• Engineering and Architecture
  • Management and Business Administration
  • Medicine and Allied Sciences
  • Law
  • Animation and Design
  • Media, Mass Communication and Journalism
  • Finance & Accounts
  • Computer Application and IT
  • Pharmacy
  • Hospitality and Tourism
  • Competition
  • School
  • Study Abroad
  • Arts, Commerce & Sciences
  • Learn
  • Online Courses and Certifications
Careers360 Logo
Careers360 Logo
Search Colleges, Exams, Schools & more
Fees & Scholarships

Smart Ways To Pay Off Your Student Loan, Become Debt-Free Quickly

Subscribe to Careers360 Premium

Get Information and Premium Advisory Content - Exams, Colleges, Careers, Placements, Scholarships, Studying abroad etc. Engagement with Experts, Toppers, Subject matter faculty, Career Counselors, University and industry leaders.

Download and read later
By Narayan Krishnamurthy
11 Mar'22  3 min read
Smart Ways To Pay Off Your Student Loan, Become Debt-Free Quickly

A little bit of planning and discipline can go a long way to help you repay your student loan quickly and live debt-free. Here’s an expert’s advice on paying off EMIs that can help reduce the size of the education loan interest component, fetch you tax deductions and fast-track repayment.

Read more
Smart Ways To Pay Off Your Student Loan, Become Debt-Free Quickly

A little bit of planning and discipline can go a long way to help you repay your student loan quickly and live debt-free. Here’s an expert’s advice on paying off EMIs that can help reduce the size of the education loan interest component, fetch you tax deductions and fast-track repayment.

Repaying any loan feels tough and at times, even impossible. Whether you have taken an education loan to start your career or for increasing your skill-set; here are a few ways to fast track the repayment of your education loan and be debt free.

Start Loan Repayment Early

There are opportunities to start earning while you are still a college student, with a part-time job. You could save and invest this income and build a decent corpus that could be used to reduce your loan outstanding from the time you start repaying the loan.

Suppose you save Rs 1,000 a month, earning 8% returns over a two-year period of your education; it would add up to Rs 26,100 which, when deducted from your outstanding loan amount, can reduce your EMI outgo or loan outstanding tenure. If you could save and invest more, the possibilities are immense.

Live On A Budget

Whether you are starting your career or already employed, the virtues of living with a budget from the bedrock of financial prudence. By planning and understanding your monthly cash flow – income and expenses – you can make some necessary sacrifices and avoid falling off the budgetary wagon.

One could set and stick to a monthly savings goal with a budget, and the savings could be utilized to make more than the required EMI payment where possible. There are several online resources for preparing and tracking one’s budget, use them to your advantage.

Use Tax Deductions On Education Loan

The government offers an education loan interest deduction on your taxes for interest paid during the year on qualified loans. Under Section 80E, individuals are eligible for tax deductions when the education loan is taken from recognised banks and non-banking finance companies (NBFC). Remember, that the tax benefit is not available on money borrowed from friends and relatives.

The income tax deduction can be claimed only on the interest component and for eight years by the person under whose name the loan has been taken. This is a wonderful window to reduce your tax liability, and could be well utilised.

Make A Few Financial Sacrifices

There are numerous creative ways to save, but it all starts with being willing to make a few temporary sacrifices for some long-term gains. Reduce your expenses, and there are many ways to go about it. Explore the difference between your financial needs and wants; this will go a long way toward securing your future – you would be able to save smartly for your financial goals and live within your means.

Seek Alternate Sources

If you are lucky with friends and family who could lend you money for the short-term and on discounted interests – go for it. Don’t be embarrassed when borrowing from siblings and friends to pay off your education loan. Not only are you debt free early; you may be able to deploy your savings into better earning investments to repay the money borrowed and have money to pursue other financial needs and goals.

Education Loan Interest: Pay More Than EMI

If you are paying just the EMI, your loan repayment will continue for the entire loan tenure. While longer repayment tenures come at the cost of higher interest repayment, you could try and make regular prepayments or increase the EMI if possible. By making larger payments, you will be able to attack the amount you owe at a quicker rate.

