How to Pay Off Your Student Loans Early and Build Your Finances

By the SMU Social Media Team 

Often the last thing on students’ minds amidst the never-ending deluge of assignments and exams, student loans can seem like a daunting task that’s best left till you enter the workforce.

For those who are looking at starting your career on a clean, debt-free slate, here are a few tips to help you fast-track your way to a loan-free status and start building your finances:


Find out what financial aids are available

Don’t miss the opportunity to get all the help you can get. Whether it’s a university bursary, scholarship, tuition fee subsidy or financial grant, keep your eyes—and options—open. There are myriad different choices that you can apply for based on criteria such as your household income, academic performance and aptitude in certain fields.

These financial aids and grants can help fund your studies and give you a leg up to go debt-free faster. Not sure what you qualify for? Our online Student Financial Needs Calculator can help you determine your eligibility status and the type and quantum of financial aid you may qualify for.


Assess your loan and have a plan

Hands up if you know exactly how much your tuition fees are, the interest rate on your student loan, the minimum payment that you’ll have to make each month upon graduation, and how long you can take to repay that loan?

Let’s be honest here. There can’t be any ‘guesstimations’ when it comes to taking charge of your finances. This may sound like a no-brainer, but having a proper plan and timeframe gives you that extra push to stay on track.

Start by assessing your loan—how much is your loan after you’ve subtracted any grant or financial aid, and how long will you need to comfortably pay off this amount?

For those of you on the government-funded Tuition Fee Loan, the loan is interest-free during the course of your study, and the interest rate of almost five per cent per annum (average prime rate of 3 local banks) kicks in once you graduate. This means that if your principal loan is $50,000, you might incur up to $2,000+ interest when it kicks in. While the CPF Education Scheme has a significantly lower interest (currently at 2.5 per cent per annum) you might still incur up to $1,000+ in interest.

The ideal situation, of course, would be to pay off the loan before graduation so that no interest is incurred. Otherwise, the sooner you repay the principal sum, the less you’ll need to fork out as interest. So, start finding out what loan scheme you are currently on and do your calculations!


Take up freelance or temporary jobs

While it might be rather tempting to spend the entire semester break just hanging out with friends or hopping from one holiday destination to another, consider taking up a vacation job. Or if you’re one of the lucky few who managed to fit all your modules in a three or four-day school week, you could even possibly find a part-time position or freelance work to beef up your bank account.

What’s more, you’ll get to score some valuable work experience to include in your resume at the same time. Who knows, that part-time job may just be the gateway to a full-time position when you graduate.

For suitable temporary or part-time job opportunities, check out the listings on the SMU Student Employment System. Also, check out our recommendations for 5 gigs you can start from your bedroom.


Improve your financial literacy and start managing it

Stay on top of your spending because every little bit of saving counts towards an earlier debt-free life. We don’t mean that you should morph into Ebenezer Scrooge and scrimp on everything. In fact, the more financially savvy ones can even look at growing the money with safe investment options. But before you dive straight in, having basic financial literacy can go a long way.

Besides the large range of finance and investment books available in the library, you could also turn to online resources. Here are just a few to get you started: The New Savvy (founded by SMU Business alumna Anna Haotanto), Budget Babe, Cheerful Egg, and Dollars and Sense.


Nobody said it is going to be a breeze, but you’ll soon find yourself thankful for the headstart.