With the cost of education increasing year on year, the word education loan is becoming more and more familiar to the general public. High educational expenses that come tagged with quality education have created pressure on parents as well as students eventually leaving them with no option other than taking an education loan. Unlike the old days when it was easy to take an education loan, today the scenario is different. Taking a loan is not just a complicated process but it also stressful to repay the high EMIs month by month for 5-10 years. Paying back a loan needs meticulous planning even before you take the loan. It is essential that not just parents but students also have a basic understanding of the norms regarding student loans. While this may seem like a challenge, little precaution and planning can help you repay your loans and get rid of debts very easily.
Below are some tips which can help in paying off your student loans:
1. Create a Target for your Savings so that you can meet your Payments
Have a plan to repay the loan even before you apply for one. Try to set goals regarding your savings and payment of installments. By sticking to your target you will feel much relaxed while repaying the loan.
2. Try Paying a Little Extra with each Installment
Paying extra on installments will save you on interests throughout the entire repayment period. This will also help you pay off the principal amount much more quickly. Because of the fact that you are only adding a little bit to your actual installment, you won’t feel like a huge chunk of your money is gone
3. Try Part-time Jobs
This will mainly help students who are studying abroad. By generating income from part-time jobs you can start to repay the loan even before you graduate and get a job.
4. Pay Variable Interest Loans First
If you have multiple student loans it is wise to pay off the loans with variable interest rates first. This will help you to save money if the interest rate suddenly increases.
5. Take the Help of the Employer
For people who are working, some companies can offer a lump-sum amount as advance, which you can use to pay off the loan amount. The only downfall of this strategy is that a specific cut in your salary will be made.
6. Take Insurance
As a part of their policy, some banks will want the borrower to take insurance policy so that the policy will cover the bank loan in case of any discontinuation because of any natural or unnatural cause.
Education loan is commonly looked upon as a financial burden by many, but these loans were set up to ensure quality education for many who couldn’t afford it. By being a little smart and disciplined with your incomes and expenditure one can use these loans to enroll in top-ranked educational institutions to achieve your dream. We hope that this article helps you regarding the repayment of your educational loans.
