Managing Student Loans can be challenging, but with the right strategies, you can handle your finances and pay off your loans efficiently. By understanding your loan terms, exploring repayment options and utilising tools and resources, you can take control of your debt and work towards financial stability.
1. Calculate your total debt
The first step in managing Student Loan debt is understanding the total amount you owe. Graduates often have multiple loans from different sources, each with different interest rates. Knowing the total debt helps in planning repayment, consolidating loans, or other options. Use online tools or consult your loan provider to get a complete picture of your debt.
2. Understand loan terms
Familiarise yourself with the terms of your Education Loan. This includes interest rates, repayment schedules and any associated fees. Knowing these details is crucial for developing a repayment plan that minimises additional costs.
3. Review grace periods
Each loan may have a different grace period, which refers to the duration after graduation before you start repayments. For instance, direct subsidised and unsubsidised loans typically have a six-month grace period. You can use this time to plan your finances and start saving. Make a budget during this period to allocate funds for future payments.
4. Research for assistance programs
Check for government schemes that offer interest subsidies or loan forgiveness for certain professions or sectors. Try to apply for scholarships or grants that can reduce the overall loan amount.
5. Inform your lender early
If you are facing financial difficulties, inform your lender early to explore other options. Try to negotiate better terms with your lender if you have a good repayment history.
6. Maintain a good credit score
Make your loan repayments on time to maintain a good credit history. Try not to take on additional debt until your Student Loan is manageable. It is also common for many students to take up a part-time job or freelance to get extra income to help with repayments. Build an emergency fund to cover unexpected expenses.
7. Consider loan consolidation
Consolidating loans can simplify repayments and reduce monthly payments. However, ensure the new interest rate is not higher than your current loans. Also, be aware that consolidating can sometimes result in losing specific benefits from original loans. Weigh the pros and cons carefully before consolidating.
8. Make extra payments
Whenever possible, pay more than the minimum payment. Extra payments go directly towards the principal, reducing the total interest over time. This strategy helps in clearing the debt faster. Even small additional payments can significantly shorten your repayment period.
9. Utilise automatic payments
Setting up automatic payments can prevent missed payments and may even earn you a discount on interest rates. Ensure your account has sufficient funds to avoid penalties. Automatic payments ensure consistency and can improve your credit score over time.
Also Read: Non-collateral Education Loan for Abroad Studies
Conclusion
Managing student debt requires a proactive approach and careful planning. By understanding your loans and exploring repayment and consolidation options, you can effectively manage and reduce your Student Loan debt.
Axis Bank provides Education Loans starting from ₹50,000, covering tuition, hostel and other expenses, with repo rate-linked interest rates. Axis Bank's Education Loan criteria include holding an Indian citizenship, a minimum of 50% marks in your HSC and graduation, admission for a career-focussed academic course and preferably a co-applicant with regular income-proof.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
