A student may need more financial means to attend the institution of their choice, but an education loan can help. However, this practical means of paying for your education also requires repayment.
Repaying your student loans decreases your debt-to-income ratio, gives you financial freedom, boosts your credit score, and helps you save money while pursuing other financial goals.
In this blog, we’ll go through strategies to keep your money in order and organized while handling your student loan payments while you’re studying abroad.
Create a sound financial plan
When enrolled in the course, use money wisely. Get a firm understanding of your debt situation, then create a budget to deal with it. Save money on something other than unimportant things.
Use the right insurance coverage to cover your medical costs. As part of your financial strategy, look for part-time work so you can regularly set away money.
It matters, no matter how little. Over time, smaller sums that are methodically put together build up to larger ones.
This will help you accumulate cash reserves that you may use to sustain yourself while looking for work when your degree is over. Furthermore, you will be prepared to make the EMI payments on your student loans until you get your first paycheque.
You earn an additional benefit if the country where you are pursuing your course of study has a higher currency value than the Indian Rupee because the study loan’s currency denomination is Indian Rupees.
Advice for students who are considering studying Abroad
Always build an Emergency fund
You can get started by saving away a tiny sum of money each month. By the time your student loans are repaid, you may try to have amassed a sizable sum of money.
According to the calculation above, your emergency fund should be Rs 40,000 x 6 months = Rs 2.4 lakh if your normal, recurring, and unavoidable monthly costs total Rs 40,000.
Find some good investments
This might be a wise strategy for paying off your student loan debt after you start working or if you have additional money.
The goal is to invest for a longer period. Invest in a reliable mutual fund or a fixed deposit that offers an annual return that is fixed.
By using the interest or returns from your assets, you can use this technique to pay off some of your loan EMIs. Consequently, you will only need to use some of your income to repay the loan in full.
Your money will continue to grow as a result. You will be able to pay off your debt by creating an asset.
Create extra income
After the moratorium period is passed, the majority of students begin paying. However, it is advisable to start working part-time while pursuing a degree. Pay down your student loan debt with the money.
We millennials know how to use the internet to get some side income. So, start promoting your services as a freelancer online or as a social media influencer.
If the traditional route appeals to you more, apply to be a TA. Working even a small amount of time may increase your income and reduce your debt.
Pay more
Paying more than the required minimum each month is one of the most straightforward strategies to eliminate debt.
Any additional funds you provide to the bank are subtracted from the principal, so even a modest amount can go a long way because it lowers interest.
You should prepay the debt partially or entirely if you have enough money.
Save more
While making monthly payments toward student debt repayment is a good idea, creating a recurring savings account is even better.
Automate the procedure to ensure consistency and make it easier to administer. Each month, deposit a certain amount into it. Use the accumulated corpus to pay back the student debt.
Keeping track of any financial windfalls is another way to increase your savings. Don’t spend money received from family members, friends, or elders, a signing bonus, or a tax return. Use it to settle a portion of the debt.
Self Financing vs Students Loans
Consider refinancing your loan
There are two approaches you may take:
- Check to see if you may move your loan to a bank with lower interest rates.
- Ask your current bank to cut the interest rate. The danger is lessened once you begin working, so the lender could be willing to reward you with a better interest rate.
Finally, repay your study abroad loan before receiving your first income. Take the steps right now to live a stress- and debt-free life.
