7 ways for Indian students to repay student loans faster

While student loans can be a useful tool for postgraduate studies in the United States, they can become a major financial burden after you graduate. If you’re ready to get that monthly student loan payment out of your life, there are ways to pay off student loans faster.

Accelerating your debt repayment might not be easy, but it could be worth the sacrifices in the end if you’re able to get rid of your student loans ahead of schedule.

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Key statistics

  1. Types of U.S. scholarships for Indian studentsThere are at least six types of scholarships available for Indian students pursuing higher education in the United States. These include need-based scholarships for financially disadvantaged students, merit-based scholarships for academic excellence, program-specific scholarships tailored to certain fields of study, government-funded scholarships provided by the U.S. or Indian government, university-funded scholarships to attract international talent, and non-government/private scholarships sponsored by private organizations and foundations.Source: NxtWave – Scholarships for Indian Students to Study in USA
  2. Total number of Indian students in the U.S. (2023-2024):Indian students now form the largest international student group in the U.S., with a record-breaking 331,602 students in 2023-2024. This surge reflects a growing trend of Indian students seeking world-class education and better career opportunities in the U.S.Source: IIE Open Doors 2024 Report
  3. Proportion of Indian students among all international students:Indian students now make up 29.4% of the total 1.1 million international students in the U.S. This means that nearly one in three international students in the U.S. is from India, further cementing their dominance in global student mobility.Source: IIE Open Doors 2024 Report

How to pay off student loans fast

If you’re wondering how to pay off student loans fast as an Indian student, here are some strategies that could help:

  1. Refinance for a lower interest rate
  2. Pay more than the minimum payment
  3. Find a job with student loan assistance
  4. Make biweekly payments
  5. Ask for a raise or work a side hustle
  6. Reduce your living expenses
  7. Put a cash windfall toward your loans

1. Refinance for a lower interest rate

If you’re looking to pay off your student loans faster, you might consider refinancing your international student loans with a lender based in the United States. If you refinance student loan debt, you could score a lower interest rate.

Since less of your money will be going to interest, you might be able to afford extra payments on your refinanced loan. Many refinancing lenders in the U.S. don’t charge a prepayment penalty, so you probably won’t have to worry about racking up any prepayment fees either.

Some lenders also offer an additional rate discount in specific instances. MPOWER Financing, for example, offers a 0.25% rate cut if you put your refinanced student loan on auto pay.

Taking these steps to reduce your interest rate as much as possible could help make your loan more affordable as you work to pay it off faster.

2. Pay more than the minimum payment

When you borrow a student loan, you usually agree to pay it back with fixed monthly payments over a certain number of years. But if you pay more than the minimum amount due each month, you can shave months or even years off your repayment term.

For example, let’s say you took a US$35,000 (INR29,16,000) loan at a 10.00% rate. If you pay US$463 (INR38,600) per month, you’ll get rid of that debt in 10 years. But if you can bump your monthly payment up to US$513 (42,700) ($50 more per month), you’ll get out of debt a year and a half faster and save nearly US$3,500 (INR2,91,600) in interest. If you can pay US$563 (INR46,900) per month, you’ll get rid of your debt two years and eight months faster and save nearly US$6,000 (INR5,00,000) in interest charges.

Before setting up your increased payments, it could be worth reaching out to your loan servicer to make sure it’s applying the payments correctly. You want to make sure your payments are going toward your principal balance rather than being saved for future bills.

3. Find a job with student loan assistance

Some companies offer student loan assistance benefits to their employees. Google, for example, will match up to US$2,500 (INR2,08,000) in student loan payments annually for its employees. And technology company Nvidia will pay up to US$6,000 (INR5,00,000) per year in student loan assistance with a lifetime limit of US$30,000 (INR25,00,000).

If you’re looking for a new job, consider prioritising a company that will help you pay back your student loans. Note that international student loans are not always eligible for this benefit – you might need to refinance your student loans with a U.S.-based lender to qualify for employer-sponsored student loan assistance.

