How to Pay Off Student Loans When You Are Self-Employed

In today’s world, student loans have allowed many to pursue higher education, irrespective of their financial status. Most student loans come with a moratorium period of 6 months or 1 year after the end of the course. Once the moratorium period is over, the repayment of the loan begins. Here is a concise guide on how to pay off student loans if you are self-employed.

All about student loans

Many people are often intimidated by the idea of paying back their student loans. This is especially true for self-employed people who do not receive a monthly salary slip. However, with wise strategies and good financial discipline, paying off student debt is as easy for self-employed individuals as salaried individuals.

How to pay student loans as a self-employed person

Here are some useful tips that can help you repay your student loan if you are self-employed.

Choose the appropriate repayment scheme

One key factor in managing your student loan efficiently is choosing the right repayment scheme. The right repayment scheme for you might not be the right repayment scheme for someone else. Before choosing a repayment tenure for your student loan, research how much you can earn every month. You must also consider your financial obligations while deciding the amount of instalment you will pay each month.

Start saving early

One of the best decisions you can take is to start saving early while pursuing your studies. You can do this by working part-time or offering tuition to kids around you. This can help you make some extra money that can come in handy while repaying your debt.

Pay interest during the moratorium

While it is a benefit that you don’t have to pay your EMIs during the moratorium, the interest on your loan keeps accumulating during this period. Therefore, it is a good idea to keep paying the interest during this period to avoid further build-up of debt.

Look for other sources of income

Looking for other income can help you increase your net income and can thus help you manage your debt better. You can try starting a business or investing in different mutual funds and stocks to try and make some money from the dividends.

Refinance your student loan

If you are burdened with your student loan, one way to get out of it is to replace the existing loan with a new loan. This is known as refinancing. Refinancing your current student loan can give you multiple benefits, like lower interest rates and more convenient repayment schemes.

Conclusion

It is important to remember that everyone’s financial obligations are different. Hence, what’s good for someone else might not be good for you. So, be disciplined, save enough money, and choose the best EMI scheme for yourself, and you are all set to pay off your student loan smoothly.

Fi is the right place for you if you want to start saving to pay off your student loan. On Fi, you can open a Federal Bank Savings Account in minutes. This account provides a VISA Platinum, zero forex debit card with no hidden fees. You can also use your Federal Bank Savings Account on Fi to safely stash your savings in deposits, earn additional interest, send/receive payments instantly, analyse expenses, budget smarter, or invest in Mutual Funds.

Frequently Answered Questions

1. Do I pay student loans on dividends?

If you earn enough dividends from your investments, you can pay off your student loan on dividends.

2. Can I pay a student loan after getting a job?

All student loans are to be paid after a moratorium period, which begins right after your course ends. You can use this time to find a suitable job and pay your student loan after getting the job.