Complete Guide to Student Loan Repayment Methods: Repay Easily Without Pitfalls
Repaying student loans is an inevitable responsibility for every borrower. Choosing the right repayment plan can save you tens of thousands in interest. This article provides a comprehensive explanation of the latest student loan repayment policies, including a comparison of five repayment options, interest calculation rules, deferment application tips, and answers to common questions, helping you craft the most efficient repayment strategy.
1. Comparison of Student Loan Repayment Options
1. Five Repayment Plans After Graduation
| Repayment Plan | Start Time | Monthly Payment (based on ¥48,000 loan) | Total Interest | Best For |
|---|---|---|---|---|
| Lump-Sum Repayment at Maturity | Starting from 6th year after graduation | ¥0 (Pay ¥53,000 in the 6th year) | Approx. ¥5,000 | Students pursuing further education or military service |
| Equal Principal and Interest | 2nd month after graduation | First 5 years: ~¥100 After 5 years: ~¥580 |
Approx. ¥12,000 | Salaried employees with stable income |
| Equal Principal | 2nd month after graduation | First month ¥720 → Last month ¥420 | Approx. ¥10,000 | High early-career earners |
| Interest First, Principal Later | 2nd month after graduation | First 3 years: ~¥120 Last 3 years: repay principal |
Approx. ¥8,000 | Entrepreneurs with tight early-stage finances |
| Flexible Repayment | Starting from 2nd month after graduation | Repay at least once per year; amount is flexible | Approx. ¥15,000 | Freelancers / Irregular income |
✅ New Policy: LPR lowered to 3.6%, student loan interest rate reduced to 3.2%
2. Student Loan Interest Calculation Rules
1. Interest Accrual Start Time
- While in school: 0% interest (fully subsidized by the government)
- From September of graduation year: Interest begins accruing (option to apply for 5-year principal grace period)
2. Interest Rate Standards
| Loan Type | Interest Formula | Current Rate |
|---|---|---|
| Local-Origin Credit-Based Student Loan | 5-Year LPR - 1.6% | 3.2% |
| Campus-Based National Student Loan | 5-Year LPR - 1.5% | 3.3% |
Example: ¥48,000 loan (4 years of undergraduate study), 6-year equal principal + interest plan:
- Monthly Payment: ~¥100/month for first 5 years (interest only), then ~¥580 from 6th year
- Total Interest: Approx. ¥12,000 (¥2,000 more than equal principal but less pressure early on)
3. Practical Repayment Guide
1. Four Steps for Online Repayment
- Login: Visit the official National Development Bank student loan portal
- Check Dues: Review current principal/interest (updated monthly on the 1st)
- Select Payment Channel:
- Alipay: "National Development Bank Student Loan" service account
- UnionPay Cloud QuickPass: “Student Loan Repayment” mini program
- Confirm Payment: Recommended at least 3 days in advance to avoid holiday delays
2. Handling Special Situations
| Situation | Solution | Required Documents |
|---|---|---|
| Unable to repay | Apply for deferment (up to 3 years) | Unemployment/Low-income certificate |
| Pursuing further education | Interest subsidy deferment (until end of new studies) | Admission notice |
| Military service / Teaching in rural areas | Government repayment (fully waived) | Proof of service / teaching |
3. Early Repayment Tips
- Best Timing: Repay in full before August 15 of graduation year to waive all interest
- How to Operate:
- Apply for early repayment online between the 1st and 15th of each month
- Complete payment by the 20th (otherwise deferred to the following month)
- Savings Example: Early repayment on a ¥48,000 loan can save ~¥5,000 in interest
4. Common Pitfalls to Avoid
1. Beware of These 4 Issues
❌ Late payments hurt credit: 3 consecutive missed payments will be reported to the central credit system
❌ Wrong repayment account: Payments made to school account may be lost (use the account specified in your loan contract)
❌ Interest calculation misunderstanding: "5 years after graduation" does NOT mean interest-free — interest starts from graduation
❌ Repayment scams: Agents charging “fees” for repayment — official platforms are completely free
2. Key Notes
- Interest rate adjustment: Annually revised based on LPR on December 21
- Repayment reminders: Enable SMS alerts (NDB customer service: 95593)
- Proof retention: Keep repayment records for at least 5 years after loan closure
5. Recent Policy Changes
- Extended repayment term: Maximum loan term extended from 20 to 22 years
- Expanded interest subsidy: Includes students in associate-to-bachelor transitions and second bachelor's degrees
- Enhanced support system: Sudden hardship cases may apply for 1–3 year principal deferment
Important Reminder: Graduates must confirm their repayment plans before August 31!