What happens if I can’t repay my educational loan?

Defaulting on education loan Equated Monthly Instalment (EMI) payments after the initial grace period can lead to financial setbacks. Some consequences faced by defaulters are:

1. Penal interest rates: The lending institutions levy elevated interest rates, typically 2-3% above the applied rate, on the outstanding loans if instalments are missed repeatedly. This rapidly inflates dues.

2. Credit score impact: Financing companies report non-payment of EMIs for 90+ days to credit bureaus, severely eroding the defaulter's creditworthiness for future lending.

3. Restricted privileges: Defaulters may be debarred from obtaining future loans or etc., till clearance of old dues.

To avoid repayment troubles, it is prudent not to commit to unrealistic education loan amounts, stay gainfully employed after studies to service EMIs, and prepay the loan if funds allow. Requesting a temporary break from EMI payments helps manage unexpected cash flow issues when facing financing companies.