How can you pay your child’s student loan
In Singapore, an undergraduate degree is more than just a piece of paper. It is an educational degree that leads to a job and a secure future. This may be the reason why as much as 90% of parents see an undergraduate degree as an essential educational qualification for their children. Furthermore as much as 83% of parents would be willing to send their children abroad for education. However, 42% of parents do not have sufficient money saved for their children’s higher education. This data is derived from HSBC’s Learning for life report.
The only alternative for parents in such scenarios where they can’t afford to pay for their children’s high education is to take a loan. This puts a burden on parents to pay for their children’s student loans.
If you have paid for your child’s education by taking a loan, how can you repay the loan?
The first step if you want to pay back the loan as quickly as possible is to save more. This can be quite challenging because you have many expenses and responsibilities. Here’s how you can save more.
Track your Expenses
The first step is to track your expenses. Know where you spend every cent of your money.
Cut down your Expenses
Once you know where you are spending your money, identify areas where you can cut down your expenses. For example, you regularly purchase ice-cream, chocolates boxes and candy. These are luxury expenses and can be cut down on. Similarly, identify expenses that are luxury expenses that are not required and reduce them. Additionally, identify other expenses that can be lowered. For example, instead of traveling by cab, can you travel by public transport.
Create a Budget
If you truly want to repay the student loan as quickly as possible, there is no better way than a planned approach. For this, you need to create a budget. A good budget will help you save more, plan your expenses, and ensure you pay the loan premium regularly. How do you create a budget?
- List down all monthly expenses. This should be easy since you have been tracking your expenses.
- Know the total amount of your income. This should include your earned income, investment dividends, and income from house properties.
- Divide your income amount with your necessary expenses. This would include grocery, home utilities, and transport.
- Allocate funds for loan payment. Ensure that you allocate sufficient funds to pay the minimum repayment.
Pay more than the Minimum Premium
The more you pay, the lesser the interest charged. Rather than adhere to the minimum premium amount to repay the loan, aim to pay higher. How do you do that?
- Optimize the best out of your budget to increase the monthly or bi-weekly repayment premium.
- Save more so you gain additional funds to increase your payments.
- Increase your income by getting a better paying job to pay higher premiums.
Use your Bonus
Received a bonus? Instead of making a big spending or purchase, utilize the bonus to make a lump-sum payment for the repayment of the loan.
Ask your Child to Pitch in
Considering that you have taken an education loan for your child, you can ask her to pitch in. Your child can perform a side-job or a work-from-home job. Done right, the job would not interfere with her education. It would also prepare her for the adult world and teach her to be financially responsible. This would be an opportunity for good parenting.
The additional income from your child can be of great help to pay off the loan quickly.
Consolidate your Loans
If the student loan is not the only debt you have, then you should consider consolidating your loans. You may have a home loan, personal loan, and medical debt. In such a case, it is recommended that you consolidate your debts. This way, you can better manage the loan repayment and even ask for a better interest rate.
Education is very important for your child and it should not stop at schooling. Undergraduate and post-graduate education is important, and your children should go to the college and university. The higher education improves their career perspectives. However, if you are taking a student loan, then you want to take all the steps possible to pay it off quickly.
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In case, you have burden of student loan, home loan or personal may consider debt consolidate loan from 1st credit moneylender. 1st Credit SG is offering debt consolidation loan to whom may need it. 1st Credit SG Pte Ltd is start giving out loan from 1989.
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