Education loans are a crucial financial tool that enables students to pursue higher studies without financial constraints. However, various myths surrounding educational loans often discourage students and their families from applying. As a Direct Selling Agent (Education Loan DSA), addressing these misconceptions and providing accurate information to potential borrowers is essential.
In this blog, we will debunk some common educational loan myths to help DSAs guide their clients better.
Debunking Educational Loan Myths: Essential Facts Every DSA Should Know
Myth 1: Educational Loans Are Only for Premier Institutes
Reality: Many clients believe that an education loan is exclusively for students enrolled in top-tier institutions like IITs or IIMs. However, financial institutions provide loans for various courses, including undergraduate, postgraduate, vocational, and international programs. Education Loan DSAs should inform clients that banks and NBFCs finance education in a broad spectrum of recognized institutions. Whether a student is enrolling in a local college or an international university, they can easily apply for an education loan online or offline.
Myth 2: A High CIBIL Score Is Mandatory for Loan Approval
Reality: While a good CIBIL score enhances loan eligibility, it is not the sole criterion. Many lenders approve loans based on a co-applicant’s financial stability and creditworthiness. If the student has no credit history, the co-borrower’s (parent or guardian) credit profile plays a crucial role in loan approval. Education Loan DSAs should guide clients on alternative ways to secure an instant education loan without a high credit score.
Myth 3: Collateral Is Always Required for Educational Loans
Reality: Not all educational loans require collateral. Government-backed loan schemes like the Credit Guarantee Fund Scheme for Education Loans (CGFSEL) offer loans up to ₹7.5 lakh without collateral. DSAs should guide clients on secured and unsecured education loan options to help them choose the best financial solution.
Myth 4: Education Loan Interest Rates Are Too High
Reality: Many clients hesitate to apply for an education loan due to concerns about high interest rates. However, education loan interest rates are typically lower compared to personal loans. Moreover, government subsidies, such as the Interest Subsidy Scheme for Economically Weaker Sections, further reduce the repayment burden, making education loans a cost-effective choice for students.
Myth 5: Loan Repayment Starts Immediately After Disbursement
Reality: Education loans come with a moratorium period, which includes the course duration plus an additional 6-12 months. This allows students to secure employment before beginning repayment. DSAs should educate clients about this repayment flexibility and how it eases financial pressure. Clients looking for an online education loan should check the moratorium period offered by different lenders.
Myth 6: Processing an Education Loan Is Time-Consuming
Reality: With digital loan processing, approvals are faster than ever. Many banks and NBFCs provide online application facilities, ensuring quick document verification and approval. DSAs can highlight how fintech advancements have simplified the process to apply for an education loan, allowing students to get an instant education loan without unnecessary delays.
Myth 7: Only Tuition Fees Are Covered Under Educational Loans
Reality: A major misconception is that educational loans cover only tuition fees. In reality, they also finance hostel expenses, books, laptops, travel, and other academic necessities. Education Loan Agents should emphasize the comprehensive nature of education loans and help students secure funds for their overall academic journey.
Myth 8: Prepayment or Foreclosure of Education Loans Attracts Heavy Penalties
Reality: Most lenders do not charge prepayment penalties on educational loans, especially if the repayment is made after the moratorium period. Clients should be encouraged to check their lender’s prepayment policies to make informed decisions. An online education loan often comes with flexible repayment options that benefit borrowers.
Final Words!
Dispelling myths surrounding educational loans is essential to help aspiring students achieve their academic goals without financial stress. As an Education Loan DSA, educating clients about these misconceptions ensures they confidently opt for the best loan solutions. Partner with Ruloans, India’s leading loan distribution company, to offer clients the best educational loan deals with attractive commissions and seamless digital processing through the Ruconnect App, India’s First B2B Loan Distribution Channel Partner App.
Start debunking myths and guiding your clients towards their dream education today!
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