One way to achieve your future goals is through education. Nonetheless, there may be little choice but to seek other means of supporting your education if the desired degree is prohibitively expensive. A student loan would be one such choice. In the current environment, obtaining an education loan only requires a few clicks on online platforms. Education loans are available from banks and other financial institutions at competitive interest rates for both domestic and international studies. Yet taking out a student loan is not the major burden; it’s how you pay it back.
For instance, you take an education loan of Rs 30 lakh, now because the RBI chose to implement a rate hike cycle to combat inflationary pressure, the interest rate on student loans has increased. The policy rate increases have caused a significant increase in banks and other financial institutions’ cost of funds, which has caused an increase in those institutions’ benchmark lending rates which overall means that repaying can be difficult considering these many factors in mind. In simple words, EMIs have become expensive on term loans including home loans, personal loans, car loans, and education loans among others.
Here are 5 tips to keep in mind that can help students to pay bulky loans in no time.
1. Start early: Starting repayment during the moratorium period to lower the principal balance is a highly effective way to pay off your student loan debt more quickly. You might reduce your principal balance payment to pay off your loan before the predetermined tenure.
2. Budget your money: According to the 50/30/20 rule, which is a basic plan, you should set aside 50% of your income for essentials, 30% for wants, and 20% for debt repayment and savings. Reduce your “needs” and “wants” to increase your loan payback savings.
3. Refinance your student loan: Speak to alternative lenders about refinancing possibilities. Refinancing your student loan lowers the interest rate, particularly if you have already graduated and are working. With a job and higher earning potential, you will be in a better position to negotiate the terms and circumstances of your college loan.
4. Develop additional sources of income: You can pay off the debt by paying more than the EMI with the help of a side business or a part-time job. There are several ways to use side hustles to generate a respectable income, like using your talent on social media or as a freelancer.
