Educational credit is a tool that more and more households are using to pay for college. Especially since the value of higher education tuition has increased by nearly 20% in the last decade.
We have prepared this guide to understand how education credit works and how to get financing for college. It is a tool to understand how to find the best alternative for paying for college. Also, you will understand what educational credit is and what modalities exist. Finally, we will review what to keep in mind when applying for it and how to make the best use of this credit.
What is educational credit?
The educational credit is a product specially designed to finance higher education studies. These, generally, can be at a technical, technological, professional or graduate level. Some of the educational credit options you will see here also finance:
- Professional updating courses
- Master’s Degrees
In several of the educational credit offers, the interest rate is lower than in free investment credits. This is an important factor in ensuring the profitability of the investment, and ensuring that our home does not get into financial difficulty.
How do I know if I need educational credit?
Higher education is an expense that has a huge impact on our lives and finances. First, because the value you pay is usually high. Second, because it is done over several years. Third, because it is accompanied by additional expenses that require a good budgeting exercise. Buying a house, car, changing jobs, for example, are decisions that require similar levels of planning.
Contrary to popular belief, educational credit is not an alternative used only by those who cannot afford to pay tuition in cash. Like other financial decisions, one reason to use it may be the opportunity cost that the household assumes when a child enters college. In other words, by paying for a semester of college, the family is missing out on something else with that money.
What to analyze when looking for an educational credit?
There are many financing options for undergraduate study. Therefore, it is essential to calmly evaluate how our finances are today and what we expect from them in the future. In this decision we must analyze our income, other debts and household expenses.
To begin with, if we are considering using debt to finance our education, it is because we know that we want to bet on the return of this investment.
How does short-term educational credit work?
In a short-term student credit, tuition is paid in the same semester of study.
In other words, the financial institution lends us the value of the semester, and divides your payment into 6 installments. At the end of the period, we can reapply for the same short-term credit. If the program is annual, then they lend us the value of the tuition and divide your payment into 12 installments.
Keep in mind that the value of these fees is a little higher than taking the tuition and dividing it into 6.
As you will see below, there are programs from the same Higher Education Institutions’ Credit Departments that allow you to pay your tuition monthly without interest.