The gap between demand and supply of jobs has led many to default on their education loan repayments
The aftermath of 2008 recession still has its impact on the job market, which is not so buoyant as before. On top of this, the ever increasing supply of young college graduates is further resulting in more underpaid jobs or unemployment. But, unfortunately, problems are bigger as those completing their college education have the liability of repaying education loan. The gap between demand and supply of jobs has led many to default on their education loan repayments. Those who are caught in the same tide should consider following ways to help manage their education loan.
Preparing before Time:
Generally, an education loan gives a repayment holiday of six months after completion of college education. Hence, one should start saving money from their jobs three months in advance so as to keep the risk of hurting your credit score at bay.
Restructure your loan:
Banks are always willing to assist students who have a problem finding job. A discussion with banking personnel could give you relaxation in how you pay back education loan. One can agree to pay just the simple interest or partial simple interest till the student finds a suitable job. Extending payment tenure: One can choose to approach the bank and get the payment tenure extended. In this way, one can reduce the burden of EMIs and could afford to pay from the existing salary. One can ideally extend the tenure from 5-7 years to 10-12 years, which will be a big relief to a student.
Refinancing with Accommodative Terms:
A student can look for options to refinance the loans with terms that are more accommodative. Some institutions give the option to switch the existing co-applicant with another co-applicant, who is more financially sound. Also, a bank can ask parents of the student to support with the repayment for their child till he/she settles in a job.
Seek Part-time Job:
If the repayment holiday is just three months away then one should always try to find a part-time job so as to repay the EMIs. In this way, one can get experience as well as money to take care of the education loan. A missed EMI may tarnish one’s credit score, which will make it difficult for a person to apply for any other loan in the future. Therefore, it is advisable to sit and talk with your bank instead of shrugging off the responsibility.