Repaying Your Education Loan Faster


Repaying Your Education Loan Faster:

Repaying an education loan is undoubtedly a challenging task. It usually comes with a payback period ranging between 7 and 15 years, and the interest payments can be overwhelming. That's why repaying your abroad education loan faster is a great option, as it allows you to use your hard-earned money for other necessary expenses.

However, after studying, landing a job with an overseas company brings excitement, and receiving your first salary feels like the culmination of all your hard work. But when loan repayments consume a significant portion of your monthly earnings, it turns out to be an anxious state. Developing an effective study abroad loan repayment strategy and acting accordingly will keep you in a secure position.

Factors contributing to creating an effective loan repayment strategy:

By considering the factors mentioned below, students can create an effective plan and increase their chances of paying off their education loan as early as possible.

  • Be an early beginner:

We've all heard the saying, "An early riser becomes wiser," and it holds true in real life as well. It's crucial for students to gather comprehensive information about the complete loan repayment procedure, including when the moratorium period begins, the total time allotted for repayment, and how to calculate your Equated Monthly Instalment (EMI) and interest rate. Having this information will prevent any misunderstandings later. You can use Education Loan Guru's online EMI calculator to estimate your upcoming monthly payments.

  • Be an effective planner:

Studying abroad involves planning for various aspects such as finances, the chosen country for education, and adjusting to life in a new nation. Being an effective planner should be your primary approach when taking out an education loan. Creating a well-defined budget strategy that accounts for all expenses, available funds, and the required loan amount from an external lender will set you apart. Choose a repayment plan that suits your budget and consider the moratorium period. This way, you'll know how much time you have to find a job and start saving before your first EMI is due.

  • Explore additional sources of income:

Many students begin repaying their loans after the moratorium period, but if you want to become debt-free as soon as possible, look for ways to generate extra income to contribute towards loan repayment. Taking up a part-time job alongside your studies is a suitable option to earn extra money and support your living expenses. Another popular option is showcasing your talent on social media and becoming an influencer by creating vlogs about your life and studies abroad. In the 21st century, there are numerous avenues to increase your income through the aforementioned sources.

  • Save money: 

An age-old yet always valuable piece of advice passed down from one generation to another is the importance of saving money and spending it wisely. This advice holds true in this context as well. Saving money for student loan repayment to study abroad is a wise choice to make. Students can also open a recurring savings account and deposit a fixed amount every month to avoid any last-minute rush when it's time to make loan repayments.

  • Automated Payment Option for Dues:

Automation is incredibly helpful in reducing the effort required to perform tasks manually. This option is particularly beneficial for students when it comes to making timely payments on their dues. You can set up an automated payment option from your account, which will act as a scheduled withdrawal. The EMI or any amount payable for loan repayment will be deducted automatically from your account. Delaying loan payments can have a negative impact on your creditworthiness, so this automated method ensures timely payments without the worry of forgetting to make the payments. It is an effective way to maintain a good CIBIL score and stay on top of your dues.

  • Budget Planning: 

Creating a budget plan and adhering to it is a valuable skill for any individual. Budgeting enables you to intelligently manage your hard-earned money and spend it wisely. It is also helpful for planning your student loan repayment for studying abroad. Students can incorporate budgeting into their routine to save for loan repayment. By making a budget, students can identify areas of unnecessary expenses and make necessary cutbacks or sacrifices. Write down your budget and stick to it for a specific period, and you will observe a significant difference in your savings and expenditures. Every penny saved will contribute towards your loan repayment.

  • Extra Payments: 

Making additional payments towards your loan each month will help you pay off your debt sooner. Adding extra money gradually reduces your burden and accelerates the loan repayment process.

  • Pay Off Interest During the Moratorium:

The moratorium period is a crucial part of the repayment process. It is an additional benefit that the lender offers to student borrowers, giving them time to find employment after completing their studies. Typically, the repayment period begins after the moratorium period. A smart strategy for student loans for study abroad is to start paying off the interest during their study period. Interest payments begin as soon as you receive funds from the bank. Several apps are available that can help you calculate the interest payments to be made in the coming years. Initiating interest payments during your study period will undoubtedly alleviate your burden.

  • Refinancing Your Loan:

In addition to your education loan, it is possible that you have other loans, such as credit card bills and car loans. In such situations, you can consider refinancing your education loan with a lender offering better interest rates than your current one. This can provide some relief on your payments. You can also negotiate lower interest rates with your financing partner, as even a slight decrease can have a significant impact on your payments. Establishing a good relationship with your lender can help you take advantage of benefits like lower interest rates.

The Importance of Paying Off Your Education Loan as Early as Possible

Repaying your education loan is crucial because it undoubtedly consumes a significant portion of your monthly earnings that could be used for emergencies, savings, or investments. Life is unpredictable, and nobody knows what the next moment holds. That's why repaying your education loan on time is a wise move for students; this gives them an opportunity to make investments after becoming debt-free. The cost of student loans for studying abroad varies for each student, with some easily repaying their debt while others find it challenging. By considering the strategies mentioned above, students can create an effective plan to pay off their education loan abroad faster

By Education Loan Guru