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The interest starts being levied on the part of the education loans amount disbursed to you as soon as that amount is disbursed.
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Education loans have made pursuing higher education easier for students who have the merit to study further but not the funds to pay for their higher education expenses. Many students, after completing their higher education, find it difficult to repay their education loans. Education loan repayment can be made easier if students follow a few tips. In this article, we will tell you about 5 tips that will help you repay your education loan in an efficient way.
Repay the interest levied on the disbursed education loan • The interest starts being levied on the part of the education loans amount disbursed to you as soon as that amount is disbursed. This interest becomes part of the principal amount, and more interest keeps getting accumulated as time passes. You can ease the burden of repayment from your shoulders by repaying that interest during the course period itself. Get a part-time job at your university, like becoming an assistant to a university professor, and repay the interest from the salary you earn through that job.
Use the moratorium period to save money for the EMIs • Financial lenders offer a grace period—also called the moratorium period—to students to give them time to get a job, and begin earning money to repay their higher education loans gradually. You should use this grace period to stash savings from your salary to pay the first few EMIs of your loan.
Restructure the EMIs according to your financial capability • Financial lenders talk with students before setting the repayment tenure calendar, and the EMI value of the education loan. Ask your lender to set the EMI value such that you gradually repay the education loan in as few months, and at the same time also feel that the EMI is well within your reach financially.Some lenders offer the choice of step-up EMIs, where the student pays the EMI of less value initially, and the EMI value increases as time passes.
Use the tax benefits available on your loan • The Indian government offers tax benefits on the interest levied on education loans. This benefit is allowed only up to a period of 8 years from the time the first EMI of the loan is paid, or up to the time it takes to repay the loan completely, whichever happens earlier. Use this feature to your benefit by repaying your education loan within 8 years of the first EMI paid.
Refinance the loan if repaying it is too difficult • If repaying the study loan to your current lender is too difficult then refinance the loan from another lender. But keep in mind that the new lender you choose levies lower interest rate and other charges on your loan than your current lender. • So, these are the 5 tips to help you repay education loans with ease. Please consult a financial advisor to know the best way of repaying your education loan. All the best!
