Student loan is always a hot topic in many parts around the world including in Malaysia. When it comes to student loans, everyone wonders the same thing, “How are current university/college students or recent university/college graduates going to repay these loans?”, “Now that I’m working, how do I manage my student loan repayments and still have enough money for my savings?”
Education is still and will always be a wise investment to make. However, taking up a student loan is not something to be taken lightly. Many working adults now would advise students to think over their decision on getting a student loan and understand that the repercussions of their decision will follow them beyond their university years.
But this is in no way prohibiting students to get a student loan because in its essence a student loan is made to help the students. To some, repaying back student loan debts will be doable and easy if they know that they can instantly secure a job with good pay after they graduate or if they have enough savings that can help them make repayments. To some, it may not be so simple but with every problem or challenge there is in the world there is always a solution and a way out.
Here are some ways to help you manage your student loans and keep them from overwhelming you:
Add a little to your monthly payment
If and when you can afford it, add RM10-20 to each monthly debt payment you make. This amount will be applied directly to your principal amount, opposing to pay off some of your interest. This creates a small avalanche effect of its own, since reducing the principal amount will also reduce the interest accumulated.
Get a part-time job
If you are already employed full time, and your debts are still overwhelming, there may be some part-time jobs out there that could help to ease that burden. The side-hustle economy is booming, and there are hundreds of jobs out there that could be done on your own time and at your own speed.
Cut out wasteful spending
Make your coffee at home instead of buying a morning cup of coffee every day on your way to work. At the end of each month, calculate the money you didn’t spend on daily coffees (or other similar luxuries) and consider adding that amount to your student loan payment that month.
Apply the ‘avalanche’ method
If you have several loans, make the largest payment to the one with the highest interest rate every month, paying it down in a shorter period of time. When this is paid off, move to the next highest interest rate, then the next, and so on.
Refinance through a different lender
If all you want is to simply reduce the monthly payment of your student loan, try refinancing through a different lender. New loans generally get lower interest rates, so take advantage of this.
Bump your payments incrementally
During the first year of student loan repayment, you might unable to repay more than the bare minimum due, and that’s fine. However, if you get a raise, and you can afford it, use the raise to bump up your payment a small amount. Do this every year and before you know it, you will cut months or even years of repayment off your loan.
Read more: Can Money Buy Time?