New Delhi, Aug. 31 -- Loan terms, interest structure and lender play a decisive role when considering early closure of education loan. Although prepayment of a loan can save future interest and free up your monthly income, but there are several factors one must consider before deciding to become debt free.

Providing protection to individual borrowers, the Reserve Bank of India (RBI) in 2014 introduced one of the most borrower-friendly policy changes. Borrowers no longer need to pay foreclosure or prepayment penalties on floating-rate education loans. This rule applies to floating-rate term loans sanctioned to individual borrowers.

However, many private banks and NBFCs imposed foreclosure charges if borrowers wanted to close their educat...