people were given a chance to self-report their test results, they usually inflated their scores by only 50% regardless of the reward. Someone who had answered four questions claimed to have answered six.”The reason, according to him, is that we want to see ourselves as honest, because we have, to some degree, internalised honesty as a value taught to us by society .”

While lying gives us an edge in dealings, truth is the basis of coexistence.”Much of the knowledge we use to navigate the world comes from what others have told us. Without the implicit trust that we place in human communication, we would be paralysed as individuals and cease to have social relationships.”

That’s how lies and scams succeed.Although we are born liars, we don’t always regard ourselves and others so.Thus, when an email claims a millionaire somewhere in Africa has left us all their wealth, and it is ours to take after paying a processing fee of $1,000, we rush to wire the money.

Mind Your Food!

It starts with a cup of ice cream, goes onto a tub and finally, as we wallow in our feelings of self-pity and unhappiness, the meal ends with huge portions of dessert and coffee. Food and emotions have always had a thing going. We eat more and mostly wrong when we are low, while happiness makes us choose wisely and eat with control. But there has to be a way to check the bad patches, right? Rationalising and planning good food choices when low? Yes.
Mind Your Food!
Good, bad and ugly…
When you feel low, it results in a certain kind of numbness and reaching for the jar of mayo or packets of chips in a trance like state. “Under stress or excitement, there are certain neurochemical changes in the brain that can alter the eating habits: one may lose appetite or develop carb cravings/binge eating patterns,” says Dr Sameer Malhotra, psychotherapist and de-addiction specialist. On the other hand, good feelings make you alert and focused. The trick here is to accept the feelings… without indulging them.

Get a grip
According to a latest research published in the journal Child Development, emotional eating has its roots in childhood. It says that when parents soothe their toddlers with food, their children end up engaging more in emotional eating later in life. While reaching for that occasional comfort food is not really a bad idea to help us get a grip on our emotions, too much dependence on food to soothe is a bad idea.

Choose Healthy
It is just not the food but also the kind of food that’s a problem. As nutritionist Nivedita Singh says, “Emotional eating responds to stress so a person tends to eat high carbohydrates, high calorie food with very low nutritive value and thus all this leads to obesity, diabetes, heart and cholesterol problems.” Most emotionally satisfying foods contain opiodes that delude us into feeling satiated and happy. They get us hooked to them. So choose wisely. If you really want to eat something sweet, choose an apple or dates over a dessert and if you must have ice cream, just have a scoop. Avoid whites for sure!

Love Yourself
Be it anger, sadness, jealousy or disappointment; it is better to practice tolerating difficult feelings than by blunting them with food. Other ways to feel good could be getting fitter, joining a zumba dance class or playing a physically demanding sport. Nothing works? Start a house improvement project! Love yourself and your surroundings.

Are you an emotional eater?
– You eat when you are not hungry.
– You see other people eating and you always want to join in.
– You feel guilty about what you eat so you like to hide it.
– You find it easier to reach for that chocolate than make the effort to call a friend to talk about what has got you down.