Attaining financial freedom and living a debt-free life is what each one of us aspires to achieve. If you have an education loan, paying off your debt as early as possible can free up your earned income which you can further utilize to invest wisely for the timely attainment of your financial goals.
Another important reason to pay off your student loan debt in time is to maintain a good credit score. Most good employers check your credit score before hiring you. Your credit score is also important to banks before they approve any other type of loan you might apply for in the future.
Here are 5 simple tips to avoid drowning in your Education Loan debt and dealing with it in the smartest possible way:
Pay Off Your Education Loan Interest Amount During Tenure of Your Course
Some student loans like HDFC Credila Education Loan have a special feature which requires you to pay the loan interest during the tenure of your course. These are simple interest rates and the compounding of this interest increases the financial burden on you when you actually begin paying off your loan after your grace period is over.
An HDFC Credila Education Loan also gives you the option to pay your loan interest amount upfront and in one go. This facility is provided depending on the nature of your course and underlying demographics.
Create a Sound Financial Plan
During the tenure of your course, spend wisely. Get a complete understanding of your debt situation and come up with a financial plan to deal with it. Don’t buy stuffs you don’t really need.
Use a suitable insurance policy to cover your medical bills.
As a part of your financial plan, find some part-time work, to be able to put some money aside on a regular basis. It doesn’t matter how small the amount is. Small amounts put together in a systematic manner amount to larger amounts in the future. This will help you in creating a cash reserve which you can use to finance yourself during the time your course is over and you get a job. You will also be prepared well in advance to pay for your student loan EMIs till you get your first pay-check.
If the country you are pursuing your course in, has a higher currency value than the Indian Rupee, you get an additional advantage as the currency denomination of your study loan is in the Indian Rupee.
Find a Job Abroad that Offers Student Loan Repayment Benefits
A lot of companies abroad offer student loan repayment as an employee benefit. In fact, repayment of student loan debt or providing support for student loan debt is the new employee benefit incentive which is becoming very popular today as companies find this to be a good way to retain the right talent. If you wish to pursue your career abroad after your education is over, you can do your due diligence about these companies and apply for a job with them.
Even if you wish to ultimately settle in India, it would be a good idea to work abroad for some time till your debt is paid off and you have created some amount of cash reserve.
Pay More than Your Minimum Loan Amount Every Month
This is another great way of paying off your study abroad loan debt early.
Additionally, use your bonus or any additional income that you make, to pay more than your minimum amount that needs to be paid every month.
Opt for Some Good Investments
This could be a creative way to pay off your study loan debt after you have started working or if you have some additional funds available with you. The idea is to invest some money for a longer time frame.
Choose a good mutual fund or alternatively, you can also invest this money in a fixed deposit which offers a fixed yearly return. Using this technique, you might be able to pay off some of your loan EMIs with the returns or interest you earn from your investments. This way your money keeps multiplying so you don’t end up paying the entire loan amount from your earned income. You are creating an asset which is helping you in paying off your liability.
To conclude, don’t wait till you receive your first pay-check to begin dealing with your study abroad loan.
Take the right steps today to live debt-free and stress-free.
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Disclaimer: This blog is for informative purposes only, while HDFC Sales Private Ltd makes an effort to provide the accurate and reliable information about the products, the Company does not guarantee or certify accuracy and completeness of the information. The company shall not be liable for any loss incurred by any person relying on such information.