Repaying loans is a legal obligation that any borrower has, but when it comes to education loans then an additional moral responsibility also rests on the borrower's shoulder as this loan was sanctioned to him/her at fairly easy terms. Now apart from this there is another aspect that could prompt borrowers to be regular in their education loan repayment; defaulting on loans can hamper your job prospects. Below we discuss this in detail.

Loan Defaults and Job Eligibility:

When you apply for any job, the prospective employer would like to assess you not based only on your educational qualifications and technical skills but also on other parameters. Employers are looking for people who are trustworthy, disciplined and are good in managing day to day duties efficiently. They try and assess this by various methods and background check, is one such tool that the use. Accessing the applicant's credit report is now a part of the background check done by many organizations to assess the applicant's employability.

Any loan is granted with the belief that the borrower will repay it in a timely and regular manner as specified in the loan agreement. Not doing this either implies that the borrower is not disciplined or is bad at financial management or is simply not honest enough to repay his dues. When the prospective employer sees a default on an education loan they are likely to assume that the applicant is not trustworthy.

Apart from that no organization wants to hire a candidate who could turn out to be a potential liability either due to pending litigations against him/her or because of mismanagement of funds or lack of integrity. As we said defaults also display irresponsible and reckless behavior which definitely is not a quality that employers are looking for when hiring a new candidate.

Repaying Education Loans is Important:

Paying all loans is important but repaying an education loan attains more significance. Often education loans are the first loans that an individual might take. Thus any default on them not only puts you on a loan defaulter list but also impacts your credit rating greatly.

If there are multiple loans and credit cards that a person holds and there is default on one of them the impact of a single default will be less when compared to a default if there is single loan that an applicant has. When there is only one loan and the borrower defaults on that then the credit rating is going to be affected negatively in a large way.

Since these loans are often the first loans to then any default on them means that the credit reports starts at a negative note only which again is not good for any individual. Low scores not only impact getting credit in future but also put future job prospects at risk. Not getting a job due to this reason could put the borrower at further risk of default.

Most lenders offer a moratorium period and the borrower is not obliged to start payments in this period. If you have not been able to find a job till the end of the moratorium period it is advisable to get in touch with the lender and workout an amenable solution so that you do not default on your payments.

As of now only few employers may be seeking the CIR of an applicant but this is trend that is likely to gain acceptance and momentum.