I'm 12 pass going to NIFT, my total fee is 14 lakh, what should i do how much loan would be okay

Ans: Understanding Your Education Loan Requirements for NIFT

Congratulations on your decision to pursue higher education at NIFT! The journey you are about to embark on is exciting and filled with opportunities. However, financing your education is a critical aspect that needs careful planning. Let's discuss the various facets of taking an education loan for your NIFT fee of Rs 14 lakh.

Evaluating Your Total Education Cost
The first step is to understand the total cost of your education. Your tuition fee is Rs 14 lakh, but there are other expenses to consider.

Accommodation: If you plan to stay in a hostel or rent an apartment, factor in these costs.

Books and Supplies: Include the cost of textbooks, supplies, and any software or tools required.

Living Expenses: Calculate monthly living expenses, including food, transport, and other personal costs.

Miscellaneous Expenses: These might include project work, extracurricular activities, and unforeseen expenses.

Having a comprehensive understanding of all these costs will help you determine the exact amount you need to borrow.

Deciding on the Loan Amount
The next step is to decide how much loan to take. While Rs 14 lakh is the tuition fee, consider borrowing slightly more to cover other expenses.

Buffer Amount: It’s wise to include a buffer in your loan amount to cover any unexpected costs.

Avoid Over-borrowing: Only borrow what is necessary to avoid a heavy repayment burden in the future.

Assessing Your Repayment Capacity
Understanding your future repayment capacity is crucial before taking an education loan. This involves assessing your potential earnings after completing your course at NIFT.

Expected Salary: Research the average starting salary for NIFT graduates in your field of study.

Loan Tenure: Longer loan tenure means smaller monthly installments but more interest overall. Choose a tenure that balances affordability and total interest cost.

Monthly Budgeting: Ensure that your expected monthly salary can comfortably cover your loan EMI, along with your living expenses and savings.

Exploring Different Loan Options
There are several types of education loans available, each with its own set of features. Here are some key aspects to consider:

Interest Rates: Compare interest rates offered by various banks. Lower interest rates reduce the overall cost of your loan.

Moratorium Period: Some loans offer a moratorium period during which you do not have to make any payments. This can provide financial relief while you focus on your studies.

Collateral Requirements: High-value loans might require collateral. Check if your loan amount necessitates this.

Applying for the Loan
When you are ready to apply for the loan, make sure you have all the necessary documentation ready. This usually includes:

Admission Letter from NIFT: Proof of admission is essential.

KYC Documents: Identification and address proof such as Aadhaar, PAN card, and passport.

Academic Records: Previous academic transcripts and certificates.

Income Proof: If your parents are co-borrowers, their income proof will be required.

Collateral Documents: If applicable, property documents for collateral.

Loan Disbursement Process
Once your loan is approved, understand the disbursement process. Funds are usually disbursed directly to the educational institution as per the fee schedule.

Fee Payment Schedule: Ensure the loan covers the entire fee structure as per NIFT’s schedule.

Direct to Institution: Most lenders disburse the loan amount directly to the institution, ensuring timely payment of fees.

Understanding Loan Repayment
Repayment typically begins after the completion of your course, including a grace period if applicable.

EMI Calculation: Understand how your Equated Monthly Installment (EMI) is calculated. Use online EMI calculators for a clearer picture.

Prepayment Options: Check if your loan allows prepayment without penalties. Prepaying can reduce your interest burden.

Evaluating Your Financial Situation
It’s important to evaluate your family’s financial situation and how much they can contribute without straining their finances.

Parental Support: Assess how much financial support you can expect from your family.

Savings Utilisation: Use any existing savings strategically to reduce the loan amount and interest burden.

Benefits of Actively Managed Funds
While discussing investments, it's important to highlight the benefits of actively managed funds compared to direct funds.

Professional Management: Actively managed funds are handled by professional fund managers, ensuring informed decisions.

Better Performance: They often outperform the market due to expert management and strategic adjustments.

Regular Monitoring: These funds are continuously monitored and adjusted based on market conditions.

Building a Financial Plan
Creating a financial plan is crucial to ensure you can manage your education loan effectively. This involves:

Budgeting: Create a monthly budget to manage your expenses during your study period.

Savings: Try to save a part of your allowance or earnings, which can help in emergencies.

Part-time Work: Consider part-time work to supplement your income and gain valuable experience.

Long-term Financial Goals
While focusing on your education, don’t lose sight of your long-term financial goals.

Debt-Free Future: Aim to repay your education loan as early as possible to achieve financial freedom.

Invest for Future: Start investing early in SIPs (Systematic Investment Plans) to build a corpus for future goals.

Emergency Fund: Maintain an emergency fund to cover unforeseen expenses without derailing your financial plan.

Seeking Professional Guidance
Consider consulting a Certified Financial Planner (CFP) for personalized advice.

Tailored Advice: A CFP can provide advice tailored to your financial situation and goals.

Investment Planning: They can help you create a balanced investment plan to secure your financial future.

Risk Management: Professional guidance can help in managing risks effectively.

Conclusion
Planning your education financing is a critical step towards achieving your academic and career goals at NIFT. By carefully evaluating your total costs, borrowing prudently, and planning your repayment, you can manage your education loan effectively. Remember to also consider your long-term financial goals and seek professional guidance when needed. Best of luck with your studies and your future endeavors!

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in