6 Smart Ways To Repay Student Loan in 2023

In this article we will highlight six smart ways of repaying a student loan,

Nowadays, upskilling is the standard, therefore many of us think of completing our education with extra domestic or international degrees. But paying for higher education, particularly in foreign countries, may be very expensive. The only method to fulfil such academic objectives when borrowing from family is not practical is to obtain a bank loan.

It would be ideal to pay off your student loan quickly without going into debt because nobody wants to spend a significant percentage of their monthly income on EMIs. Paying more than the required minimum each month is the most effective approach to settle off student debt. The more you put toward your debts, the more you’ll save on interest and the faster the sum will be paid off.

In this article we will highlight six smart ways of repaying a student loan,

1. Choose an appropriate repayment plan

Choosing the appropriate college loan repayment plan is the best method to manage student loans. You will have multiple repayment choices , you have to pick the option that fits your budget perfectly well. Always keep in mind the duration of your moratorium. You will then be aware of how much time you have left to look for work and save money before your first EMI is due. Consider your expected salary from your first job as well. You can determine the appropriate tenure and EMI with the aid of all of this. Without such careful planning, you might end up selecting an EMI that is very expensive for you financially.

2. Choose a shorter loan Tenure

A brief tenure is a fantastic choice for managing student loans. It’s true that a shorter loan term will incur higher EMI payments, but on the other hand it will also enable you to save enormous amounts on interest payments. Now, this does not imply that you choose EMIs that are too expensive for you to afford. Instead, go with the shortest tenure you are able to handle. To figure out how much you can afford to pay each month for your student loan, utilise an EMI calculator.

3. Choose automatic monthly deductions

Missing loan instalments might seriously harm your financial situation. Your credit score may be impacted, and you can end yourself incurring late penalties as a result. Simply enable recurring debits from your bank account to avoid unpaid bills. These payments will be made on schedule, sparing you from any missed EMI penalties. Making timely payments will go a long way toward preserving your good credit. In consequence, having a good credit report is beneficial when you later seek for loans.

4. Start paying off the debt early

You might attempt paying off the basic interest while you’re studying to reduce the total amount due (i.e. during the moratorium period). Even before you start making your EMI payments, this will assist lower your overall debt burden by Rs. 1 lakh (on the loan in the case above). Moreover, if you begin making payments during the moratorium period, many banks may reduce your interest payments by up to 1%. Depending on your financial situation at the time, you can choose to pay the simple interest in full at the conclusion of each academic year or try to make a monthly payment.

5. Keep a check on your expenses

Calculate your monthly expenses, including rent, bills, EMIs, and necessities of living. Make sure you have enough money each month to fulfil your basic requirements and necessities. The tried-and-true methods for increasing savings include staying in affordable shared housing, restricting shopping binges and excessive food ordering, taking the bus or train instead of a cab, and keeping an eye on home entertainment costs (such as subscriptions to multiple streaming services, expensive internet connections, etc.) and gaming-related costs.