Hi! I'm a 2024 MBA passout and been ine year in job, my current inhand salary is 75,000rs. I have take education loan of 20lakh for MBA, which is now 23.2 lakh outstanding. I have monthly EMI of 28000 for next 12 years. I have an FD worth 2 lakh and stock investment of 2lakh. My mom said she can give me 2 lakh from her savings and i want to know from you, shall I increase my EMI amount and take help from family or I should keep it as it is. Thanks

Ans: You have started your career well. You are already earning Rs. 75,000 per month. That shows great effort after your MBA. Managing a large loan this early is not easy. But you are thinking wisely. That is a good sign.

Let’s plan everything carefully from all sides. We will look at EMI, savings, family help, and future growth.

? Understanding Your Current EMI Burden

– You are paying Rs. 28,000 per month in EMI.
– That’s about 37% of your in-hand salary.
– Anything above 40% can affect your lifestyle.
– So right now, you are just at the comfort limit.
– You also need to grow savings and meet future goals.
– If EMI stays the same, you will repay for 12 years.
– That’s a very long repayment period.
– Interest payout will also be very high over time.

? Assessing Your Monthly Surplus

– You didn’t mention your monthly expenses.
– Let's assume expenses are around Rs. 30,000.
– That leaves Rs. 17,000 per month as savings.
– Out of this, only Rs. 2,000 may remain after EMI.
– That is too tight.
– You must build emergency funds and start investing.
– If there’s any bonus or hike, that will help.
– For now, we need careful choices.

? Should You Increase EMI Using Mother’s Support?

– Your mother’s offer to help shows family strength.
– But you must use it smartly.
– Use Rs. 2 lakh to partly prepay your education loan.
– Don’t increase EMI unless your salary rises soon.
– If you increase EMI now, you lose flexibility.
– Instead, make a one-time prepayment.
– This will reduce interest and shorten tenure.
– You can keep the same EMI later or increase it yearly.
– This is a more balanced approach.

? Your Existing Savings and How to Use It

– You have Rs. 2 lakh in fixed deposit.
– You also have Rs. 2 lakh in stocks.
– That is a good start.
– But don’t rush to liquidate them for loan.
– Stocks can grow over long term.
– FD can act as emergency fund.
– For now, don’t use this money for loan prepayment.
– Keep FD as backup.
– Keep stock investment untouched unless emergency.

? Managing EMI Without Strain

– Keep EMI at Rs. 28,000 for now.
– Try to use extra income like bonus or gifts for prepayment.
– If your salary increases next year, raise EMI slightly.
– That way, you maintain cash flow and reduce debt.
– Even a small annual EMI hike can save big interest.
– But never over-stretch now.
– Financial stability is more important than early closure.

? Education Loan Prepayment Strategy

– Use your mother’s Rs. 2 lakh as lump sum payment.
– Don’t give it to bank as EMI increase.
– Always mention “Reduce Principal” during prepayment.
– You can reduce either EMI or tenure.
– Choose tenure reduction for long-term gain.
– This saves more interest.
– Later, plan small annual prepayments too.

? Future Financial Steps to Plan

– You must create an emergency fund of at least Rs. 1.5 lakh.
– Use FD partly and slowly add more to it.
– Keep 3 to 6 months expenses in this fund.
– Avoid using stocks or mutual funds for emergencies.
– After that, you can start a small SIP.
– Even Rs. 3,000 per month in mutual fund is good.
– Choose regular plan via Certified Financial Planner and MFD.
– Direct funds lack handholding and reviews.
– Regular plans offer guidance, fund switch help, and timely review.
– That support is critical for beginners.

? Avoiding Index Funds and Direct Plans

– Index funds only follow market passively.
– They don’t avoid risky sectors during bad times.
– You can lose more during market crashes.
– Actively managed funds are safer.
– A good fund manager handles risks smartly.
– Also, avoid direct plans.
– Direct plans are cheaper, but offer no support.
– If you invest via MFD and Certified Financial Planner, you get support.
– That helps with portfolio review and corrections.
– That’s a very valuable benefit for new investors.

? How to Deal With Loan Emotionally

– Education loan is not a burden.
– It is an investment in yourself.
– But don’t let it block your long-term goals.
– Balance debt repayment with wealth creation.
– Over time, you will earn more and pay faster.
– For now, control expenses, increase skills, and grow income.
– Don’t feel stressed by comparing with peers.
– Every plan must suit your own life.

? Role of Family Support

– It’s fine to accept small help from mother.
– But avoid regular dependency.
– Take support only for one-time use.
– Don’t increase EMI based on that.
– Use help to reduce principal.
– That shows maturity and planning.
– Your mother’s support is valuable.
– But building your own capability is more important.
– Appreciate her gesture but plan with independence in mind.

? Tax Benefits on Education Loan

– Continue claiming interest benefit under Section 80E.
– This is valid for 8 years from start of repayment.
– There is no limit on the amount.
– Only interest is allowed, not principal.
– So you save some tax also during initial years.
– Keep this benefit in mind during tax filing.

? Investing Mindset to Build Early

– Don’t wait for loan closure to start investing.
– You can invest and repay together.
– Start SIP with just Rs. 2,000 or Rs. 3,000.
– Slowly increase it every 6 months.
– SIPs help build future goals like marriage, home, etc.
– Loan is past expense. SIP is future security.
– Both must run side by side.
– Prioritise balance, not speed.

? Create a 5-Year Roadmap

– First, stabilise expenses and control EMI burden.
– Second, build emergency corpus of 3 months expenses.
– Third, start SIPs and increase yearly.
– Fourth, grow career and upgrade skills.
– Fifth, prepay loan partly every year with extra income.
– Sixth, avoid lifestyle inflation.
– Seventh, start a goal-based SIP later for home or car.

? Finally

– Your current EMI is manageable.
– Don’t increase it now.
– Use your mother’s Rs. 2 lakh to reduce principal.
– Focus on income growth and financial stability.
– Keep FD and stocks untouched for now.
– Begin small SIPs for wealth creation.
– Avoid index funds and direct funds.
– Choose regular mutual funds with Certified Financial Planner support.
– In 5 years, you can reduce the loan and grow investments.
– You are young and well-qualified.
– With right steps, you can create financial freedom.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment