How To Repay Your Education Loan Faster: A Quick Guide

Table of Content

1. How to Get out of Student Loan Debt in the Shortest Amount of Time?
2. Why Repay your Education Loan Faster?
3. Don’t Let Education Loan Drag You Down

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You land a prestigious job after completing a degree abroad. The first paycheck arrives; with happiness, you tear it open, and then the other shoe drops. A chunk of it, not small but enormous, will go into education loan repayment. 
No one said paying off your education loan for abroad studies would be easy, but one thing we can say for sure that erasing it sooner than planned is possible only by upgrading your repayment strategies.

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How to Get out of Student Loan Debt in the Shortest Amount of Time? 

1. Begin Early

Level of Effectiveness: High

One of the primary considerations while looking for education loans is the repayment calculation. It means that the process of paying off an education loan faster commences even before you choose it. To that end, get comprehensive information on loan interest rates and any other charges. Next, use our EMI Calculator to find the exact payment required to clear the debt entirely. Even a small variations in interest rates can impact your repayment burden significantly.
If you're worried about how much will be left over after paying off the loan and other expenses, use our estimate future earnings tool.

2. Create Extra Income

Level of Effectiveness: Varies 

Most students begin repayment after completing the moratorium period. However, it is wiser to start while pursuing a degree by getting a part-time job. Dedicate the earnings for education loan repayment. 
As a millennial, we all know how to leverage the internet to earn a few extra bucks. So turn into a social media influencer or a freelancer who peddles their talent online. If the traditional route is more to your bag, then apply to be a TA. Even a small gig will supplement your income and help reduce debt. 

3. Save More

Level of Effectiveness: Average

Sending a monthly amount towards repayment of education loan is good, even better is setting up a recurring savings fund. Each month deposit a fixed amount to it, automate the process to make it consistent and more manageable. Use the corpus amassed to repay the education loan. 
Another strategy of saving more is to accumulate all cash windfalls. Money sent by parents, elders, or friends; signing bonus or a tax refund, don’t spend them. Use it to pay part of the loan.

4. Build A Budget: Track & Manage It

Level of Effectiveness: Average to High

Getting an extra income might not be possible for all; in that case, try another way. Devise a shoestring monthly budget that severely trims your extravagance  from the very first pay. Sustaining on a strict budget shouldn’t be difficult because you are already used to living hand to mouth as a student.
Identify areas which can be categorised as unessential, then make the required cutbacks and sacrifices. Write everything down and keep track of it or find a reliable App that hacks down expenses, helps you live within your means and save more. You’ll be surprised at the amount of money you can spare in a month.
Every penny saved should be advanced towards the loan. The great news is that living sparingly is temporary and only for the period where you want to repay the education loan faster.

5. Pay More

Level of Effectiveness: High

One of the easiest ways to be loan free is to pay more than the minimum monthly amount. Anything extra you give the bank is deducted from the principal which means even a small quantity can go a long way because it reduces interest. If you have sufficient funds, then prepay the loan partly (or wholly).

6. Consider Refinancing

Level of Effectiveness: High

There are two ways to go about it:

1. Find out if a loan transfer is possible to a bank that has cheaper interest rates.
2. Negotiate with your present bank for a lower interest rate. After you start working, the risk attached is reduced which means the lender may be ready to reward you with a better interest rate.

Because refinancing takes know-how on banks rates, reading the fine print and negotiation skills, it is better to let experts like GyanDhan help you out.

Check Your Education Loan Eligibility Apply Here

Why Repay your Education Loan Faster?

The Burden of an Education Loan has a Multifold Effect:
It takes away a significant portion of your salary that can be utilised to reach other financial goals like saving for emergencies, etc
It hinders you from taking risks with your career.
Delay in repayments of education loan can add a serious burden on the borrower. E.g., a study loan of forty lac taken for four years at 10% interest, the interest amount you will have to pay is 17, 21, 793 and if an extra year is added, i.e. five years, the total interest you will be required to pay will be 19,91,667. You will be able to save around 2.7 lacs by paying just 1 year early!
Delay in making minimum payments, as defined in your loan contract, will lead to a lower credit score 
Both of these factors imply that tackling an education loan at the earliest is imperative.