Explore online education loan calculators to check how increasing the EMIs would reduce your loan tenure and effectively, the overall interest outgo. For instance, on a Rs 20.2 lakh loan for 10 years at 8.5% interest, the EMI works out to Rs 25,000. However, if the EMI goes up to Rs 30,000, the loan tenure reduces to just 7 years and 6 months. You basically repay the loan 2.5 years before time.

Debt of any size can seem overwhelming, especially if it takes you some time to find a job. At the same time, a good payback strategy is the one that is reasonable for you and your income. By following some of the above steps, you can get on a fast track to ending your education loan debt for good – and, the faster you get rid of your loan; the sooner you can live life on your terms.

Narayan Krishnamurthy is a believer in financial literacy and awareness, and works on promoting both. For the past two decades he has been writing to simplify personal finance. He also works as a personal finance trainer.

  • Economy
  • Finance
  • Banking
  • Financial services
  • Money
  • Debt
  • Liability (financial accounting)
  • Loan
  • Tax

Subscribe to Premium Membership Plan

*Unlock all premium content and benefits:

  • Career Guidance

    Plan ahead with clear directions on courses, careers and best ways to learn

  • Fees & Scholarships

    Our guides on accessing loans, scholarships will help you understand how to finance your studies.

  • Jobs & Internships

    Prepare for employed life with tips on jobs, find paid & unpaid internship listings, summer jobs and career advice.

  • Interactive Career Counselling Webinars

    Webinars with academics and institutional leaders on admission, careers.

  • College Placement Reports

    Wondering what comes after college? Read placement reports of top universities, colleges.

  • Sports and Extra Curricular Activities

    Interested in music? Art? Summer camps? Start exploring here.

  • Mental Health & Well Being

    To help you deal with stress, face exams, stay focussed, experts share tips here.

  • Career Foundation

    It's not too early to train for work life. Read about building CVs, cracking job interviews; find paid & unpaid internship listings, summer jobs and career advice.

  • Study Help

    Understand concepts of Physics, Chemistry Maths and others through fun stories and illustrations

  • NCERT, Exemplar, CBSE Previous year Solutions for Maths & Science

    - Concept-oriented detailed solutions for NCERT (Class 6 to 12), Exemplar (Class 9 to 12) & CBSE Previous 5 year (Class 10 and 12)

    - For Maths and Science

  • KVPY SA Test Series

    Mock tests replicating the actual exam interface.

    Previous 10 year' official question papers with detailed solutions.

  • KVPY SB / SX Test Series

    Mock tests simulating the actual exam interface.

    Previous 10 years' official question papers with detailed solutions.

    For Class 12 and first-year undergraduate students.

  • 15+ Engineering College Predictors for State & Top University Exams

    Analyses your exam performace to predict admission chances based on Domicile, Caste, Gender, etc. and Exam Result.

    Get your personalised report with Top Predicted Colleges.

  • NCHMJEE Hospitality College Predictor

    - Know your college admission chances based on your Seat Type, Caste, etc. & exam result

    - Get your NCHM JEE personalised report with Top Predicted IHMs, Government & Private Colleges delivered via email

  • NIFT Design College Predictor

    - Know your admission chances based on your Home State, Caste, etc. & exam result for NIFT campuses

    - Get your NIFT personalised report for B.Des & B.FTech delivered via email

  • CLAT, AILET, DUET L.L.B, MHCET Law College Predictors

    - Know your admission chances in NLUs, Delhi University’s Faculty of Law for L.L.B (3Yr), National Law University, Delhi’s B.A-L.L.B course & Law colleges accross Maharashtra based on your Seat Type, Caste, etc. & exam results

    - Get your personalised report delivered via email

  • Study Abroad Guidance Webinars

    Interactive webinars with experts for different countries will take you through all the basics.

  • SOP Guidance

    What should go into your statement of purpose (SOP)? Learn how to put together a winning application.

  • English Proficiency Test

    How can you ace the English proficiency test? Let the experts help you.

  • Visa Regulations

    Have questions about visa regulations? Find answers here.

  • Career Support

    Exams and scholarship alerts, test prep reviews, study plans, college selection

Rate this Story

  • Poor
  • Weak
  • Good
  • Very Good
  • Excellent
New Age Careers: Web3 Offers Lucrative Professions
Read more from Latest Stories

Careers360 helping shape your Career for a better tomorrow