Taking a student loan is a great way to finance your studies. However, paying off that loan can be challenging if you do not manage your finances according to your set loan payment schedule. Furthermore, after completing higher studies, as a new earner, you would want to pay off your existing student loan as soon as possible to focus on other liabilities.
Here are a few tips on how you can pay off your education loan or debt faster.
Make Additional Payments
You can reduce your payable loan amount faster if you make extra payments occasionally. Set yourself a schedule and keep on making payments whenever you get some extra cash in your pocket. This will help you to reduce the total time required for paying off your debt completely.
Use a Credit Card
Using a credit card is another way that can be useful for making payments for your student loan. Not only can you charge your monthly loan repayments to your credit card, but also earn rewards and cashback on the card while doing so. However, make sure that you pay the full instalments on the card or else you may have to pay hefty interest.
Also keep in mind that not all banks will have a facility that allows you to transfer your education loan to your credit card. Check with your bank if it provides the provision.
Consolidate Your Debts
You can consider debt consolidation loans if you have more than one loan to pay for. Check with your bank for this arrangement and if they provide a debt consolidation loan for student or education loans, you can combine them all and you will have to make repayment instalments only for one consolidated loan. This way, your study loan will be more organised and you will have to pay interest for only one loan instead of several others.
Do Not Forget To Save
Commonly, you can borrow a student loan for a tenure of up to 15 years, depending on your scheme. However, paying off that loan can be much easier if you have savings. Also, a student loan is one of the initial loans that you borrow from a bank/financing institution. Therefore, to keep your credit score healthy, and for many other fiscally practical reasons, you are advised to settle this loan as quickly as possible. Therefore, consider your loan amount and start saving accordingly right from the start. Cut down on unnecessary expenses and save for the repayments.
Part-Time Job Helps
Paying off your student loan can happen much faster if you have constant income to support your repayments. Therefore, while studying you can consider a part-time job that can help you settle your loan quickly.
Things to Remember
- Understand the liabilities: It is very important to know your loan liabilities thoroughly before you apply for a loan. Know the interest rate, other charges and penalties involved in the scheme so that you can manage your repayments accordingly.
- Grace period: In an education or study loan, a grace period is a duration from completion of your education until the beginning of your loan repayments. Loans such as PTPTN allow a 6-month grace period, however, the grace period can be different for different banks.
- Renegotiate your tenure: Do not panic if you are unemployed. You can renegotiate the starting of your repayment time frame by requesting for a deferment (e.g. in case of PTPTN loan). You can get an extension of up to 24 months in circumstances such as unemployment.
- Do not overlook a student loan: If you fail to pay off an education loan like PTPTN, it may result in your blacklisting and eventually, restrictions will be put on your traveling and passport renewal.
If you are looking to pay off your student/education loan faster, you can consider these options and choose the most suitable method for you.