4. Make biweekly payments

If you’re making monthly student loan payments, consider switching to biweekly payments. In other words, split your monthly bill in half and pay that amount every two weeks. Instead of paying US$200 (INR16,600) once per month, for example, you’d pay US$100 (INR8,300 ) every two weeks.

You’ll still pay the same amount every month, but because of how the calendar works out, you’ll end up making a full extra payment every year. Making biweekly payments on your student loans is an easy way to pay off your debt faster without much extra effort on your part.

5. Ask for a raise or work a side hustle

Making extra payments on your student loans will be difficult if you don’t have any room in your budget. If you’re committed to getting rid of your debt ahead of schedule, search for ways to increase your income.

You could ask for a raise from your employer or work a side hustle, such as driving for a ride-sharing service or offering freelance services online. If you can increase your income, you can apply that extra money toward paying down your student loan debt.

6. Reduce your living expenses

Along with increasing your income, consider ways to decrease your expenses. Freeing up more room in your budget will help you afford extra payments on your student loans.

Consider downsizing to a cheaper apartment or moving in with a roommate or two. If you often eat out at restaurants, try meal planning and cooking at home. And if your car payment is a stretch, consider trading in your car for a less expensive vehicle.

Take a look at your monthly expenses to identify areas where you can cut back. Even an extra US$50 (INR4,150) or US$100 (INR8,300) per month could help you pay off your student loans faster.

Budgeting your money is a lot easier when you have a bank account in the country where you study. That way you can access your money without excess foreign transaction fees and keep an eye on your spending. Approved MPOWER customers can get a U.S. bank account and a credit card prior to their arrival to the country. Canadian students can check out TD Bank’s Student Package,* a bank account designed specifically for your needs.

*TD is a partner of MPOWER Financing

7. Put a cash windfall toward your loans

If you receive an unexpected windfall of cash, such as a bonus at work or an inheritance, it might be tempting to spend it on something fun. But if you’re committed to getting rid of your student debt as fast as possible, consider putting that windfall toward your student loans.

If you need a boost of motivation, use a student loan calculator to see how much an extra payment would save you. By seeing how much you could save in interest, along with the time you could shave off your debt, you might feel inspired to stick to your debt repayment goals.

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FAQs


How can Indian students handle currency exchange considerations when repaying U.S. student loans?

Indian students can minimize currency exchange costs by using services that offer better rates than traditional banks. Consider making larger payments less frequently to reduce multiple transfer fees. For those returning to India after graduation, explore refinancing options specifically designed for international borrowers that offer favorable terms for payments from abroad.

What tax benefits can Indian students claim on student loan repayments?

Indian students can claim tax benefits under Section 80E of the Income Tax Act for interest paid on education loans from specified Indian financial institutions. This deduction has no upper limit and can be claimed for up to eight years. However, interest paid on loans from U.S. lenders typically doesn’t qualify for Indian tax benefits unless routed through an Indian bank, so consult with a tax professional to optimize your approach.

What strategies work best for Indian students returning home after graduation?

Before leaving the U.S. to return home, Indian students should establish a U.S. bank account that allows easy international transfers. Set up automatic payments to avoid missing due dates across time zones, and maintain an emergency fund in dollars to cover three to six months of loan payments to protect against rupee depreciation or temporary employment gaps.

How can Indian students use OPT employment to accelerate loan repayment?

Indian students should maximize optional practical training (OPT) employment by securing positions in high-paying fields like technology, finance or engineering. Use the higher U.S. salary during OPT to make aggressive loan payments before potentially returning to India. Consider living frugally during this period by sharing accommodations and minimizing expenses to direct 40-50% of income toward loan repayment, potentially reducing principal by 30-40% during the OPT period.

DISCLAIMER – Subject to credit approval, loans are made by Bank of Lake Mills or MPOWER Financing, PBC. Bank of Lake Mills does not have an ownership interest in MPOWER Financing. Neither MPOWER Financing nor Bank of Lake Mills is affiliated with the school you attended or are attending. Bank of Lake Mills is Member FDIC. None of the information contained in this website constitutes a recommendation, solicitation or offer by MPOWER Financing or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.

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