Students, even the bright ones who are selected in campus interviews by big-time companies, have to start worrying about the repayment of their education loan as soon as they join the job. Even if they get a 6-month window to start paying their EMIs, the burden keeps playing in the back of their minds. They should aim to finish their loans as soon as possible as education loan interest rates in India as quite steep, especially if the EMI amount is more than half of their starting salaries. Therefore, proper financial planning is a must.
Since education loans in India are inevitable as education fees in good institutes can go up to Rs 40 lakh, and most parents can’t afford it, the student has to bear the brunt, live frugally for a few years, set aside savings and all extra earnings like bonuses etc. to pay off their education loans. Students who take education loans to study abroad would be less anxious as they start earning in foreign currency and find it easier to pay their EMIs. Students should also buy insurance to cover their education loan, and the amount of cover should be in excess of the loan amount.
Is It Absolutely Essential to Prepay Your Education Loan?
This depends on how the student wants to manage their finances. One thing is for sure, education loan interest rates rarely reduce, and education loans in India attract higher interest than students would earn from even fixed deposits, as the FD interest rates are much lesser than those on education loans. From this point of view, it would be better to prepay the education loan. However, earning students can avail an exemption on income tax under section 80E, which could reduce their EMI burden to some extent. If the benefits of availing exemption from income tax is higher than interest rates on the education loan, however, it would be better to continue with the education loan.
Grab the First Job That Comes Along
The brighter students generally have lots of options during campus recruitments, and can pick and choose their jobs, but a majority of the students do not have such a luxury. They need to grab the first job that comes their way as soon as they finish their studies, as their top priority should be to prepay their education loans. It may not be the ideal job, but students who are smart will eventually find better ones, and having a job is anyway better than sitting waiting for a good job to come along.
PaySense Gives Instant Loans of Rs 2 Lakh
If you are in need of some money in a hurry, your best option is to avail the instant loan of up to Rs 2 lakh from PaySense. We have very user-friendly mobile and web apps, and on them you can get an instant loan of Rs 2 lakh, with the money being deposited in your account within seconds. This can be very useful for students who have taken an education loan and want to prepay it, but are falling short by a small amount.
Apply for Loans of upto ₹5 Lakhs easily using your phone or laptop, and pay back on low EMIs