FAQs on Education Loan Restructure

Loan restructuring is very helpful, especially in unforeseen circumstances like job loss, pandemic, quitting studies etc. However, it depends on the bank or the lending institution whether they approve your application for restructuring the loan or not. The central bank, i.e. the Reserve Bank of India restructuring scheme 2.0 was released when the nation was hit with the Covid-19 pandemic. Let’s go through some of the common FAQs on Education loan restructure. 

What is education loan restructure?

Education loan restructuring means modifying the terms and conditions, repayment period, interest rate etc when the borrower is suffering from the financial crisis. The purpose of a loan restructuring is to make the repayment easy and convenient for the borrower. However, please keep in mind that when you are applying for a restructuring loan, there shall not be any delayed payment for more than 30 days in the record. 

Also Read: Planning to take an education loan? Check some common FAQs on Secured Education Loan to study abroad.

Under what circumstances can I opt for education loan restructuring?

You can consider restructuring your education loan in case of financial hardships, changes in employment status, or unexpected events that affect your ability to repay the loan. Make sure that you haven’t delayed any payment more than 30 days. Contact your bank and tell them about your financial situation. If it is genuine, the bank will allow the restructuring of the loan. 

Is loan restructuring allowed for unsecured loans?

Loan restructuring can be done for both secured and unsecured loans. However, the terms and conditions vary depending on the bank or the financial institution. Contact your bank for the application process and get the loan restructured if they approve the same. 

How does loan restructuring impact the interest rate?

Banks may reduce the interest rate to make the loan cheaper. Restructuring may involve a change in the interest rate, either by fixing it, converting it from fixed to floating, or vice versa. The impact on interest rates varies depending on the terms negotiated during restructuring.

Can I restructure my education loan after completing my studies?

Yes, education loan restructuring is not limited to the study period. After completing the graduation, if you face financial challenges, you can still explore restructuring options with your lender. Even during your study period if you are paying the interest in the moratorium, you can apply for restructuring your education loan citing financial stress. 

Is there a specific time frame to apply for education loan restructuring?

While there isn’t a fixed time frame, it’s advisable to approach your lender at the earliest signs of financial strain to explore restructuring options proactively. If you haven’t paid the EMI and the delay is more than 30 days then the bank may reject the request for loan restructure. 

Will loan restructuring affect my credit score?

Generally, opting for education loan restructuring does not impact your credit score directly unless you have missed payments or made defaults that led to restructuring. However, it cannot be guaranteed that there will be no impact on your credit score. It will always be reflected in your credit report that one of your loans has been restructured. So, it is important to consider the impact of education loan restructure on your credit score before applying. 

Are there any additional charges associated with loan restructuring?

Lenders may charge a nominal fee for processing education loan restructuring. The schedule of charges depends on the policies of the bank or financial institution from where you have taken the loan. Contact your bank for details of all such charges. 

Also Read: Facing dilemma about applying for loan restructuring? Check out this blog and understand the benefits of education loan restructure

Can I include multiple education loans in a single restructuring plan?

If you have multiple loans, then a personal loan for debt consolidation will be the most suitable option. With this loan, you will be able to close all the existing loans and you will have to pay only one EMI for a personal loan. 

What documents are required for the education loan restructuring process?

Apart from the basic documents like an Aadhaar Card, PAN Card, Income proof, bank statement etc, the lender may demand employment details and status, a detailed repayment plan, and a letter explaining the need for restructuring. The income proof and the employment status will be the two major things that the bank will consider before approving the loan restructuring request. 

Can I prepay the restructured education loan without any penalties?

Banks or lenders may have specific policies regarding the prepayment of restructured loans. Some may allow it without penalties, while others may impose charges. However, most of the banks do not take any early repayment charges on education loans. Contact your bank to understand the detailed schedule of charges. 

Education loan restructuring can be a lifeline for students facing financial challenges while pursuing studies abroad. It’s important to approach this process with a clear understanding so that you can negotiate properly with the lender.

To know more about the loan restructure, loan application process, the best bank accounts for students, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience. 

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