Introduction

Students who aspire to study domestically or abroad seek help by taking an education loan to fund their studies. Nowadays, students are supplementing their education by taking a loan but it can lead to a major financial burden if not planned properly. Students who do not plan their loan repayment properly often end up paying a large portion of their monthly income on EMIs. So, the ideal way to put an end to this burden is by repaying the loan amount quickly and by following tips to payoff student loan.

However, navigating through the twists and twirls can be quite exhausting, so in this article we have come up with a few tips to clear education loan debt quickly without stressing about your bank balance. Stay tuned till the end of the article to gain deeper insights. 

Few Tips to Payoff Student Loan

Paying off education loan before the scheduled time will require proper planning and implementation. Let’s take a look at the methods you can adopt in pursuit of early payment.

1. Know your loan better

While taking an education loan, students should consider and pre-plan their education loan on various factors which includes moratorium period, repayment tenure, interest rate, type of education loan etc. Students might find it hard to understand all the terms. Students who tend to take education loans directly from the banks are provided only with certain information required to take an education loan. Other than that there are other hidden charges like insurance, processing fee etc which a student is not aware about. As we know half-baked information can lead to huge problems, so we advise you to connect with our team at WeMakeScholars. They will explain you all the details in-depth which will help you plan your repayment and disbursement too. They will also assist you through the entire education loan process and will be there with you after sanction too. So, if you have a query or education loan issues, feel free to ping your financial officer to seek professional guidance. 

2. Plan to payoff education loan while studying

Figuring out your personal finances and managing to pay your interest portion during moratorium period is the one of the best ways to payoff education loan. Instead of paying a hefty sum, students can try paying off the simple interest during their study period i.e. during their moratorium period (repayment holiday).

For eg: Let’s assume you’ve taken a loan of Rs 30 lakh for a 2-year course and the bank is charging you simple interest of 8% p.a. on this amount i.e. bank is charging you 8% per annum on Rs 15 lakh. Thus, the simple interest payable is Rs. 1,20,000 each year, or Rs. 2,40,000 for 2 years. This amount is added to your total loan amount once you begin paying EMIs. So here, students can cut this and save more money instead of paying it to the bank. 

3. Aim to pay more than your EMI

Strategizing on how much to pay during your repayment plays a very crucial role. We advise students to pay more than your EMI installments each month to cut down on your loan tenure and loan amount significantly. Paying even Rs 2,000 extra each month will relieve the outstanding amount by Rs 24,000 a year. 

But it is also advised to check with the respective lending banks regarding this as a few banks levy prepayment charges on the extra amount paid on the EMIs. 

4. Make an informed call about prepayment

Students who are not aware about this, let me remind you that banks levy prepayment charges on the extra amount paid on the EMIs. So even if you end up pre-paying a loan before the tenure, banks may charge you a penalty which usually depends on the quantum of loan. 

Also, students who are considering repaying their loan by sticking to the payment schedule, you still stand a chance to receive tax deductions on your education loan under Section 80E. 

Students who plan on prepaying the loan amount, they may miss out on the benefits offered by the Government banks. 

5. Consider refinancing your student loans

Students who are having trouble to payoff education loan can consider this option of refinancing. This is one of the effective options as students get relatively better interest rates with friendly terms and conditions. Students can connect with their financial officer who processed their education loan and learn all about the takeover process. 

To know more on this, read this article: Education Loan transfer for a better rate of interest

6. Take advantage of tax deductions

Students can avail tax benefits like Section 80E of the Income Tax Act of 1961  which states that a certain percentage of the interest paid towards your education loan can be declared by the loan applicant or the co-applicant as non-deductible. 

Students can utilize this scheme to the best but before that, gain deeper insights on the subject. To know more, read this article: Education loan income tax exemption: Section 80 E (A complete guide)

7. Choose a Relatively Shorter Loan Tenure

One of the easiest and the quickest ways to payoff education loan is by taking a shorter loan tenure. Students may have to pay high EMIs when they choose shorter tenure. So, we recommend students to not choose very short tenure where paying monthly payments is hard to execute. While planning for your education loan repayment, it is extremely necessary to cater for financial contingencies. Students are generally able to repay their education loans as soon as they are employed abroad. However, if this doesn’t happen, then opting for a shorter loan tenure for the student loan repayment process may not work in their favour. Therefore, it’s advised to choose a considerable repayment tenure which will help you pay early and will also spare you some time in case of emergency. 

Education loan is reckoned as a financial burden in a way, but it’s not completely. When students plan their student loan repayment in a certain way, it would not lead to any sort of economic miseries. Follow the above mentioned tips to quickly payoff education loan. If you are facing any trouble planning your repayment or are looking for an education loan to fund your studies, connect with our team at WeMakeScholars. WeMakeScholars is an organization funded and supported by the Government of India that focuses on International Education Finance. As this initiative is under the Digital India campaign, it’s free of cost. 

Why to Payoff Education Loan Faster? 

When students start their repayment after getting a job, a significant portion of their monthly salary is paid towards the repayment of education loan and other for their basic necessities. What about the other financial obligations? How will you meet it?

Because of this, we usually recommend students to start their student loan repayment while studying only. This overall helps students to ease the burden of debt off their shoulders in the future. As we know the EMIs are made of two components, the principal amount and the interest on the principal amount. If the student pays the interest component every month while they are studying during the moratorium period, this will decrease the overall amount to be paid during the time of repayment. This means, the less interest paid to the bank the more savings you can do.

To know the amount you can save by paying off education loan interest during moratorium, ask your financial experts. Request a callback to connect with our team at WeMakeScholars.

Why process through WeMakeScholars?

Our team has closely helped 10,000+ students to process their education loan in a cost-effective way. We value student’s time and efforts because of which we provide you with all the required details and will guide you through the entire process of applying for your study abroad. We connect you with the best education loan lenders across India who can fund your education. Our team shares a special affinity with the education loan lenders because of which it is possible to help our students with the entire loan process with legal formalities done in the stipulated time frame. 

Note: WeMakeScholars is an organization funded and supported by the Government of India that focuses on International Education Finance. We are associated with 10+ public /Pvt Banks/ NBFCs in India and help you get the best abroad education loan matching your profile. As this initiative is under the Digital India campaign, it’s free of cost. The organization has vast experience dealing with students going to various abroad education destinations like the US, Canada, UK, Australia, Germany, Sweden, Italy, New Zealand, France among others.