How to smoothly repay your student loanSeema Gurnani
College expenses anywhere in the world are often beyond the means of the middle class. There is no dearth of students looking for loans to study, and financial institutions are ready to give them one with a fat interest. Once the course is over and it is time to repay the loan, the same institutions have you financially handicapped for years with growing interests and absurd payment policies.
If you do not want to be handicapped, all you need is a little smart planning and these years will go by rather easily and will also increase your credit score.
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Understand the student loan and the terms and conditions that come with it:
The process of efficiently paying off your loan begins at understanding the loan. Even if your parents or older siblings are taking care of the paperwork, you need to know what you are getting into. All the guidelines, repayments dates, clauses for repayment, interest rates, interest amount, pre-closing of loans, etc. need to be understood even before you sign the documents. It is going to seem like a lot of numbers too early, but you better know them.
Start repaying the student loan while in college:
Make use of the time that you have in college to ensure that you are not struggling to make ends meet after. Undertake part-time jobs which are not only going to help you out with the loan, but also with your career. If the bank/loan scheme you have chosen doesn’t give you this option – save up at least a year’s worth installments while in college.
Do to not live lavishly:
Once you are done with college, there is a good chance that you will want to move to a better place than your dorm room, or the 1BHK you shared with 4 other people, you might consider buying a vehicle and also honing up your lifestyle a little bit. Well, this is never going to work when you have a student loan to repay. Ensure that you don’t fall short of money at the end of the month. In fact, you should be saving a little bit too.
Look for other schemes under which you can customise your loan repayment:
You are sure to find options in the middle of your repayment term where you will be allowed to pay up in bigger installments and at a lower interest rate. When you are done with college and start working, try to work out your financials in a manner where you can finish up the term early. With time, increase the interest rates – this means it is going to be a long and tedious process to pay up.
Stay positive though it all:
A student loan is always a spike in the way of a really good lifestyle, and also kills all the motivation that one has towards the first few formal paychecks of his life. But it is sure to teach you much more than it takes away, therefore it is essential to stay positive through the entire process. Understand that this money has helped you gain education and had made you capable of earning a living and give it back with gratitude, it will make the entire process much easier.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)