A student loan is a prudent choice to finance your education independently without depending on your parents. Equally important is the repayment of the student loan. So, let’s find answers to questions such as why repayment is crucial, what education loan repayment strategies exist, and more.
Key highlights:
- Why is Repayment of Student Loan Important?
- What Are the Education Loan Repayment Strategies
- How to Repay Student Loans Effectively Using Calculators
- How to Repay Student Loans During Moratorium Period
- How Can I Pay Back Student Loans During Emergencies
- Education Loan: How to Repay – Options
- Some Popular Education Loan Repayment Modes
Why is Repayment of Student Loan Important?
A student loan is a debt you must repay over the years. The repayment of your education loan is essential as it directly impacts your creditworthiness and financial future. When you repay your education loan, you build a healthy credit score. It will help you later in your life when you opt for other financial products, such as a car loan, home loan or credit card, as you can unlock several benefits.
What Are the Education Loan Repayment Strategies
How to Repay Student Loans Effectively Using Calculators
If you are wondering how I can pay back my student loan or how I can pay my student loan faster, the key lies in planning early. You can use online calculators such as the Education Loan EMI Calculator to find the estimated EMIs, the College Course Expense Calculator to understand your potential college expenses and the Education Loan Eligibility Calculator to know the student loan amount you are eligible to borrow based on your current finances.
Please remember that the best student loan repayment strategy should be designed keeping in mind your financial requirements and preferences.
How to Repay Student Loans During Moratorium Period
The holiday or education loan moratorium period refers to the time between the loan amount reaching you and when you make your first EMI payment. It’s a grace period where you don’t have to make the repayment.
However, please remember that this is not an interest-free period, and interest begins to accrue from day one. Therefore, at Avanse Financial Services, we advise our students to pay education loan interest during the moratorium period in the form of simple interest (SI) or partial interest (PI). Paying the education loan moratorium period interest during the holiday period instils financially prudent habits.
How Can I Pay Back Student Loans During Emergencies
If you are wondering how I can pay my student loans during emergencies, then let us share an efficient way. You can create an emergency corpus in order to continue paying your EMIs even during unforeseen circumstances such as a pandemic. So, you should spend judiciously and set aside some amount for such situations.
Also Read: Types of Education Loans Students Must Know
Education Loan: How to Repay – Options
- Simple Interest servicing during the course: You can pay simple interest when your course is ongoing.
- Partial Interest servicing during the course: You can pay partial interest during your study programme.
- Equated Monthly Instalment (EMI): The regular EMIs will start after you have completed your education.
Also Read: Debunking Education Loan Myths
Some Popular Education Loan Repayment Modes
- National Automated Clearing House or NACH: National Payments Corporation of India is a body that facilitates NACH. If you want to opt for NACH, then you are required to verify and sign an NACH mandate, which will allow your lender to collect automated monthly payments on the due date. It is one of the fastest modes as it doesn’t require you to be physically present during the transaction.
- Electronic Clearance Services or ECS ECS is another electronic mode of payment which is periodic and repetitive. Once you set up the mandate, the EMIs will be debited from your bank account on a specific date you set. The primary difference between ECS and NACH is that the latter is quicker and more reliable.
- Cheques One of the oldest modes of making payments is cheques. You can submit the cheque every month to your chosen financial institution.
- Post-Dated Cheques (PDCs): PDCs are the pre-signed cheques with future dates. You can share the post-dated cheques with your lender, which can be processed later on the designated EMI dates.
So, to ensure a robust financial foundation and build a healthy credit score, it is crucial to pay your student loan effectively. Whether you aim to study abroad or study in India, it is essential to plan your education loan journey in advance.
At Avanse Financial Services, we offer an education loan for abroad studies and also to study in India. By opting for methods such as NACH, UPI apps, digital wallets, Easy Pay, Internet Banking, Debit Cards and Cheques, you can make payments swiftly. If you have any queries, please contact us. We will be glad to assist you.
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