Tips to Plan for Education Loan Repayments While Still in College
Education loans help students achieve their academic goals, but they also bring the responsibility of paying them back. Planning your loan repayment while still in college can make life easier and reduce financial worries after graduation.
Here’s a simple list of tips that can make your repayment plans easier:
1. Understand the Loan Terms
Here’s how to effectively understand your loan terms clearly:
- Interest Rates
Identify if the rates are fixed (constant) or variable (fluctuating) to plan for future costs.
- Repayment Period
Know when repayment starts and how long you have to pay off the loan to manage your finances better.
- Grace Period
Check if your loan includes a grace period after graduation for a smoother repayment transition.
- Subsidized vs. Unsubsidized
Understand if interest accrues during your studies (unsubsidized) or not (subsidized) to prioritize payments.
A clear understanding of these terms helps you manage loans without surprises.
2. Create a Monthly Budget
Create a monthly budget to make your repayment savings effective:
- Track Income
Include allowances, scholarships, and part-time job earnings.
- Monitor Expenses
Categorize essentials like tuition, rent, and food, and limit non-essentials.
- Allocate for Savings
Dedicate a portion of your budget toward loan interest payments or savings. Sticking to a budget helps you identify areas where you can save money.
3. Take Advantage of Part-Time Jobs
Part time jobs can be a big add on to your repayment plans with their added income:
- Look for Flexible Work
Jobs or internships that fit around your study schedule.
- Build Work Experience
Gain skills relevant to your career while earning money.
Use this income to make small loan payments or save for future installments.
4. Avoid unnecessary expenses
Here’s how to effectively manage your finances while studying:
- Save on rent by sharing an apartment or living off-campus.
- Opt for used or library textbooks to save money.
- Take advantage of discounts on food, tech, and services.
- Save money by preparing meals instead of dining out.
- Utilize free services like tutoring, the gym, and health clinics.
- Purchase supplies and groceries in bulk to save long-term.
- Look for scholarships and grants to reduce tuition costs.
- Avoid unnecessary credit card debt by paying off balances each month.
- Save on transportation expenses by using public transportation instead of booking online.
- Earn extra income with a flexible campus job.
- Limit costly social activities and find free alternatives.
- Track your spending with a monthly budget app.
5. Build an Emergency Fund
Building an emergency fund is essential for financial stability.
Missing even one education loan payment can hurt your credit score, making it tough to get future loans. To protect yourself, create an emergency fund that can cover your payments in case of unexpected events like job loss or medical emergencies.
Start saving early on, aiming for a considerable number of payments, so you have a cushion when your loans are due. This financial buffer will help you stay on track and avoid penalties.
6. Continue To Apply For Scholarships
A common myth is that scholarships are only available in high school, but many scholarships are open to college students throughout their careers.
New scholarships are offered every year, and changing your major, picking up a new hobby, or experiencing a major life event could make you eligible for more opportunities.
Take time annually to search and apply for scholarships. Before accepting any new scholarship, ensure it won’t affect your current grants or financial aid.
7. Research Repayment Options
As you prepare to repay your education loans, you’ll need to choose a repayment plan. These plans vary by eligibility, monthly payments, and loan term. Depending on the term and conditions of your loan, it is important to plan your repayments carefully and in an optimised manner.
If you plan to apply, ensure you meet all requirements and continue making timely payments. Don’t rely entirely on forgiveness programs, as eligibility can change, and they may only forgive part of your loan.
8. Seek Financial Counselling
Seeking financial counseling for your education loans can be a game changer:
Your loan servicer manages your education loan repayment, sends bills, resolves issues, and offers assistance. Stay in touch with your servicer if you:
- Change your name, address, or phone number
- Transfer to another school
- Graduate, drop out, or become a part-time student
You can also reach out for questions or clarification about your loans and repayment. For issues related to current or upcoming loans, contact your school’s financial aid office.
9. Pay As Much As You Can While You’re In College
Education loans accrue interest while you’re in school and during the grace period, increasing your balance before repayment begins. To prevent this, consider making monthly payments—even small amounts—to keep your balance from growing or to reduce your principal.
To calculate your monthly interest charge:
- Divide your annual interest rate by 365 to find your daily interest rate.
- Multiply that by your loan balance for the daily interest.
- Then, multiply by the number of days in the month to find your monthly interest charge.
Handling education loan repayments during college requires discipline, thoughtful planning, and consistency. Understanding your loan terms, creating a budget, making payments ahead of schedule, and seeking financial advice can ease future financial pressures. Take control of your finances today for a debt-free tomorrow!
If you’re looking for an education loan, Propelld is a trusted choice for many students as they provide exceptional customer support and guidance throughout the education loan process. They make it easier to understand the terms, helping students confidently manage their education loan journey.
Why Propelld?
The following are the primary benefits of taking an education loan from Propelld.
Particulars | Details |
Max Loan Amount | 50 Lakhs |
Collateral | Not Required |
Moratorium | Available |
Processing Time | 10 Times Faster than Banks |
Disbursal Time | 7 Days |
Approval Rate | Higher than Other Banks |
Special USP | Marks Based Approval |
% Financed | 100% of Fees |
FAQs
- What are the key factors to understand about my education loan?
It’s essential to understand the loan’s interest rates, repayment period, grace period, and whether it’s subsidized or unsubsidized. - How can I create a budget to manage my loan repayment?
Track your income (allowances, scholarships, part-time job) and expenses (tuition, rent, food), and allocate part of your budget toward loan interest payments or savings. - Can a part-time job help in repaying my education loans?
Yes, part-time jobs can provide extra income that can be used to make small loan payments or save for future payments. - How can I reduce my college expenses?
Save on rent, buy used textbooks, use discounts, prepare meals at home, utilize free campus services, and find scholarships and grants. - Why is it important to build an emergency fund for loan repayment?
An emergency fund helps you cover payments in case of unexpected events, protecting your credit score and preventing penalties. - Can I apply for scholarships throughout college?
Yes, many scholarships are available throughout your college years. Changing your major or life events can open up new scholarship opportunities. - How do I choose the right education loan repayment plan?
Research the various repayment plans, such as the Standard, Graduated, and Income-Driven plans, and choose the one that best fits your financial situation. - What are education loan forgiveness programs?
These programs, like Public Service Loan Forgiveness and Teacher Loan Forgiveness, allow for partial or full loan forgiveness based on your career and loan type. - How do I stay in touch with my loan servicer?
Ensure your servicer has updated information if you change your name, address, or phone number, and contact them for any questions about your loans. - Should I pay as much as I can while in school?
Yes, making payments on unsubsidized loans while in school can prevent interest from accruing and reduce your total loan balance. - How do I calculate the interest on my education loan?
To calculate monthly interest, divide your annual interest rate by 365, multiply by your loan balance, and then by the number of days in the month. - Can loan forgiveness programs change over time?
Yes, eligibility and program availability can change, so it’s important to stay informed and not rely entirely on loan forgiveness. - What if I miss a loan payment?
Missing a payment can damage your credit score and increase the total amount owed. Consider setting up automatic payments or creating an emergency fund to avoid missed payments. - How do I contact my school’s financial aid office for loan issues?
Contact your school’s financial aid office for issues related to your current or future loans, as they can provide specific guidance on loan management. - What should I do if I’m having trouble making my education loan payments?
If you’re struggling to make payments, contact your loan servicer immediately to discuss options such as deferment, forbearance, or switching to an income-driven repayment plan to ease the financial burden.