Finance

Sky rocketing tuition fees and other educational expenses are making an increasing number of people who want to continue their education opt for student loans. However, the high installments that these come with can play havoc with your monthly budget if you do not account for these beforehand. If you do not want your financial management to go awry due to the high EMI of your student loan, you need to take a few steps to ensure the same. You can alleviate the burden of your student loan significantly by following the advice given below.

Step up the amount of principal amount that you repay
One of the easiest ways to get rid of student debt is by repaying it aggressively. Instead of sticking to the amount of EMI, make lump sum cash payments whenever you have a little extra money. However, make sure that the additional amount paid by you is deducted from the principal amount rather than the interest amount.

Take up a part time job
If you find yourself unable to budget for the extra cash with which you can pay down the principal, you can arrange for the same by taking up a part time job. You can earn a little extra money by doing content writing from home or by baby-sitting or pet sitting. You can also give tuitions in a subject that you are good at and earn a little extra money to pay off your student loan faster.

Reduce the term of repayment
If you make timely payments of your student loan EMI, you may be able to negotiate for a shorter term of repayment from your bank so that you can be free of this loan faster. However, you should take this step only when you can raise the additional money that you will be required to pay towards your EMI following the shortening of the loan term. Do not act in haste in this regard as inability to pay your EMI can affect your credit score more adversely than a long-term loan on record.

Opt for IBR program for repayment of federal loans
In case you opt to finance your education through one of the federal student loans available, you can reduce the burden of loan repayment considerably by applying for the IBR or Income Based Repayment program that allows students to pay EMIs in proportion to their income and family size. In most cases, students qualify to make IBR payments that do not exceed 10% of their income and even get a discharge from repayment of the amount of student loan that remains outstanding after 25 years of timely payments.

Transfer student debt into a personal loan with a lower interest rate
It is a wise option to transfer the amount of your student debt into a personal loan if you are getting the same at a lower rate of interest. Though this may sound simple in theory, it has more to it than what meets the eye. In order to qualify for this facility, a student needs to have a stellar credit history.