Mistakes That Can Increase Your Education Loan Debt (And How toAvoid Them!)

Imagine standing at the airport, with your passport in your hand and ready to fly to your dream university. The excitement is real! But what if, a few years down the line, instead of celebrating your graduation, you’re drowning in student loan debt that just won’t seem to go away? God forbids! Sounds scary, right? Unfortunately, this is the reality for many students who, despite securing a good education loan, end up making small (but costly) education loans mistakes that can increase their education loan debt over time.

Education loans are a lifesaver when it comes to funding international studies, but if you don’t
handle them wisely, you could be paying way more than necessary. The good news? These mistakes are totally avoidable, and we’re here to make sure you don’t fall into these common traps.

So, before you sign that loan agreement, read this blog carefully! We’re breaking down the most
common education loan mistakes that can increase your debt—and how you can steer clear of them.

Borrowing More Than You Actually Need

The Mistake

It’s tempting to borrow extra money—you know, for that dream apartment, the latest gadgets, or
weekend trips with friends. But over borrowing means higher interest and a longer repayment
period, making your debt much harder to clear.

The Fix

• Calculate your real expenses before applying for a loan—consider tuition, accommodation, food, and study materials.
• Borrow only what’s essential, and avoid using loan money for non-educational expenses.

Pro Tip: Look for scholarships and part-time jobs to cover additional expenses instead of taking a
larger loan!

Ignoring Interest Rates & Loan Terms

The Mistake

Many students focus only on the loan amount and completely ignore the interest rate and repayment terms. A small difference in interest rates can lead to lakhs of extra repayment over the years.

The Fix

• Always compare lenders before taking a loan. A 1-2% lower interest rate can save you a ton of money in the long run!
• Understand the difference between fixed and floating interest rates—choose wisely based on market trends.

Pro Tip: Check the Annual Percentage Rate (APR) instead of just the interest rate—it includes all
hidden fees and gives you the actual cost of the loan.

Not Making Payments During the Moratorium Period

The Mistake

Many students believe they don’t have to worry about loan repayments until after graduation. While it’s true that you don’t have to pay the principal amount during the moratorium period, interest still accumulates! The longer you wait, the more interest piles up, increasing your overall debt.

The Fix

• Start making small payments (even if it’s just the interest) during your moratorium period.
• Some banks offer interest discounts if you make regular payments before the full repayment
  period begins.

Pro Tip: Even paying ₹5,000–₹10,000 per month during your studies can significantly reduce your
total loan burden!

Overlooking Processing Fees & Hidden Charges

The Mistake

Some lenders advertise low interest rates, but sneak in processing fees, prepayment penalties, and
hidden charges that increase the actual cost of borrowing.

The Fix

• Before finalising a loan, ask about processing fees, late payment charges, and prepayment
  penalties.
• Choose lenders with low or zero prepayment penalties, so you can clear your loan early without
  extra charges.

Pro Tip: Read the fine print! Ask for a breakdown of all charges before signing the loan agreement.

Not Considering Currency Exchange Rates for Foreign Loans

The Mistake

If you take a loan in USD, GBP, or EUR, remember that the rupee fluctuates against foreign
currencies. If the rupee weakens, your repayments in INR will increase, making your loan more
expensive.

The Fix

• If taking a foreign currency loan, ensure you have a currency risk strategy—some banks offer
  forex protection plans.
• If your future salary will be in INR, taking a rupee-denominated loan may be a safer option.

Pro Tip: If you’re considering USD loans, track exchange rates and convert funds strategically to
save money!

Delaying Your Repayments Without a Strategy

The Mistake

Some students wait until the end of the moratorium period to start making payments, thinking
they’ll have higher earnings later. But delaying unnecessarily can increase your debt by lakhs!

The Fix

• Start repaying as soon as you start earning—even if it’s a small amount!
• Use any extra savings, bonuses, or tax refunds to make early repayments and reduce interest accumulation.

Pro Tip: Some lenders offer discounts for early repayments. Check if your loan provider has this
option!

How Lorien Finance Can Help You Save Money on Your Education Loan

At Lorien Finance, we don’t just help you secure an education loan—we help you choose the
smartest financial option so you don’t fall into unnecessary debt.

What We Offer

• Low-Interest Loans – We connect you with lenders offering competitive interest rates.
• No Hidden Fees – Transparent loan terms, so you don’t get any nasty surprises.
• Expert Guidance – Personalised financial advice on choosing the best loan for your needs.
• Flexible Repayment Options – Find a plan that suits your budget and career growth.

Planning to study abroad? Let Lorien Finance help you make smart financial choices!

Apply for your loan today!

FAQs

**How do I know if I’m borrowing the right amount?
**Create a detailed budget covering tuition, living costs, and travel expenses—then borrow only
what’s necessary!

**Should I pay off my loan early?
**Yes! Making extra payments or starting repayments early reduces total interest costs.

**Can I refinance my student loan later?
**Some lenders allow loan refinancing at lower interest rates. Check with your bank or financial
provider!

**What’s the biggest mistake students make with education loans?
**Not reading the fine print! Always check for hidden fees, repayment terms, and interest calculations before signing a loan agreement.