By admin 
Education loans are a crucial tool for any person seeking higher education. The easy availability of these loans today empowers numerous individuals to pursue their academic goals. As Kavan Choksi / カヴァン・チョクシ point out, much like any other loan, education loans are also a financial liability. Hence, if they are not managed well, these loans can quickly spiral into a debt trap. Therefore, one must plan to effectively manage their education debt.
Kavan Choksi / カヴァン・チョクシ discusses tips for managing education debt effectively
For millions of students across the world, education loans have emerged as an important tool for financing higher education. However, upon graduation, many of these borrowers are faced with the dilemma of how to strategically manage their debt.
The following tips can help people to effectively manage education debt:
- Create a realistic budget: One must create a budget that accounts for all the expenses one may incur while pursuing higher studies. This will help in managing expenses smartly, and maintain a disciplined spending habit when it is time for loan repayment. It is important to review the budget from time to time, to see to it that one does not overspend on unnecessary items and is able to successfully honour the EMIs on their education loan.
- This will help pay off the loan faster, as well as reduce the total amount of interest they need to pay. For instance, by paying $50 extra per month on a $25,000 student loan, one would be able to pay off the loan two years early, while also saving on interest.
- Pay biweekly instead of monthly: Making biweekly payments can help the borrower to pay half of their monthly bill every two weeks instead of making one full monthly payment. This would cause them to make an extra payment each year, ultimately reducing the repayment timeline and the amount of interest they need to pay.
- Consider refinancing or consolidating loans: Refinancing student loans involves replacing multiple existing loans with a single private loan, ideally one that offers a lower interest rate or a shorter repayment term. This approach can simplify the repayment process, particularly for borrowers juggling several loans, and may help accelerate loan repayment as well.
As Kavan Choksi / カヴァン・チョクシ says, if one does have more than one student loan and is unable to consolidate them, they may consider using the debt avalanche method to tackle debts effectively. This continues till all the education debts are gone.