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How to pay off your student loans in a timely manner

For many millennials in The Bahamas, student loans have been a proverbial shadow hanging over our heads. It’s a financial burden that takes years, and for some, decades, to break free of. On average, the total repayment amount on student loans in The Bahamas is about $30,000. This is undoubtedly a large financial burden undertaken even before the age of 25, and this bleak reality has been the case for over 6,000 Bahamians under The Bahamas Government Guaranteed Loan Program.

The student loan program was first introduced in July of 2000, and over the years has taken a toll on both the government and recipients. Eventually, it was suspended in August 2009 due to its high delinquency rate. The minister of education recently stated that over 4,600 Bahamians have substantial overdue balances from The Bahamas Government Guaranteed Loan Program. Presently, there is $156,000,000 outstanding in principal from the program, and this has resulted in another suspension of the program.

Truth is, there are still many young Bahamians struggling to pay off these student loans. As a recipient myself, I’ve been able to manage my payments and figured out a few tips that can be useful to many others. Here they are:

  1. Start paying immediately. If you can, don’t wait for the six-month grace period to end upon your return from school to begin making payments. As soon as you get your first check, make a payment. You’ll pay less interest if you start making payments in a hurry, and it gets you into a routine. If you’re disciplined up front, you’ll be far ahead of everybody else.
  2. Make an extra student loan payment. One of the best strategies to pay off student loans faster is to make an extra payment. There are no prepayment penalties, so you can make extra payments of any amount. For example, always pay at least the minimum payment each month. This will allow you to control and pay back the loan at a reasonable pace. Do not overexert yourself at the beginning and try to pay off the loan with a max payment every month. Remind yourself that the loan repayment is a substantial amount, so you must pace yourself. In addition to making 12 monthly payments per year, consider an extra payment once every three months for a total of 16 payments per year.
  3. Apply extra payment to the principal. This is very important and critical component to getting rid of your student loan in a timely manner. The principal is the primary amount you got the loan for. For example, if you received a loan of $30,000 the total repayment would be about $37,000 with interest and fees. Once you make payment every month be sure to specify that you want to apply any extra payment above the minimum payment to the principal only, (not to next month’s monthly payment but to the principal). This will limit the amount of interest that accrues and cut directly into reducing the overall loan.
  4. Make a lump-sum student loan payment. Your first inclination might be to spend your annual work bonus or an asue draw on a vacation or other personal purchases. But the wiser move is to apply all or a significant portion toward paying principal on your student loans. There is nothing wrong with applying a lump sum whenever you have it.
  5. Don’t get another loan. Loans can be very tempting for some college graduates within the first few years of completing university. You will have the urge to get a car loan but a word to the wise is to simply save and don’t incur any more debt until the loan is at least 50 percent paid off. Waiting two or three years to purchase a new car will allow you to make additional payments on student loans.
  6. Ask about the student loan incentive program at the Education Loan Authority or Ministry of Education. Believe it or not, there are some helpful initiatives that are in place and have been in place to assist you in paying off your student loans. There was a program that involved the establishment of a 12-month period of incentives and waivers that began on March 1, 2016. There was also an interest-free period where no interest was applied to your loans. The goal of the program was to help the government begin the process of receiving funds for the $156 million debt it has. The government matched your monthly contribution for six months and then paid a 1.25 percent increase on your monthly payments for the remaining six months. Also, at the end of that 12-month period the government reduced your final pay off balance by 40 percent, which was a huge reduction on the overall payout figure. This program ended on February 28, 2018. But the Education Loan Authority has a new plan in place that can assist. Contacting the authority could be a good idea.


  • Quinton C. Lightbourne is a certified financial planner with the Chartered Institute of Bankers in Scotland and vice president of the Bahamas Investments & Securities Business Association (BISBA). E-mail:

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