Smart ways to help you pay off your student loans faster
The rising cost of education adds to the worry of parents who want to provide their children with the best knowledge and skills, but do not have the financial independence to do so.
Here are Five ways that you as a student can pursue your educational dreams:
The cost of getting a decent education in India is increasing by leaps and bounds each year. A National Sample Survey Office report cites that between 2008 and 2014, the annual cost of professional and technical education shot up by 96% to Rs.62,841 per student. And this is certainly not the kind of expense that students can meet on their own. Parents too may not be in a position to pay these high fees outright, especially when the fees increase depending on which university is chosen and whether education overseas is on the cards. The only support a student who wants to pursue higher studies has is to avail of a loan but with that also comes the terrifying thought of repaying student loans. Here are five trusted ways to help you clear that student loan faster.
1. Work Out a Repayment Schedule
Create an accurate repayment schedule based on your earnings and timeline for employment. This repayment schedule will vary from student to student. You can find out which repayment schedule fits you best by inputting your loan details into a repayment calculator, which your lender may also provide online on their website. Here you’ll learn how much you need to pay per month in order to pay off your loan.
2. Make a Budget
It goes without saying that if you are going to chalk out a schedule to repay your loan, you should also have a well-structured, carefully planned budget. Tracking your expenses helps you achieve financial independence as you know where to cut needless spending. This helps you plough back the excess money you have into repaying your student loans.
3. Group Your Loans
Grouping multiple smaller loans into a larger one, also known as loan consolidation, could facilitate repayment of your loans as now you have fewer lenders to deal with. However, bear in mind that consolidation can also lengthen your repayment period. While the sum of the EMIs you pay will be smaller in the short term, in the long run you most probably will be paying more interest.
4. Ask For a Better Rate
Approach your lender to give you a more suitable interest rate. With the Reserve Bank of India (RBI) recently reducing the repo rate, which is the rate at which RBI lends to financial institutions, this is an opportune moment to request banks to pass on this financial benefit to you. This is easier for existing customers; however, new customers can look out for lenders who offer the best interest rates and good services too.
5. Use Tax Benefits
Education loans in India come with tax concession, which may help you speed up the loan repayment process. The interest paid on education loans can be claimed as deduction, as per Section 80E of the Income Tax Act of India, 1961. Find out how much you save in taxes and deposit the same twice a week along with your ongoing EMI. Although this may seem like nothing much initially, it saves you almost three to four months during the final payment which ends up in you paying almost 25% to 30% less interest.
Bajaj Finserv helps parents fund their child’s education and students pay for higher education by providing Personal Loans with flexible repayment options. With a maximum amount of Rs.25 lakh, Bajaj Finserv’s Personal Loans are easy to apply for and be be repaid in the tenure of your choice. There is also the advantage of pre-paying the loan with idle funds at no extra cost.