Tried and Tested Money Saving Strategies to Manage Abroad Education Loans

Overseas Education often involves a substantial sum of financial investment. For many students, this means seeking financial aid through overseas education loans. While these loans undoubtedly simplify academic aspirations, it is also a reality that they bring forth the weight of debt. However, in this entire loan-taking process the important aspect lies in understanding that with effective money management, one can effectively overcome student debt.

To help you manage your financial obligations in a foreign country and curtail the burden of debt significantly, this article is for you. Here, we present a comprehensive guide outlining tried and tested strategies to effectively manage education loan for students to study abroad, reduce debt burdens, and stride confidently towards a brighter debt-free future. So, without any further ado, let’s begin with the article.

Money Saving Tips to Help You Reduce Student Loan Debt

1. Look for Additional Scholarships

Beyond the institutional aid that you get as a commencing student, the world of scholarships is vast and diverse. Research more into niche-specific scholarships, academic scholarships, minority scholarships, merit-based aids, and country-specific grants that are offered in your second year of college. Communicate with professional organizations related to your field of study, as they often provide exclusive scholarship opportunities. Additionally, you can explore the local community foundations or non-profits as they can reveal lesser-known yet impactful financial support avenues. These additional scholarships will be beneficial and contribute towards your student debt.

2. Work Part-Time During Your Study Tenure

Consider part-time employment during your academic tenure as almost all leading destinations allow international students to work. You can look out for part-time jobs that are available and work as per the work hours permitted to you. Furthermore, you can also check paid internships, research assistantships, or freelance opportunities that not only offer financial remuneration but also enrich your academic experience. Engaging in such roles builds skill development, networking, and a deeper understanding of your chosen field.

3. Avail your Tax Benefits

Understand the tax benefits that you can claim for your education loan. Different countries offer varying tax deductions for interest paid on loans and in India education loan applicants and co-applicants can avail of tax deductions under Section 80E of the Income Tax Act of 1961. As per this act, the tax deduction is allowed on the total interest amount of the EMI paid during the financial year and this can be claimed by either the loan applicant or the co-applicant. This is mostly applicable to nationalised banks, private banks, and government education loan for study abroad. Connect with a tax professional to optimize your tax liabilities and save up funds for loan repayment.

4. Create a Budget and Follow it.

Making a detailed budget is like building a foundation for financial stability. We recommend you follow the 50-30-20 rule, wherein you should spend 50% of your money on needs, 30% on wants and keep 20% in savings. Over time, this amount will grow to become substantially huge and support your loan repayment. Beyond this, categorise expenses, prioritize savings goals and emergency funds within your budget. Furthermore, use the technology available and utilize apps that not only track expenditures but also analyse spending patterns to identify areas where savings can be maximized. These practices will make your spending more mindful.

5. Take the Benefits of your Student Discounts

International student life is accompanied by numerous discounts. Beyond the obvious savings on textbooks and supplies, explore discounts on technology, travel, and entertainment. Also, check the regional benefits such as reduced public transportation fares or student-priced museum tickets. The cumulative impact of these discounts can be significant and help you save money on your living expenses.

6. Start Paying Off the Loan Interest in the Moratorium Period

The moratorium period is an appropriate time to initiate loan repayments. By targeting the interest accrued during this period, you prevent it from capitalizing and thereby reducing the overall loan amount. Every small payment made during this phase mitigates the future financial burden. So, start paying the loan interest during this period.

7. Save Money for the Future EMIs

Working towards future loan repayments that will commence as soon as your moratorium period ends. Save money and set funds aside to ensure a smoother transition into the repayment phase. Consider high-interest savings accounts or short-term investment options to yield returns that can contribute towards EMI payments.

8. Pay More Than Your EMI

Channel bonuses or surplus income towards loan repayments. Even small additional payments made towards the principal amount can substantially reduce the overall interest accrued over the loan tenure. Thus, accelerating your payback timeline and giving you debt freedom within a short span.

These are the tried and tested money-saving strategies to manage your education loan effectively. Be mindful of your earnings and spending to manage your student debt timely and quickly.

Education loans need not be frightening, by wisely applying these methods you will lessen your burden of loan repayment. Furthermore, for prudent financial planning and expert advice, you can take the best online loan services for studying abroad.

Every financial decision contributes to not just managing the loan effectively but also building a foundation for a financially secure future. Good Luck!