Taking an Education Loan online is often necessary to afford the expenses of higher studies, especially when studying abroad. However, having large Student Loan payments after graduating can be a huge financial burden.
If you are thinking about how to reduce Student Loan payments, there are several strategies you can employ to reduce your monthly Student Loan payments and make them more manageable.
1. Choose the right EMI plan
Your answer to how to lower my Student Loan payments starts with choosing the most suitable EMI plan. When initiating loan repayment, select an EMI plan that aligns with your income and budget. Most lenders provide flexible EMI options. Opt for an amount you can comfortably pay each month without strain.
Missing EMI payments can accrue penalties and hinder your repayment progress. Consider setting up auto-pay instructions with your bank to ensure timely EMI deductions, avoiding default charges. You can also adjust the tenure or EMI amount as your financial situation evolves.
Most Education Loans provide a 6-month moratorium period after course completion before EMI repayments begin. This allows you to start reducing the principal amount right away, leading to lower total Study Loan interest rates being paid.
2. Increase EMI contributions
A simple way to accelerate repayment is to contribute higher EMI amounts whenever possible. If you secure a well-paying job or receive increments, try increasing your EMI from the previous ₹20,000 to ₹30,000, for instance. However, ensure that the higher EMI is realistically manageable without putting stress on your finances. You can also make lump-sum pre-payments using bonuses or other income sources to reduce Student Loan payments.
3. Choose a shorter loan tenure
While a longer tenure results in lower EMIs, it increases the total interest paid over the full term. Opt for the shortest possible tenure you can afford without overstretching your budget. Using an Education Loan Calculator can help analyse repayment amounts for different tenures.
4. Check eligibility for EWS interest subsidy
The government offers an interest subsidy scheme for Education Loans taken by borrowers from economically weaker sections, with household incomes below ₹4.5 lakh per annum. The subsidy can provide relief by reducing the interest burden. It offers loans starting from ₹50,000 and covers tuition fees, hostel charges, cost of books and other expenses.
5. Consider loan refinancing
Once you secure stable employment after graduating, you may qualify for better interest rates compared to your initial Education Loan terms. Explore refinancing options with lenders like Axis Bank, which provides Education Loans at low inter interest rates, especially if you can provide collateral. Refinancing can potentially reduce your overall interest outgo, thus reducing Student Loan burden and helping you become debt-free sooner.
Also Read: Education Loan repayment: A simplified guide for you
Conclusion
Now, you have an answer to 'Can I reduce Student Loan payments?'. From selecting the ideal EMI plan and increasing EMI contributions when possible to supplementing your income and exploring options like refinancing, you can effectively reduce Student Loan payments. Remember, the path to being debt-free is achievable with careful planning and execution.
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.
