Lesser-known tips to reduce your education loan burden

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Education loans make higher studies possible, but they can feel heavy once repayment starts. Most students only focus on getting the loan approved and miss the small tricks that can reduce their total cost. Whether you’ve just taken a student loan or are already repaying one, these simple, lesser-known tips can help you save money and finish debt-free sooner.

Start paying interest during the moratorium

Most education loans offer a moratorium—no EMIs while you study. But interest keeps adding up. Paying even the monthly interest portion during your course can save you thousands later.

Use government subsidies and repayment benefits

Check if you qualify for the Central Sector Interest Subsidy (CSIS) scheme, which gives a full interest subsidy on education loans for technical or professional courses in India during the period of moratorium, i.e., course duration plus one year. It is available for students whose family income is less than Rs 4.5 lakh per annum. Public sector banks also offer female students a 0.5 percent interest rate concession, and many lenders extend income tax deduction under Section 80E on the entire interest you pay. Use these benefits—they add up.

Make partial prepayments whenever possible

You don’t need to wait till the end of your moratorium to start repayment. Even one-time prepayments—like from internships, scholarships, or bonuses—directly reduce your principal and cut total interest. Most education loans today, especially floating-rate ones, allow free prepayment with no penalties.

Opt for shorter tenures when you can

Longer tenures lower your EMI but increase total interest. If your income allows, choose a shorter term or switch after a few years when your salary grows.

Check refinancing options regularly

Once you start earning and your credit score improves, check whether another bank offers a lower rate. Refinancing (balance transfer) can cut your rate by 1-2 percent, especially if you have a steady job and good repayment history. Many fintech lenders like Cred, YONO SBI, and Axis Bank’s “EduLoan Switch” programme now process transfers online.

Use windfalls wisely

Whenever you receive tax refunds, bonuses, or gifts, divert part of them to your loan. Even small lump-sum payments make a big difference early in your tenure because they reduce the interest-bearing principal.

Avoid missing EMIs

Delays attract penalties and hurt your credit score, making future loans—like for a car or home—more expensive. Set up auto-debit or standing instructions so you never miss a payment date.

Bottom line

Education loans don’t have to be a burden for years. By paying interest early, making part-prepayments, using subsidies, and refinancing smartly, you can finish faster and save big. The key is to stay proactive—don’t just repay your loan, manage it strategically.