Find Your Way Out Of Education Loan

By | December 12, 2018

Struggling to pay off your Education Loan? Here’s a ready guide to help you sail through the troubled waters. 

Find Your Way Out Of Education Loan


So, the days of endless trials are over. The late-night submissions, the bite-sized breakfasts, and the war on GPAs are now past behind you. Up ahead, lies your future as you had envisioned it. You have the job that you always wanted. You’re all set to soar.

However…there is a tiny bump in the road.

You still have your Education Loan to pay off.

The realisation hits you. You finally know why your parents were so critical about saving every single penny. You recall how they talked about investing in Mutual Funds – the conversations you didn’t want to be a part of.

Finance was boring then but it does make a lot of sense now.

It’s time to put on your thinking cap. As you gear up to take on the big challenges, here is a ready guide to help you find your way out of your Education Loan.

Let’s Get Started

Begin your journey by calculating the total amount you’ll have to pay. Use an Education Loan EMI Calculator to find out the payable amount every month along with the monthly interest. With an EMI calculator, you’ll be able to set realistic targets and work on your finances accordingly.

Set A Goal

Do your groundwork well in advance. Be aware of the monthly instalments you’ll end up paying on a regular basis. Make sure you have enough savings set aside every month to nullify the effect of EMIs. The repayment period for Education Loans is generally between 5 and 8 years. Check whether you can manage to pay off the debts without completely utilising the repayment period.

Auto-Pay Your Debts

With automated payments, rest assured you will never miss a payment deadline. When you automate your payments, you also get a reduction in your interest rate.

Knowing that a fixed amount will automatically get deducted from your account will also enforce a sense of discipline and help you plan your finances better.

Tax Benefits Of Paying Off Your Education Loan On Time 

Did you know that the entire interest amount you pay on your Education Loan is eligible for deductions? Section 80 E of the IT Act allows for deductions on the interest paid. This deduction is allowed only for those paying interest on the loan for self, spouse or children or for the student to whom the payer is a legal guardian. The entire interest amount paid from your taxable income can be deducted as long as the maximum time for repayment does not exceed 8 years.

Additional Reading: Your Income Tax Exemption Guide For The Financial Year 2018-19

EMI Holiday Period For Education Loans

The Moratorium period or the EMI-holiday period is given to borrowers by banks during which the borrower is not required to make any payment. The grace period varies from 6 months to 1 year depending on the bank. However, RBI has recently directed banks to provide a uniform moratorium period of 1 year to the students taking on Education Loans.

Why is the EMI Holiday given to you? What does it mean for you?
Sometimes, you may find it difficult to get a job right after your college. The EMI Holiday is meant to provide a financial cushion during the time gap. For the first year after completion of your course, you don’t have to pay anything to the bank.
Keep in mind, your education loan is a liability. Any delay in payment will only compound your burden. Therefore, don’t wait for the moratorium period to get over. Instead, plan your way out and start paying off the debt as soon as you land a job.

Additional Reading: Why It Helps To Calculate Your EMI Before Applying For A Loan

Education Loan Affects Your Credit Score

Since Education Loans have a long tenure of repayment, your Credit Score gets a significant boost if you manage to make your payments on time. A good Credit Score, in turn, helps you access lower interest rates when you are purchasing a house or taking a Car Loan to buy your dream car.

Additional Reading: Things You Should Know Before Checking Your Credit Score

Beware of spiralling into default while you are paying off your Education Loan. A payment default will damage your Credit Score. Your Credit Score shows whether you can manage debt responsibly and a negative mark here may make it difficult for you obtain loans in the future.

Get Your Free Credit Score

Ready For More?

Although it may seem like your Education Loan is making a huge dent in your savings, try and look at the brighter side of things – the doors it will unlock, the opportunities your degree will bring, and the places your new job will take you. Think of your Education Loan as the key to the wonderful world of finance. Once you are ready, step right in. We can help.

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit for the latest rates/offers.

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