Here’s how you can pay back your education loan with ease

 Education loans help the students to set a path for their career and chase their dreams. They are used by students who don’t want to liquidate their financial assets to study at the university or college of their choice. At the completion of their degree, they are supposed to start paying back the loan. This article will help you understand 3 tips that will help you pay back your education loan with ease.

 

  1. Use the moratorium period to prepare for repaying the loan

Moratorium period is the grace period the lender gives the students to prepare themselves for the long road of paying back the education loan. You can use this period to develop your loan repayment foresight. You can start stashing your savings to pull off the first few EMIs with ease. Or perhaps, you can use the buffer savings method where you create the savings to use them in the future if you don't have a stable source of income then. Most lenders offer a moratorium period of 1 year after you complete your education or 6 months after you get your first job, whichever comes earlier.




  1. Restructure the EMIs

The second tip is to bite off as much as you can chew. You can ask the lender to adjust the EMIs according to your convenience. If you bag a high-paying job after you complete your degree, you can ask the lender to increase the EMI value. This will help you pay back the study loan swiftly and you also end up paying less overtime in terms of interest.

If you get a job that pays humble sums then you can ask the lender to reduce the EMI value. But beware that doing this will increase the tenure of your loan and you will end up paying more overtime in terms of interest. Some lenders will even allow a better deal. They will give you the choice of step-up EMIs, in that you pay lower EMIs initially and as time passes you can ask the lender to increase the EMI value to suit your earning ability.

 


  1. Refinance the loan

If you have taken an education loan from a lender and while paying it back realised that the lender offered you the loan with a hefty interest rate then you can save yourself some money by refinancing the loan from another lender. But make sure that you select a different lender only if it offers an interest rate lower than your current lender. This tip will help you but remember one point: You have to pay various charges like service charges, processing charges, prepayment penalty etc. when you refinance your education loan.

 

So, these are the 3 tips that can help you to pay back your education loan with ease. Please note that you have to discuss these tips with your lender’s executives to arrive at the repayment plan that suits your prospects the best. Also, seek advice from a financial advisor before you move forward with any decision of taking a loan. All the best for your education!

 Related Article - Looking at 4 important things to consider before taking an education loan

Related Article - Looking at 4 important things to consider before taking an education loan

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